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LIBRARY 


IXXJIJMENTS 


ONE  IIUNDIIKD  ANI)  SIXTH  SESSION, 


1883. 


VOLUME  V.— Xos.  45  to  52  irclusive. 


A L B A N : 

WEED,  PARSONS  AND  COMPANY,  LEGISLATIVE  PRINTERS. 
1883. 


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'joev  ^ o 3 (5  ^ 


STATE  OF  NEW  YORK. 


No.  45. 


IN  SENATE. 

April  20,  1888. 


MAJORITY  AND  MINORITY  REPORTS 

OF  THE  COMMITTEE  APPOINTED  TO  INVESTIGATE 
THE  CORNERING  OF  GRAIN  AND  OTHER  ARTICLES. 

To  the  Honorable  the  Senate  of  the  State  of  New  Yorh: 

The  special  committee  appointed  in  pursuance  of  a resolution  of 
your  honorable  body  to  inquire  into  and  report  relative  to  “ the 
whole  system  of  making  corners  and  dealings  in  futures,  with  refer- 
ence to  its  effect  upon  commerce,  and  its  influence  upon  the  public 
welfare,”  begs  respectfully  to  report : 

As  the  investigation  was  somewhat  novel  in  its  character,  and  had 
to  deal  largely  with  commerce  and  commercial  men,  your  committee 
deemed  it  advantageous  to  seek  its  information  at  the  great  com- 
mercial marts  of  the  State.  Its  sessions  were  therefore  principally 
held  in  New  York  and  Buffalo.  Prominence  was  given  to  these 
meetings  in  the  daily  newspapers.  Subpoenas  were  issued  to  repre- 
sentative persons  in  trade,  commerce,  mechanics’  labor  and  the  pro- 
fessions, and  all  who  desired  to  testify  were  granted  every  opportu- 
nity of  so  doing. 

As  the  investigation  progressed  the  attention  and  interest  of  the 
public  seemed  to  increase,  and  much  valuable  information  in  the 
^ shape  of  testimony  was  obtained. 

It  soon  became  evident  to  your  committee  that  the  commercial 
'fy  terms  corners  ” and  ‘‘  dealings  in  futures  ” are  very  much  mis- 
understood by  the  community  at  large,  outside  the  trading  classes  • 
the  former  being  generally  regarded  as  a species  of  mercantile  con- 
[Senate  Doc.  No.  46.]  1 


2 


[Senate, 


spiracy  of  an  oppressive  cliai*acter,  and  tlie  latter  as  a system  of 
recognized  and  tolerated  gambling  in  merchandise,  lately  introduced 
into  iVmerican  commerce,  of  a very  demoralizing  and  dangerous 
character. 

The  term  “corner”  from  the  mercantile  standpoint  is  intended  to 
illustrate  the  condition  of  the  market  for  the  time  being,  relative  to 
an  article  of  merchandise  which  is  in  greater  demand  to  lill  conti-act 
obligations,  maturing  within  a given  p(U*iod,  than  the  stock  on  hand 
will  supply.  Thus  a party  is  unable  to  deliver,  at  the  time  speci- 
fied in  his  contract,  an  article  sold  by  him  at  some  previous  ])eriod, 
he  is  said  to  be  “cornered”  on  that  article,  just  as  a ship  builder, 
for  instance,  who  mighty  fail  to  have  the  vessel  completed  at  the 
date  specified  in  his  contract  with  the  })urchaser,  would  he  deemed 
“cornered”  on  his  contract;  and  when  this  condition  of  things  ob- 
tains with  a number  of  persons,  relative  to  the  same  article,  it  is 
then  said  that  the  market  is  “ cornered  ” for  that  article. 

Corners  may  occur,  and  often  do  occur,  from  accidental  causes, 
such  as  interrruption  to  trans])ortation,  from  fire,  from  flood,  and 
from  many  other  merc.antile  vicissitudes.  They  ma}^  also  arise 
from  protective  influences,  both  conservative  and  legitimate,  as  when 
a seller  of  property  is  imperatively  asked  to  deliver  the  article  which 
he  has  forced  upon  the  market  at  detractive  values,  to  the  detriment 
of  the  business  interests  of  the  purchaser  or  the  producer,  without 
having  made  provision  for  such  delivery  ; but  corners  can  only  be- 
come positively  injurious  to  commerce  and  the  public  weal  when, 
by  taking  advantage  of  the  follies  or  misfortunes  of  others,  a con- 
spiracy is  operated  to  give  factitious  and  dishonest  values  to  the 
cornered  article  through  manipulated  markets. 

It  is  absolutely  impossible  to  avoid  “ accidental  corners  ” because 
they  occur  without  premonition  or  premeditation.  Their  influences, 
however,  are  confined  to  localities,  and  they  are  almost  always  of 
very  short  duration.  The  death  of  the  lamented  President  Garfield 
created  a corner  in  those  mourning  stuffs,  deemed  essential  in 
evidencing  a nation’s  sincere  and  generously  expressed  grief,  just  as 
potent  as  a break  in  the  canal,  during  the  season  of  inland  naviga- 
tion, would  be  in  erdiancing  the  value  of  breadstuffs  in  the  N^ew 
York  market,  until  navigation  was  resumed,  or  supplies  obtained 
from  some  other  than  canal  sources. 

While  your  committee  has  been  informed  and  believes  that  com- 
merce and  the  consuming  public  may  suffer  temporarily  from  the 


No.  45.] 


3 


“accidental  corner,”  there  are  no  corresponding  elements  of  injury 
in  the  “ protective  corner.”  It  can  only  be  effective  when  the  seller 
enters  into  his  enfra (dements  with  the  absolute  intent  of  not  fulfillino^ 
them  (unless  under  possible  contingent  circumstances  beneficial  to 
himself),  and  therefore  he  makes  no  provision  for  delivery  to  the 
])urchaser  at  the  maturity  of  the  contract.  In  other  words,  for  the 
purpose  of  demoralizing  market  values,  the  seller  enters  into  a con- 
tract to  deliver  at  a future  period  that  whicli  he  has  not  got,  and 
which  he  does  not  intend  to  obtain,  unless  through  his  demoralizing 
act  values  are  reduced  to  a point  which  renders  it  profitable  to  him- 
self to  fulfill  his  contract  obligatio;  s.  This  must  be  very  evident, 
because  corners  cannot  obtain,  if  the  property  is  forthcoming  at  the 
time  specified  in  the  contract.  The  merchant  who  sells  with  hon- 
est intent  makes  such  provision,  and,  barring  accident,  cannot  be 
cornered ; the  dishonest  or  thoughtless  man  does  just  the  reverse. 
It  is  a very  just  conclusion  therefore,  that  in  a “protective  corner” 
the  seller  is  the  only  person  at  fault.  His  original  purpose  is  repu- 
diation, if  repudiation  will  conserve  his  unrighteous  ends,  and  he  is 
only  in  default  for  the  reason  that  he  is  a knave,  or  a fool,  and  as 
such  is  not  entitled  to  any  other  protection  than  that  which  the  law 
provides  for  knaves  and  fools  and  honest  men  alike.  If  it  was  not 
the  conceded  right  of  the  purchaser  to  claim  that  which  he  had 
bought  in  good  faith  as  a protective  element  in  his  business,  or  else 
to  demand  and  receive  the  full  measure  of  damage  predicted  upon 
market  values,  in  case  of  a failure  to  deliver,  there  would  be  abso- 
lutely no  such  thing  as  protection  in  legitimate  trade. 

Nor  is  it  advantageous  to  the  consuming  public  to  have  values 
artificially  depressed.  The  natural  law  of  compensation,  which  is 
also  a governing  element  in  commercial  matters,  provides  that  undue 
depression  will  be  followed  by  undue  exaggeration,  each  equally 
detrimental  to  the  general  welfare,  and  unsettling  and  vexatious  in 
their  effects  upon  ail  classes  of  society. 

But  corners  that  are  simply  conspiracies,  or  which  by  combiniiig 
circumstances  and  taking  advantage  of  the  misfortunes  or  follies  or 
knaveries  of  others,  have  degenerated  into  conspiracies  (whos3  oper- 
ators aim  to  wrench  fictitious  values  for  property  which  their  victiins 
are  unable  to  deliver  at  the  maturity  of  contract  obligations,  and  to 
to  this  end  manipulate  and  distort  markets  through  dishonest  means), 
are  outrages  inflicted  upon  commerce  and  the  public  at  large,  and 
should  be,  and,  your  committee  believe,  can  be  summarily  suppressed. 


4 


[Sknatic. 


That  such  corners  have  been  operated  in  this  State  within  tlie  ])a8t 
few  years,  botli  on  the  Stock  Exchange  of  New  York  and  in 
mercantile  circles,  is  an  nndispiitable  fact. 

The  consuming  public  arc  not  so  much  affected  by  their  operation 
as  the  very  just  outcry  against  them  might  lead  many  to  suppose, 
for  tlie  reason  that  they  are  swift  of  culmination,  and  when  ended, 
prices  for  a time  have  generally  receded  below  legitimate  values,  in 
proportion  to  their  previous  enhancement ; but  they  are,  nevertheless, 
exceedingly  demoralizing  and  hurtful  in  their  tendencies,  and  if 
remedies  for  their  absolute  suppression  do  not  now  exist,  your  com- 
mittee would  suggest  legislation  with  a view  to  that  end. 

As  stated  in  a previous  paragraph,  the  law  is  intended  to  afford 
protection  to  fools  and  knaves  (and  it  may  be  said,  criminals  also) ; 
from  the  machinations  of  wicked  or  designing  men,  just  as  jjromptly 
and  as  wisely  as  it  aims  to  protect  society  from  the  criminal  classes. 
This  is  politic  and  reasonable,  and  therefore,  the  persons  who  con- 
spire to  take  an  undue  advantage  of  a knave  or  fool  or  criminal, 
because  of  the  position  his  wrong  doing  or  folly  has  placed  him  in, 
are  themselves  knaves  or  fools  and  should  be  dealt  with  accordingly. 
For  this  reason  “ conspiracy  corners”  and  their  operators,  and  claims 
for  damage  predicated  upon  manipulated  market  values,  should  not 
have,  and  do  not  have,  any  standing  in  law.  Conspiracies  in  all 
their  phases  are  illegal. 

If  a misapprehension  exists  in  the  public  mind  as  to  the  com- 
mercial meaning  and  operations  of  corners,  it  soon  became  apparent 
to  your  committee  that  outside  of  commercial  circles  a much  greater 
misunderstanding  exists  relative  to  ‘dealings  in  futures”  and  “its 
effect  upon  commerce  ” and  “ its  influence  upon  the  public  welfare.” 

“Dealings  in  futures,”  in  a commercial  sense,  are  simply  sales  and 
purchases  of  merchandise  for  future  delivery. 

For  the  sake  of  brevity  such  transactions  are  often  styled  “ options,” 
because  when  the  property  sold  under  the  contract  is  deliverable 
during  a specified  month,  and  upon  any  day  of  that  month  that  the 
seller  may  elect,  it  is  called  a “ sellers’ s option,”  or  if  the  buyer  has 
the  right  to  name  the  day  of  delivery,  a “ buyer’s  option.”  These 
contracts  bear  on  their  face  the  evidence  of  good  faith  and  are  valid 
in  law  and  equity.  Herewith  is  presented  the  form  of  grain  contract 
in  vogue  among  the  members  of  the  New  York  Produce  Exchange, 
and  it  is  a fair  sample  of  its  class  : 


No.  45.] 


5 


‘‘  New  York,  January  1,  1883. 

In  consideration  of  one  dollar,  in  hand  paid,  the  receipt  of  which 
is  hereby  acknowledged,  I have  this  day  sold  to  (or  bought  from) 
John  Doe,  8,000  bushels  of  No.  2 corn.  New  York  inspection,  at 
70  cents  per  bushel  of  56  pounds  deliverable  at  the  seller’s  {or  buyer’s) 
option,  in  May  1883.  This  contract  is  made  in  view  of,  and  in  all 
respects  subject  to  the  by-laws  and  rules  establised  by  the  New  York 
Produce  Exchange  in  force  at  this  date. 

KICHARD  ROE.” 

This  contract  is  explicit  and  its  meaning  cannot  be  misunderstood. 
The  buyer  professes  that  he  will  receive,  and  the  seller  that  he  will 
deliver.  It  is  legally  binding  on  both  parties  thereto,  and  the  pur- 
chaser is  entitled  to  all  the  benefits  under  it,  irrespective  of  what 
may  have  been  the  secret  intent  of  the  seller,  even  if  that  intent  at 
the  time  he  signed  the  contract  was  a determination  not  to  make 
delivery  of  the  corn,  if  market  values  did  not  run  in  his  favor. 

This  system  of  future  sales  is  not  of  recent  date,  nor  has  it  been 
confined  in  its  operations  alone  to  the  United  States.  It  existed  in 
Great  Britain  and  other  European  countries  prior  to  revolutionary 
times,  but  it  was  more  of  an  exception  than  a general  rule  of  trade. 
It  did  not  become  a prominent  factor  in  American  commerce  until 
eight  years  ago,  when  the  rapid  development  of  the  producing 
regions  rendered  necessary  its  application  to  commercial  pursuits, 
because  of  its  extraordinary  protective  elements. 

So  universal  has  it  now  become  that  it  is  impossible  to  determine 
its  present  volume,  it  permeates  dealings  in  almost  all  of  the  surplus 
farm  products  of  the  United  States  to  what  may  be  very  justly 
termed  a limitless  extent.  Its  great  popularity  rests,  not  only  in 
protective  character  but  also  in  the  rapidity  with  which  large  and  small 
transactions  alike  can  be  initiated  and  consummated,  and  it  must  be 
admitted  that  it  has  a very  firm  hold  upon  the  mercantile  exchanges, 
the  boards  of  trade  and  the  business  men  of  the  whole  country. 
It  is  beyond  all  controversy  that  the  farmer  or  producers  and  smaller 
class  of  traders,  who  deal  more  directly  with  them  at  the  numberless 
towns  and  stations  on  our  numerous  lines  of  railroads,  derive  very 
direet  and  positive  benefits  through  its  operation.  Its  protective 
element  is  apparent  when  it  is  understood  that  the  purchases  of  to- 
day, however  modest  in  their  proportions,  can  be  promptly  sold  at 
any  of  the  large  interior  towns,  for  future  delivery,  at  prices  which 
enable  the  producer  to  receive  the  then  full  market  value  at  those 
points  less  the  cost  of  transportation,  and  a fair  profit  to  the  middle- 
man or  trader,  who  in  turn  is  protected  from  possible  loss  from 


[Senate 

fluctuations  of  value,  wliile  liis  ])urchasc8  are  being  transported  to 
their  selling  destination.  The  same  protection  applies  to  the  larger 
shipper  from  Chi(;ago,  Milwaukee,  Toledo  or  other  Lake  Ports,  who 
forwards  his  grain  by  the  vessel  load  to  a seaboard  market,  to  the 
exporter  who  seeks  foreign  custom  ; to  the  miller,  and  the  cotton 
spinner,  in  fact  to  every  de])artmejit  of  commerce  that  can  be  ben- 
efited by  such  j)rotective  influences.  And  it  cannot  theretore  helj) 
being  regarded,  when  intelligently  operated,  as  of  inestimable  corn-- 
mercial  value. 

Perha])s  the  importance  of  this  system  may  be  further  illustrated 
by  giving  the  values  of  the  four  major  articles  of  export  from  the 
United  States,  in  the  year  1881. 


Grain,  and  products  of  grain $270,000,000 

Cotton 261,000,000 

Animal  products 157,600,000 

Petroleum 40,000,000 


$728,600,000 


This  enormous  aggregate  represents  nearly  seven-eighths  (7-8)  of 
the  total  domestic  exports  from  the  United  States  for  that  year,  the 
gross  being  $884,000,000.  It  is  claimed,  and  the  statement  is  based 
upon  competent  authority,  that  probably  seventy-five  per  cent  (and 
very  probably  much  more)  of  these  four  items  of  export,  were  dealt 
in  by  the  exporting  merchants  before  they  arrived  at  seaboard  ports 
and  found  their  way  on  board  ships,  and  it  is  not  improbable  that 
from  the  time  they  left  the  hands  of  the  producer  till  they  came  into 
possession  of  the  exporter,  they  formed  the  basis  of  transactions 
aggregating  ten  or  twenty  times  the  declared  export  value,  every 
one  of  which  were  legitimate  and  mercantile.  But  this  is  not  all. 
The  vessel  service  which  was  necessary  to  transport  this  property 
abroad  was,  to  a great  extent,  contracted  for  before  the  shops  ar- 
rived at  their  ports  of  American  destination,  and  the  bills  of  ex- 
change which  provided  the  means  of  making  payments,  were  also 
largely  sold  for  future  delivery  to  the  foreign  bankers.  In  fact 
every  element  relative  to  these  shipments  in  some  way  may  be  said 
to  have  ])artaken  of  this  “ future”  character.  Indeed  it  was  made 
evident  to  your  committee  that  the  system  of  buying  and  selling  for 
future  delivery  to  use  the  words  of  a witness  is  the  invention  of  a 
great  necessity,  and  has  answered  the  needs  so  well,  and  hns  helped 
to  build  uj)  interior  towns  and  largo  cities,  and  mercantile  exchanges 


No.  45.] 


7 


so  rapidly,  that  it  is  a universally  recognized  part  of  our  great  and 
growing  connnercial  development.” 

But  it  has  been  urged  that  “ sales  for  future  delivery  ” cause 
violent  fiuctuatio?is  in  values,  greater  than  those  v/hich  occurred 
prior  to  their  general  introduction  into  commercial  trading.  This 
statement  has  not  been  substantiated  however,  indeed  the  evidence 
tends  to  show  that  the  effect  is,  to  some  extent,  quite  the  reverse. 
•The  following  table  gives  the  maximum  range,  of  fluctuations  in  the 
prices  of  cash  wheat,  during  the  month  of  March  (a  fair  average 
month)  for  sixteen  years  from  1867  to  1882,  inclusive. 


In  1867  the  range  was 

25  3-4  cts.  per 

bu.  1875  the 

range 

was  8 1-2 

In  1808 

a 

11  1-2 

a 

1876 

u 

7 

In  1869 

u 

6 3-8 

u 

1877 

ii 

9 

In  1870 

u 

11  1 8 

a 

1878 

u 

10 

In  1871 

a 

4 1-8 

u 

• 1879 

a 

3 1-2 

In  1872 

u 

6 1-4 

( t 

1880 

(( 

11  3-4 

In  1873 

u 

8 1-2 

u 

1881 

u 

7 1-4 

In  1874 

a 

8 1-2 

a 

1882  ■ 

a 

15 

Total 

82  1-8. 

Average,  10  2-10 

72  Av.  9. 

From  this  exhibit  it  appears  that  for  I he  first  eight  years  of  that 
period,  when  future  sales  were  not  the  rule,  the  fluctuations  average 
ten  and  two-tenths  cents  per  bushel  per  month,  against  nine  cents  per 
month  for  the  last  eight  years,  when  the  system  very  generally 
prevailed. 

It  is  also  a very  remarkable  circumstance  that  from  1860  to  1876, 
there  were  only  two  years  in  which  the  balance  of  trade  with  Europe 
was  favorable  to  the  United  States.  During  that  period  importations 
exceeded  exports  about  $1,174,000,000  which  amount  may  be  called 
the  national  cost  of  operating  her  foreign  commerce. 

From  1876  to  1882,  exports  have  exceeded  the  value  of  imports 
some  $1,206,000,000  and  it  is  estimated  that  the  fiscal  year  ending 
in  the  summer  of  1883,  will  add  from  $150,000,000  to  $200,000,000 
more  to  the  credit  side  of  the  account. 

Again,  it  has  been  said,  and  great  stress  has  been  laid  upon  this 
phase  of  the  subject,  that  a very  large  percentage  of  sales  made  for 
future  delivery,  were  never  consummated  by  the  actual  delivery  of 
the  property  to  the  purchaser.  This  is  undoubtedly  true,  and  with- 
out explanation  may  appear  startling  and  give  color  to  the  charge 
that  such  sales  are  simply  gambling  transactions.  In  answer  to 
numerous  queries  relative  to  this  division  of  the  inquiry,  one  of  the 
New  York  witnesses  formulated  a reply  which  is  deemed  so  explana- 


8 [Senatic 

lory  and  satisfactory  tliat  it  is  given  in  detail  without  furtlier  com- 
ment. 

“It  is  true,’’  he  replied,  “ that  at  titnes  a large,  and  during  sea- 
sons of  great  activity,  a very  large  proportion  of  such  transactions 
are  not  consummated  by  an  actual  delivery  of  the  property  sold  and 
bought  by  the  contracting  parties.  In  all  such  cases,  however,  an 
equitable  mercantile  equivalent  is  substituted,  simply  as  a con- 
venience to  facilitate  settlements,  which,  under  the  old  system  of 
actual  deliveiy  under  all  circumstances,  were  found  to  be  cumber- 
some, and  attended  with  very  unnecessary  cost  and  risk.  It  is  not 
true,  therefore,  that  because  the  process  of  actual  delivery  in  every 
instance  does  not  take  place,  there  is  evidence  of  illegitimate  or 
tictitious  trading. 

“ New  York,  because  it  is  the  commercial  centre  of  the  United 
States,  is  a great  objective  point  tV»r  mercantile  transactions,  made 
on  behalf  of  parties  throughout  the  old  and  new  world.  AYith  such 
a constituency,  it  continually  happens  that  the  merchant  who  buys 
to-day  sells  to-morrow,  and  vice  versa,  and  in  the  aggregate  of  these 
purchases  and  sales,  it  also  often  happens  that  one  transaction  can 
be  matched  against  another  in  all  respects  except  as  to  price,  and  when 
this  matching  does  take  place,  differences  in  value  only  are  paid, 
without  going  through  the  form  of  a delivery,  and  then  a return 
delivery,  with  all  the  attendant  inconveniences  of  loss  of  time  and 
labor.  There 'would  be  absolutely  nothing  gained  by  a strict  adher- 
ence to  the  old  rule,  but,  on  the  contrary,  much  trouble  is  avoided, 
and  very  rapid  and  satisfactory  settlements  are  obtained. 

“ Perhaps  I may  make  this  more  evident  by  an  illustration  from 
the  operations  of  the  bank  clearing  house 'system,  of  this  city. 

By  means  of  the  clearing-house,  enormous  daily  monetary  trans- 
actions are  settled  by  the  actual  delivery  of  comparatively  small 
sums  of  money,  when  compared  with  the  grand  total. 

The  Mechanics’  Bank,  for  instance,  may  possibly  have  received 
yesterday  from  its  customers,  on  deposit,  cheques  -upon  the  Park 
Bank  for  a large  sum,  aggregating  say  $100,000,  and  the  Park  Bank 
from  its  customers,  cheques  on  the  Mechanics’  Bank  for  another 
large  amount,  aggregating,  say  $90,00(h  Now  these  banks,  under 
the  present  system  of  settlement  do  not  pay  to,  and  receive  from 
each  other  the  sum  total  of  the  cheques  respective!)^  received  on  de- 
j)osit.  . They  sent  their  representatives  this  morning  to  the  clearing 
house  and  there  the  gross  indebtedness  of  the  one,  contracted  yester- 


No.  45.] 


9 


da)r,  was  matched  against  the  gross  indebtedness  of  the  other  as  far 
as  it  would  go,  and  the  difference  only  was  paid  by  the  debtor  bank 
in  cash.  In  this  hypothetical  case  a joint  indebtedness  of  $190,000 
was  settled  by  the  interchange  of  only  $10,000  of  actual money,  and 
yet  every  item  in  the  major  amount  was  legitimate,  nor  did  the 
system  of  settlement  employed  suggest  that  a single  fictitious  ele- 
ment had  entered  into  the  transaction  from  its  inception  to  its  close. 
It  was  the  growing  necessities  of  the  banks  that  caused  them  to  in- 
vent the  clearing-house  system,  just  as  it  was  the  urgent  necessities 
of  commerce  to  improve  upon  the  old  method  of  actual  delivery  in 
every  instance,  and  under  all  circumstances,  that  suggested  the  ap- 
plication of  the  ^ clearing’  system,  wdien  practicable,  as  a more  rapid 
and  convenient  means  of  settling  contract  obligations.  In  like  man- 
ner the  railroad,  the  steamship,  the  telegraph  and  telephone  have 
been  made  the  servants  of  commerce  and  each  has  contributed  its 
quota  to  aid  in  her  marvellous  development.  All  such  means  are 
now  deemed  essential  adjuncts  and  cannot  be  dispensed  with.” 

The  immediate  effect  of  sales  of  merchandise  for  future  delivery 
upon  the  commerce  of  New  York,  is  to  increase  her  receipts  of  ex- 
portable products,  and  thereby  help  to  develop  every  interest  that 
is  essential  in  building  up  a great  and  growing  metropolis.  A single 
transaction  of  the  many  that  are  daily  operated  on  the  New  York 
Produce  Exchange,  and  which  took  place  when  the  committee  was 
holding  its  sessions  in  that  city,  is  given  by  way  of  illustration.  A 
New  York  firm,  A,”  corresponds  with  numerous  merchants  of 
moderate  means,  who  reside  in  towns  and  villages  along  the  line  of 
the  Northern  Pacific  rai^^-oad.  The  wheat  grown  in  that  region  is  val- 
uable to  millers  because  of  the  large  percentage  of  gluten  it  contains. 
The  quantity,  comparatively  speaking,  is  not  large,  and  as  navigation 
is  closed  during  the  winter  and  railroad  freights  from  that  remote 
district  are  expensive,  it  is  purchased  from  the  farmers  by  the  mer- 
chants and  allowed  to  accumulate  at  the  country  stations  and  Duluth 
elevators  until  navigation  is  resumed  in  the  spring.  But  these  ac- 
cumulations may  prove  disastrous  to  the  owners  if  the  protective 
element  of  a sale  for  future  delivery  is  not  resorted  to.  A ” was 
therefore  directed  in  January  last  to  sell,  at  a given  price,  150,00C 
bushels  of  No.  2 hard  wheat  for  delivery  in  New  York  after  the 
opening  of  lake  navigation.  “B”  is  a shipper  of  grain  to  Great 
Britain,  having  milling  customers  in  England  who  are  anxious  to  be 
supplied  with  such  wheat.  They  are  always  willing  to  pay  six  cents 
[Sen.  Doc.  No.  45.]  2 


10 


[Senate 


a busliel  for  it  (when  dcliverecl  on  board  slii])  at  some  American  sea- 
board port),  over  ami  above  the  tlien  market  price  of  No.  2 rod 
winter  wlieat,  (tlie  standard  grade  of  wlieat  that  is  principally  used 
for  speculative  and  shipping  purposes)  but  they  declined  to  forestall 
what  that  possible  price  might  be  in  May,  when  the  western  owners 
directed  their  protective  sale  to  be  made.  But  in  order  that  he  may 
secure  the  wheat,  (because  it  is  not  always  on  the  market)  “ B”  must 
purchase  it  at  the  time  it  is  offered  and  must  pay  a fixed  price  for 
it.  although  he  can  only  sell  it  to  his  customers  at  the  cash  price 
that  will  be  current  for  No.  2 red  winter  wheat  in  May,  plus  the  six 
cents  per  bushel  stated  above.  It  is  evident  that  if  “B’’  purchases 
this  western  wheat  he  also  will  need  ])rotection  against  the  possible 
fluctuations  in  market  values  till  the  following  May.  He  therefore 
went  to  the. Produce  Exchange  and  finding  that  he  could  sell  150,- 
000  bushels  of  red  winter  wheat  for  May  delivery  in  New  York,  at 
a price  within  five  cents  of  that  which  ‘‘  A ” demanded  for  his 
wheat,  he  sold  it,  then  purchased  A’s  ” wheat  and  stood  protected  ; 
because,  when  the  western  wheat  arrives  in  New  Yoi’k  in  May  and 
is  placed  on  board  ship,  “ B”  will  purchase  150,000  bushels  of  red 
wheat  and  make  delivery  on  his  contract,  and  invoice  tlie  western 
wheat  to  his  milling  friends  at  the  price  paid  for  the  red  wheat,  plus 
the  six  cents  per  bushel,  as  previously  authorized  by  his  English 
customers. 

Now,  what  are  the  direct  benefits  to  the  city  and  State  of  New 
York  resulting  from  this  single  transaction.  When  this  wheat 
reaches  Buffalo  the  transportation  interests  of  the  State  will 
be  benefited  to  the  extent  of  the  freight  charge  to  New  York,  say 
six  cents  a bushel,  or  $9,000.  The  weighing,  elevating  and  commis- 
sions paid  in  New  York  will  be  two  cents  per  bushel,  or  $3,000. 

The  exporting  merchant  has  earned  one  cent,  or  $1,500.  It  will 
require  four  ordinary  sized  vessels  to  transport  this  wheat  to  its 
foreign  destination,  and  it  is  estimated  that  the  average  disburse- 
ments of  vessels  entering  and  leaving  the  port  of  New  York,  amount 
to  $2,000  each,  or  $8,000.  These  vessels  will  probably  bring  inward 
cargoes  which  will  have  to  be  sold,  stored  or  transported,  at  an 
average  cost  of  $1,500  each,  or  $0,000, so  that  because  the  opportunity 
was  allorded  “ H”  to  sell  150,000  bushels  of  wheat  for  May  de- 
livery in  New  York,  a transaction  was  consummated  which  secured 
to  the  people  of  this  State  and  city  (and  a very  large  proportion  of 
it  earne(hhy  the  working  classes),  the  sum  of  $27,500. 


No.  45 


m 


11 


It  is  unnecessary  to  point  out  the  consequences,  if  Baltimore,  and 
not  New  York  had  been  tlie  only  seaboard  city  where  such  protec- 
tive sales  could  be  made. 

But  it  has  been  urged  that  this  system  contains  many  objectiona- 
ble features,  that  it  serves  as  a cloak  for  transactions  that  are  more 
akin  to  'gambling  than  legitimate  S[)eculative  operations,  that  it 
causes  “corners”  and  tends  to  demoralize  the  youth  of  the  present 
age.  To  some  extent  all  these  statements  arc  undoubtedly  true.  A 
“ corner”  cannot  be  produced  unless  there  have  been  previous  fu- 
ture sales,  but  when  discussing  corners  it  was  shown  that  it  was  the 
dishonest  trader  (except  in  cases  of  accident,  and  for  such  there  were 
remedies),  who  only  could  be  cornered,  and  even  he  is  protected 
from  undue  severity  in  the  punishment  iniiictedi 

The  temptation  to  over-trade  by  young  or  inexperienced  men,  is 
very  much  checked  by  a right  to  require  margins  to  insure  the  ful- 
fillment of  contract  obligations,  thereby  restricting  transactions  to 
the  ability  of  the  operator  te  furnish  money  for  marginal  purposes, 
and  in  a very  prominent  way  gives  a warning  of  the  risks  that  he 
assumes.  But  to  the  uninitiated  it  does  seem  to  be  a cloak  for 
gambling,  although  gambling  cannot  exist  with  reference  to  future 
sales  where  there  is  an  expressed  intent  to  deliver  and  receive  the 
things  sold.  There  are  however  systems  of  gambling  known  as 
“ puts  ” and  “ calls  ” and  transactions  operated  in  places  called 
“ bucket  shops,”  which,  having  the  outward  semblance  of  legitimate 
trading,  are  very  often  mistaken  for  such.  They  are  more  disreputa- 
ble than  the  ordinary  games  of  chance,  for  the  reason  that  they  are 
a confessed  fraud  in  law,  under  the  honest  name  of  sales  for  future 
delivery,  and  often  catch  the  foolish  and  unwary. 

A “put”  or  a “call”  is  a privilege  granted  the  purchaser  (for  a 
pecuniary  consideration)  to  deliver  to,  or  demand  from  the  person 
receiving  the  money  at  a given  price  a certain  article  of  merchandise 
at  some  future  period  named  in  the  contract. 

The  person  granted  the  right  to  deliver  need  not  deliver,  or  to 
demand  delivery,  need  not  demand  delivery  unless  he  so  wills,  dur- 
ing the  life  of  the  contract,  and  such  transactions  should  have  no 
standing  in  courts  of  law,  and  are  not  recognized  as  legitimate  trad- 
ings by  commercial  boards  of  trade. 

The  “ bucket-shop  ” is  simply  a betting  place  under  the  garb  ot  a 
trading  place,  of  such  a transparent  character  that  its  open  opera- 
tions should  be  suppressed  under  the  statute  that  closes  the  ordi- 


12 


[Sknatk 


iiary  ganil)]iii^  house.  Existing  laws  can  break  uj)  bucket  sliops  and 
j)iinisli  the  operator  in  “puts”  and  “calls”  if  they  were  rigorously 
enforced. 

Hut  if  it  is  true  that  the  operation  of  this  system  is  attended 
with  some  objectionable  features,  would  it  be  wise  to  abrogate  or 
legislate  out  of  existence  the  whole  credit  system  because  U)  the 
abuse  of  it  can  be  traced  in  large  measure,  the  failures  and  mis 
fortunes  which  so  often  overtake  merchants  and  commercial  insti- 
tutions'^ Shall  our  Code  of  legal  ethics  present  this  paradox,  that 
merchandise  may  be  sold  and  delivered  to  the  purchaser  upon  the 
promise  of  future  payment,  and  at  the  same  time  deny  the  riglit  to 
sell  merchandise  for  future  delivery  with  payment  to  be  made  upon 
delivery?  Should  it  not  be  the  aim  and  end  of  legislation  in  this 
State  to  attract  and  encourage  every  influence  and  element  that  will 
establish  and  perpetuate  the  commercial  interests  of  her  commercial 
metropolis? 

It  used  to  be  a time-honored  axiom,  a kind  of  antiquated  idea 
overruling  all  other  considerations,  that  the  preponderance  of  capital 
would  always  maintain  commercial  supremacy.  In  the  present  day 
this  is  known  to  be  a dangerous  fallacy.  VYealtli  is  too  diffused 
throughout  this  country  and  daily  becoming  more  so,  to  permit  of 
commerce  being  controlled  to  any  one  locality  by  capital.  On  the 
contrary,  that  place  in  the  United  States,  and  especially  that  city  on 
the  Atlantic  seaboard,  that  can  localize  commerce  through  the  advan- 
tages of  position,  transit  facilities,  both  foreign  and  domestic,  and  a 
great  trading  market,  will  attract  capital  from  all  parts  of  the  world, 
and  then  retain  it. 

This  State  has  conferred  upon' her  Exchanges*  and  Boards  of 
Trade  many  valuable  chartered  privileges,  which  have  resulted  in 
building  up  associations  of  intelligent,  upright  and  progressive  busi- 
ness men.  These  men  have  in  turn  become  the  guardians  of  her 
commerce,  and  holding,  as  they  continually  do,  their  fingers  upon 
the  commercial  pulse,  are  best  able  to  detect  injurious  influences  and 
to  suggest  remedies.  Upon  them  should  be  this  great  responsibility, 
until  it  is  demonstrated  that  they  are  unworthy  of  the  trust,  namely, 
that  all  legislation  which  is  intended  to  have  a direct  bearing  upon 
commercial  conditions  should,  in  large  measure,  first  emanate  from 
commercial  sources. 

For  these  reasons  your  committee  respectfully  submit: 

Firni.  We  condemn  the  reckless  spirit  of  speculation  and  craze  to 
suddenly  acquire  wealth  whicli  exists  to  such  a great  extent  and 


No.  45.] 


18 


leads  men  to  buy  or  sell  for  future  receipt  or  delivery  large  amounts 
in  value  of  property,  without  the  least  intention  of  receiving  or 
delivering  the  property  so  purchased  or  bought,  paying  a small  margin 
thereon  and  relying  upon  future  changes  in  the  market  for  their 
success  and  profits.  This  is  not  legitimate  business,  but  gambling, 
and  if  there  is  any  way  in  which  it  can  be  suppressed  without  an 
undue  interference  with  legitimate  business,  it  ought  to  be  done. 

Second.  That  a tax  should  be  laid  upon  certain  sales  for  future 
delivery,  to  be  collected  at  the  time  of  settlement  in  all  cases  where 
an  actual  delivery  does  not  take  place. 

Third.  That  bona-fide  sales  of  merchandise  for  future  delivery  are 
lawful  and  beneficial  when  there  is  evidence  that  it  is  the  intent 
of  the  contracting  parties  to  deliver  and  receive  the  property  sold 
and  bought. 

Fourth.  That  “ puts  ” and  “ calls  ” and  “ bucket  shop  ” operations 
are  gambling  transactions,  and  should  be  treated  accordingly. 

JOHN  W.  BROWNING, 
EDMUND  L.  PITTS. 


SPECIAL  REPORT  OF  SENATOR  BOYD. 


In  order  that  the  opinions  of  the  different  members  of  this  com- 
mittee may  be  fully  expressed  upon  the  subject  for  which  this  com- 
mittee was  appointed  I join  with  my  associates  upon  the  committee 
in  the  first,  second,  fourth,  fifth  and  sixth  recommendations,  while 
I disagree  with  the  third  proposition  which  says  that  laws  are  already 
in  existence  to  protect  the  public  interest  where  these  protective 
influences  are  demanded.  I also  dissent  from  the  report  of  my 
colleagues  as  a whole  particularly  from  such  part  as  says,  “ there  is 
no  corresponding  elements  of  injury  in  the  Protective  Corners,” 
and  that  it  is  not  a disadvantage  to  the  consuming  public  to  have 
prices  artificially  increased,  and  also  that  it  is  the  invention  of  a 
great  necessity,  but  I approve  and  indorse  all  that  is  said  by  my 
associates  with  reference  to  bucket  shops,  and  while  I dissent  from 
many  of  the  main  features  in  the  report  of  my  associates  upon  the 
committee,  I still  adhere  to  the  sentiments  as  fully  expressed  in  the 
following : 

The  committee  appointed  by  the  Senate  ‘‘  to  investigate  the  whole 
system  of  making  corners  and  dealing  in  futures  with  reference  to  i 
its  effect  upon  commerce  and  its  influence  upon  the  public  welfare” 
have  not  concluded  its  investigation  and  as  chairman  I find  it  neces- 
sary to  submit  to  the  Senate  the  following 

SPECIAL  REPORT. 

During  the  earlier  sessions  of  the  committee,  its  inquiries  natur- 
ally called  for  the  opinions  of  witnesses  upon  ‘‘  corners  ” and  their 
consequence.  The  answer  generally  tended  to  prove  that  corners 
were  injurious,  each  witness  thought  his  own  business  one  in  which 
they  did  not  occur.  Opinions  being  admitted,  several  gentlemen 
availed  themselves  of  the  opportunity  to  present  their  views  in  ex- 
tended addresses  which  although  interesting  to  many,  did  not  present 
the  facts  necessary  to  intelligent  legislation.  Although  a consider- 


I Sknatk 


h; 

able  amount  of  evodenee  was  thus  obtaine<i  the  committee  became 
satisfied  that  in  order  to  roach  the  r jot  of  tiie  evil,  they  shoidd 
receive  proof  of  the  extent  of  speculative  future  transactions  in  grain, 
provisions,  cotton,  securities,  etc.,  and  also  investigate  particular 
“corners”  and  ascertain  the  circumstances  connected  with  tliem. 
Such  an  inquiry  necessarily  involved  some  of  the  personal  transac- 
tions of  the  witnesses  and  in  relation  to  these  they  were  reluctant  to 
testify.  Believing  that  ])roofs  of  such  facts  was  an  indispensable 
part  of  this  investigation,  and  that  it  could  not  be  secured  from  un- 
willing witnesses  without  the  assistance  of  competent  counsel,  they 
ad'lressel  the  letter  to  L.  E.  Ohitteiiden,  which  is  printed  with  Mr. 
Chittenden’s  reply  on  page  803  of  the  record.  Mr.  Cldttenden  tlien 
attended  the  sessions  of  the  committee  and  acted  as  its  counsel.  An 
examination  of  the  record  will  enable  the  Senate  to  judge  of  their 
necessity  for  employing  counsel  and  what,  if  any,  action  sliould  be 
taken  in  relation  thereto. 

In  the  Case  of  Leonard  Hazeltine. 

It  has  been  proved  before  the  committee,  among  other  cases  of 
similar  character,  that  during  the  last  days  of  November,  1882,  the 
price  of  corn  in  the  Produce  Exchange  was  “ For  export  out  of  the 
country,”  eiglity4wo  cents^  and  “ For  immediate  delivery,” 
lar  and  ten  cents  per  bushel.  This  extraordinary  difference,  de- 
pending on  the  use  of  the  buyer  had  for  it,  was  attributed  to  a “cor- 
ner ” in  corn  for  November  delivery. 

In  order  to  ascertain  why  or  how  it  was  that  this  “corner”  com- 
pelled the  consumer  to  pay  twenty-eight  cents  more  per  bushel  than 
the  exporter  or  speculator,  the  committee  called  as  a witness  Mr. 
Leonard  Hazeltine,  of  the  firm  of  Husted  & Hazeltine,  heavy 
dealers  in  the  Exchange,  who  were  said  to  have  been  connected 
with  this  “corner.”  Mr.  Hazeltine  was  sworn,  and  in  answer  to  a 
question  produced  an  award  in  favor  his  firm  against  the  firm  of 
Lane  & Son,  made  by  the  arbitration  committee  of  the  Exchange, 
giving  to  the  witness’  firm  over  $4,000  as  damages,  because  Lane  & 
Son  had  sold  and  delivered  a quantity  of  corn  in  November,  1882, 
which  they  had  bought  of  Husted  & Llazeltine.  Lane  & Son  had 
thus  apparently  been  mulcted  in  damages /br  selling  their  own  prop- 
erty. 

ddie  record  shows  the  (piestions  put  by  the  committee’s  counsel 
to  Mr.  Hazletine  for  the  ])urpo8e  of  bringing  out  the  facts  and  cir- 
cumstances connected  with  this  corner.  They  are  intended  to  ascer- 
tain tiie  number  and  names  of  the  peasons  engaged,  the  date  and 


17 


Ko.  45.] 

time  of  their  agreement,  the  quantity  and  prices  of  the  corn  bought 
and  sold  by  each  associate,  the  means,  acts  and  practices  by  which 
this  corner  was  made,  its  profits  and  their  division,  and  generally 
the  whole  system  of  making  this  corner. 

Mr.  Hazeltine  declined  to  answer  any  of  these  questions.  He  was 
willing  to  give  his  opinion  upon  the  general  subject  of  “ corners,” 
but  he  would  not  disclose  any  of  the  transactions  of  his  firm.  In  his 
opinion  the  November  transaction  in  corn  was  not  a ‘‘  corner.”  He 
would  not  disclose  the  names  of  his  associates,  or  any  of  their  acts. 
The  record  shows  the  questions  of  the  counsel,  and  the  reasons  of 
this  witness  for  refusing  to  answer  them  (pages  883  to  889.) 

It  will  be  obvious  to  the  Senate  that  Mr.  Hazeltine  and  other  wit- 
nesses must  be  required  to  answer  these  and  similar  questions  dis- 
closing the  facts  of  their  personal  transactions,  or  the  inquiry  must 
be  limited  to  the  general  opinions  of  the  witnesses.  Such  opinions 
are  controlled  by  the  witness’  business.  Mr.  Vanderbilt  accurately 
stated  the  case  in  his  remark  to  the  committee  “ that  sooner  or  later 
every  one  came  to  believe  his  own  business  was  legitimate.” 
It  is  the  opinion  of  the  committee  that  Mr.  Hazeltine  should 
be  required  to  answer  these  questions,  and  that  the  simple  rules  of 
law  regulating  the  examination  of  witnesses  in  the  courts  should 
be  applied  in  this  proceeding.  The  committee  and  not  the  witness 
should  decide  whether  the  question  is  proper,  and,  if  proper,  the 
witness  should  answer  it,  unless  the  answer  will  tend  to  convict  him 
of  crime. 


The  Cases  of  Henry  M.  Flagler,  Benjamin  Brewster  and 
John  D.  Kookefelleb. 

These  gentlemen  are  connected  with  the  Standard  Oil  Company. 

Mr.  Flagler,  the  secretary,  and  Mr.  Brewster,  an  associate,  were 
permitted  to  make  their  voluntary  statements  under  oath,  in  pursu- 
ance of  the  request  contained  in  a letter  on  page  640  of  the  record. 

Mr.  Flagler’s  testimony  shows  the  extent  to  which  he  opened  the 
inquiry  into  the  history,  business,  property  and  policy  of  his  com- 
pany. He  disclosed  the  facts  that  there  were  many  corporations 
acting  under  the  general  name  of  the  Standard  Oil  Company  ; that 
its  property  was  valued  at  $60,000,000  to  $70,000,000  — that  its 
business  was  largely  transacted  in  New  York  City.  That  its  policy 
had  been  aggressive  ; that  it  controlled  from  eighty  to  ninety  per 
cent  of  the  oil  product  through  the  business  of  transportation,  re- 
[Sen.  Doc.  45.]  3 


18  [Senatb 

fining,  sale  and  export  to  all  parts  of  the  world ; and  his  statement 
tended  to  show  that  his  company  virtually  controlled  the  trade  in 
this  important  staple  of  American  production.  Mr.  Flagler,  among 
other  things,  said,  “1  have  asked  Mr.  Brewster  to  accompany  me 
here  because  he  is  more  acquainted  with  the  practical  working  and 
detail  of  the  business  of  recent  years  than  I am  ; perhaps  at  the 
same  time  1 may  be  able  to  answer  any  questions  that  the  committee 
sees  fit  to  ashi^^gQ  623)  and  in  another  place  (page  633).  I thought 
probably  the  committee  would  be  glad  to  learn  something  of  the 
Standard  Oil  Company,  of  its  methods,  its  purposes  and  the  objects 
it  has  attained.” 

Mr.  Brewster’s  evidence  was  similar  in  character,  and  he  added 
to  it  an  argument  intended  to  be  impressive  in  favor  of  the  acts 
and  policy  of  this  company  in  dealing  with  what  he  properly  called 
the  poor  man’s  light.”  Mr.  Flagler  also  controverted  the  state- 
ments of  a witness  before  the  committee  relating  to  the  dividends 
and  profits  of  the  Standard  company  and  with  Mr.  Brewster  denied 
the  truth  of  charges  which  had  been  made  public  against  that  com- 
pany ; he  said  that  hitherto  the  company  had  not  noticed  these 
charges,  regarding  them  as  the  penalty  of  business  success  but  in- 
timated that  these  charges  would  now  be  refuted. 

These  charges  are  so  grave  and  so  intimately  connected  with  that 
branch  of  the  committee’s  investigation  relating  to  petroleum,  that 
the  committee  could  not  ignore  them.  Some  of  them  have  appeared 
in  responsible  publications  over  the  signatures  of  responsible  authors- 
They  expose  this  company  to  public  censure  as  an  atrocious  mon- 
opoly which,  by  acts  closely  approaching  the  line  of  criminal  con- 
spiracies, has  secured  the  control  of  the  oil  trade ; crushed  compet- 
ing refineries,  escaped  the  payment  of  public  dues  and  taxes  and 
made  enormous  fortunes  for  the  managers  by  inordinate  profits  on 
oil.  They  are  accurately  stated  in  the  following  extracts  from  the 
report  of  a special  committee  made  to  the  Assembly  of  New  York, 
on  January  22,  1880,  as  follows  : 

“ This  corporation  ” is  an  unique  illustration  of  the  colossal  pro- 
portions ‘‘  to  which  monopoly  can  grow  under  the  laws  of  this 
country. 

It  owns  and  controls  the  terminal  facilities  for  handling  oil,  of 
tlie  four  trunk  lines.  It  owns  and  controls  the  pipe  lines  of  the 
]>roducing  regions  that  connect  with  the  railroads.  It  controls  both 
ends  of  these  roads.  It  ships  ninety-five  per  cent  oi  Ml  oil.  It 
. has  bought  and  frozen  out  refiners  all  over  the  country.  By  means 
of  the  superior  facilities  for  transportation  which  it  possessed  it 


No.  45.] 


19 


could  over- bid  in  the  producing  region  and  undersel  in  tlie  markets 
of  tlie  world.  Thus  it  had  gone  on  bnying  out  and  freezing  out  all 
opposition,  until  it  has  absorbed  and  monopolized  this  great  ex|)ort 
which  ranks  second  in  the  list  of  exports  of  our  country.  — Its  oil 
is  carried  for  fifteen  cents  a barrel.  Out  of  these  rates  the  mile- 
age allowed  to  the  Standard  leaves  about  ten  cents  per  barrel  weigh- 
ing three  hundred  and  thirty  pounds  for  a haul  of  over  four  hundred 
miles,  besides  hauling  their  empty  cars  back;  contrast  with  this  the 
charge  of  forty-five  cents  for  hauling  a can  of  milk,  holding  ten 
gallons  and  weighing  ninety  pounds,  an  average  distance  of  sixty- 
five  miles.  The  Standard  Oil  Company  is  an  Ohio  corporation  with 
a nominal  capital  of  three  and  one-half  millions.  It  was  chartered 
in  1869,  with  a capital  of  $100,000.  The  controlling  spirits  of  this 
and  the  South  Improvement  Co.,  are  the  same.”  After  the  repeal 
by  Pennsylvania  of  the  South  Improvement  Company’s  charter,  the 
attempt  to  monopolize  the  oil  trade  was  transferred  to  the  Standard 
company.  From  that  time  it  grew  rapidly  in  importance  until  it 
now  comprehends  the  Standard  Company,  Pittsburgh  ; the  Acme, 
the  Imperial,  the  Atlantic  Kefining,  tho  Camden,  Charles  Pratt  & 
Co.,  the  Devoe  Manufacturing  Co.,  and  J.  H.  Bostwick  & Co. 
Your  committee  were  unable  to  ascertain  the  exact  relation  of  these 
different  organizations,  owing  to  the  refusal  of  several  members  of 
the  Standard  Oil  Company,  subpoenaed  as  witnesses,  to  obey  the 
subpoena,  and  the  refusal  of  those  who  did  attend  to  answer  our 
questions,  but  succeeded  in  establishing  the  fact  that  ninety  or 
ninety-five  per  cent  of  all  refineries  in  the  country  ‘‘  act  in  harmony 
with  the  Standard  Oil  Company,  and  that  they  ship  ninety-five  per 
cent  of  all  of  the  oil  of  the  country,  and  of  course  the  three  and  one- 
half  millions  of  capital  is  but  an  insignificant  portion  of  the  aggre- 
gate capital  of  their  mysterious  organization,  whose  business  and 
transactions  are  of  such  a character  that  its  members  declined  giving 
a history  or  description  of  it,  lest  their  testimony  be  used  to  convict 
them  of  a crime.” 

These  charges  also  stated  that  the  managers  of  the  Standard  had 
declined  to  give  evidence  before  a Congressional  committee  and 
before  a Legislative  committee  of  Pennsylvania,  because  they  were 
under  indictmennt  for  conspiracy  and  their  evidence  might  be  used 
against  them. 

Mr.  Flagler  also  promised  to  furnish  the  committee  with  certain 
information  from  the  books  of  the  company  which  he  failed  to  give. 


20 


[Senate 


The  committee  deemed  it  tlieirdiity  to  recall  Mr.  Flagler  and  Mr. 
Brewster  and  cross-examine  them  upon  the  matters  opened  by  their 
voluntary  statements.  They  appeared  in  obedience  to  subpoenas, 
were  severally  sworn,  and  the  counsel  for  the  committee  cross- 
examined  them.  The  questions  of  the  counsel  and  the  answers  and 
refusals  of  the  witnesses  are  shown  by  their  record  pages  635  to 
707. 

Failing  to  secure  proofs  of  the  facts  from  Flagler  and  Brew^ster, 
Jolin  D.  Rockefeller,  the  president  offthe  Standard  Oil  Company, 
was  summoned,  sworn  and  examined  with  the  result  disclosed  by  the 
record  pages  922  to  934. 

The  committee  in  this  connection  present  the  following  sugges- 
tions. New  York  city  is  the  port  from  which  petroleum  and  its 
products  are  principally  distributed  throughout  the  world.  Its 
annual  export  value  reaches  $40,000,000.  It  is  sent  to  every  State 
and  territory  in  the  Union.  It  is  important  to  know  whether  the 
trade  in  this  great  staple,  designed  by  Providence  for  the  use  and 
comfort  of  the  human  family,  is  in  the  hands  of  men  who  use  cor- 
porate powers  to  appropriate  it  for  personal  gain.  If  the  half  of 
these  charges  be  true,  if  the  facts  be  true  which  a proper  cross- 
examination  of  the  witnesses  will  probably  prove,  no  corner  ” can 
exist  in  any  article  of  sale  more  complete  or  more  injurious  to  tl^he 
public  welfare  than  that  which  has  long  existed  in  petroleum, 
manipulated  by  the  managers  of  the  Standard  Oil  Company  and  the 
corner  is  made  sharper  and  more  oppressive  every  year.  The  com- 
mittee believe  that  it  would  be  a reproach  to  the  Senate  to  permit 
those  witnesses  to  defy  its  authority  and  to  admit  that  it  cannot  ex- 
tort from  these  persons  the  truth,  in  an  investigation,  they 

themselves  have  Ghallenged. 

They  should  be  required  to  answer  these  questions  and  if  one 
effect  of  their  answers  should  be  to  subject  to  proper  taxation  prop- 
erty worth  seventy  million  of  dollars  which  has  hitherto  evaded  its 
share  of  the  public  bui’den,  the  State  will  not  be  the  loser. 

Further  Investigation. 

As  chairman  of  the  committee  I also  desire  to  inform  the  Senate 
of  the  extent  to  which  it  proposes,  with  the  Senate’s  permission,  to 
carry  its  investigation. 

The  present  volume  of  speculative  transactions  and  their  rate  of 
increase  in  cottons,  corn  and  wheat,  have  been  already  proved.  Like 


No.  45.] 


21 


proof  should  be  made  in  relation  to  stocks  and  securities,  coal, 
petroleum,  dressed  beef,  beef,  pork,  barley  and  other  grain.  Such 
special  facts  as  illustrate  the  increase  and  influence  of  speculation 
and  corners  in  these  articles  should  also  be  proved,  the  means  used 
and  the  methods  employed  in  making  corners  should  be  disclosed 
and  made  public.  All  this  may  be  done  in  a very  few  sessions  if  the 
witnesses  are  required  to  answer. 

The  suggestion  of  remedial  measures  in  advance  of  the  completion 
of  the  report  of  the  committee  would  be  premature.  But  in  reply 
to  the  claim,  so  strenuously  urged,  that  the  acknowledged  evil  ot 
corners  and  futures  like  those  of  common  gaming  and  prostitution 
are  beyond  legislative  remedy,  the  committee  reply  that  it  does  not 
concede  that  the  claim  is  well-foundpd.  If  the  Legislature  cannot 
wholly  suppress  these  novel  forms  of  speculation  it  can  at  least 
compel  them  to  Lear  a fair  proportion  of  the  public  burden. 
Enough  has  already  been  proven  to  show,  that  a small  tax  on 
speculative  ‘‘deals  ” in  the  Produce  Exchange  would  raise  money 
enough  to  defray  all  the^osts  and  expenses  of  our  canal  system,  and 
a like  tax  on  the  commissions  in  speculative  sales  of  stocks  and  other 
merchandise  would  defray  the  cost  of  public  education  and  of  the 
administration  of  criminal  law. 

I am  also  of  opinion  that  when  the  cause,  effect  and  dimensions 
of  such  a great  evil  are  once  made  public,  although  the  difflculties  in 
the  way  of  its  suppression  may  be  great,  they  are  not  insurmountable. 
The  committee  therefore  recommend  the  adoption  of  the  following 
resolutions : 

Resolved^  That  the  committee  appointed  to  investigate  the  system 
of  making  corners  and  dealing  in  futures  be  authorized  to  employ 
counsel  to  assist  them  in  conducting  the  said  investigation,  and  that 
such  authority  cover  the  services  of  counsel  already  rendered. 

Whereas,  The  committee  heretofore  appointed  by  the  Senate  to 
investigate  the  whole  system  of  making  corners  and  dealing  in 
futures,  with  reference  to  its  effect  upon  commerce  and  its  influence 
upon  the  public  welfare,  have  reported  that  Leonard  Hazeltine,  Henry 
M.  Flagler,  Benjamin  Brewster  and  John  D.  Bockefeller  have  each 
refused  to  answer  certain  proper  questions  in  the  matter  of'  such 
investigation,  put  to  them  by  counsel  under  the  direction  of  the 
committee  ; and 

W HEREAS,  It  is  essential  to  the  investigation  with  which  such 
committee  is  charged  and  for  the  protection  of  the  public  interest. 


22  Senate,  No.  45.] 

that  all  of  such  questions  should  have  been  and  should  now  be 
answered  ; therefore,  be  it 

Resolved^  That  in  refusing  to  make  answers  to  the  questions  so 
propounded  to  tliem,  Leonard  llazeltine,  Henry  M.  Flagler,  Henjamin 
Brewster  and  John  D.  Hockefeller  have  been  guilty  of  a contempt 
of  the  Senate. 

Resolved^  That  the  sergeant-at-arms  of  tlie  Senate  be  and  he  is 
hereby  directed  to  bring  before  the  bar  of  the  Senate  forthwith  the 
said  Leonard  Hazeltinc,  Henry  M.  Flagler,  Ijenjamin  Brewster  and 
John  L.  Rockefeller,  and  that  they  be  then  and  there  required  to 
show  cause  why  they  should  not  answer  said  questions  or  be  punished 
for  contempt,  or  otherwise  dealt  with  as  the  Senate  shall  deem 
proper. 

• JOHN  G.  BOYD, 

Chairmcm. 


TESTIMONY  AND  REPORT 


OF  THE 


SPECIAL  SENATE  COMMITTEE 


APPOINTED  TO  INVESTIGATE  THE  SYSTEM  OP 


With  Reference  to  its  Effects  Upon  Commerce, 
and  its  Influence  Upon  the 


Public  Welfare. 


ALBANY: 

WEED,  PARSONS  AND  COMPANY,  PRINTERS. 
1882,, 


RESOLUTIONS. 


In  Senate,  March  21,  1882. 

Mr.  Boyd  offered  the  following  : 

Whereas,  The  cornering  of  grain  and  other  articles  has  become 
a prominent  feature  of  modern  business  transactions,  and  it  is  alleged 
that  it  not  only  unduly  enhances  the  price  of  articles  of  prime 
necessity,  but  interferes  with  legitimate  business  and  fosters  a spirit 
of  gambling ; and 

Whereas,  On  the  other  hand,  it  is  alleged  by  those  who  indulge 
in  this  practice  that  their  methods  are  in  accordance  with  legitimate 
commercial  principles  and  not  opposed  to  public  policy ; and 

Whereas,  It  is  desirable  that  this  important  question  should  be 
considered  with  deliberation,  so  that  there  may  be  no  injustice  done 
to  the  general  public  or  to  the  special  interest  therein  concerned  ; 
therefore, 

Resolved^  That  a select  committee  of  three  Senators  be  appointed 
by  the  President  of  the  Senate,  whose  duty  it  shall  be  to  investigate 
the  whole  system  of  making  corners  and  dealing  in  futures  with  refer- 
ence to  its  effect  upon  commerce  and  its  influence  upon  the  public 
welfare ; said  committee  to  sit  during  the  present  session  at  such 
times  and  places  as  they  may  deem  necessary,  and  to  report  at  the  pres- 
ent session  of  the  Legislature  what,  if  any,  legislative  action  is 
necessary  for  the  protection  of  the  public  interest. 

Resolved^  That  the  committee  so  appointed  be  and  is  hereby  em- 
powered to  send  for  persons  and  papers  and  to  employ  a stenog- 
rapher at  a compensation  not  to  exceed  fifteen  cents  per  folio. 

The  President  put  the  question  whether  the  Senate  would  agree 
to  said  resolution,  and  it  was  decided  in  the  affirmative. 

The  President  announced  as  such  committee  Messrs.  Boyd,  Pitts 
and  Browning. 


4 


Ik  Senate,  April  13,  1882. 

Mr.  Boyd  offered  the  following : 

Resolved^  That  the  committee  appointed  to  investigate  the  sys- 
tem of  cornering  and  dealing  in  “ futures  ” be  authorized  to  incur 
all  necessary  expenses  and  to  employ  a clerk. 

Which  resolution  was  adopted.  i 


In  Senate,  June  2,  1882 

Mr.  Boyd  offered  the  following,  which  was  adopted  : 

Resolved^  That  the  committee  to  investigate  the  system  of  deal- 
ing in  “ futures  ” be  authorized  to  sit  during  the  recess,  and  to 
report  at  the  next  session  of  the  Legislature. 


TESTIMONY. 


The  committee  met  at  tne  Metropolitan  Hotel  in  the  city  of  New 
York. 

Present — Senators  Boyd  and  Browning,  of  the  committee,  John 
W.  Corning,  Sargeant-at-Arms  of  the  Senate,  and  Daniel  A.  Cooney, 
clerk  of  the  committee. 

New  York,  Saturday,  April  8, 1882. 

lion.  Chauncey  M.  Depeyj^  sworn  : 

Examined  by  Senator  Boyd  : 

Q.  In  your  address  before  the  joint  Senate  ‘and  Assembly  com 
mittees  on  railroads,  on  the  subject  of  railroad  commissions,  you 
made  some  reference  to  the  evils  resulting  to  the  community  from 
illegal  speculations  which  are  carried  on  in  grain  and  so  forth  ? 

A.  Yes,  sir. 

Q.  Would  you  kindly  state  to  this  committee  what  your  views 
are  upon  that  subject  ? 

A.  Well,  I used  the  illustration  as  an  argument 'on  that  occasion 
for  the  purpose  of  showing  that  it  was  not  the  railroads,  but  the 
speculators  in  grain  and  provisions  which  put  up  the  prices  of  the 
necessaries  of  life — that  while  the  railroad  charges  were  constantly 
decreasing,  that  these  products  were  increasing  unnaturally  to  the 
consumer  and  seller. 

My  information  was  derived  from  the  public  press  and  from 
common  report  not  denied  — that  is,  the  market  reports  and  therefore 
I felt  at  liberty  to  use  the  argument  publicly  in  discussion,  believing 
it  to  be  an  undisputed  fact. 

I do  not  know  as  to  the  illegality  of  these  transactions  as  indi- 
cated in  the  question,  but  the  public  press  said  two  years  ago  that 
a few  pork-packers  were  purchasing  all  the  pork  there  was  in  the 
United  States,  and  that  then  it  advanced  to  somewhere  near  fifty 
per  cent,  and  that  that  was  the  price  at  which  the  consumers  had  to 

\ 


6 ' 

pay  for  it,  and  that  these  people  made  several  millions  of  dollars 
by  that  single  transaction. 

It  is  well  known  that  there  was  a short  crop  of  grain  in  this 
country  last  summer  and  a good  crop  in  Europe  ; we  had  made  a 
market  in  Europe  by  a large  crop  the  previous  year,  and  it  would 
seem  good  policy  to  have  retained  it  by  using  our  surplus,  because 
we  had  more  than  we  needed  to  supply  tlie  market  which  we  created, 
but  all  the  grain  was  purchased  and  held,  and  as  I think,  at  this 
time,  at  prices  higher  than  it  sold  for  in  Liverpool,  so  that  English 
capitalists  have  been  stimulated  to  extraordinary  efforts  to  find  new 
fields  and  they  have  found  these  in  Russia,  Egypt,  Cyprus  and  other 
places ; at  the  same  time  the  products  which  came  from  the  sales  of 
wheat  had  largely  advanced  to  the  consumer  in  this  country. 

The  papers  announced  the  night  before  last  that  all  the  wheat  in 
Chicago  was  withheld  by  a combination  of  speculators,  and  the 
morning  papers  announced  that  the  steamships  from  Boston  had 
offered  to  take  it  without  charge  for  transportation  as  ballast,  and 
that  the  offer  had  been  declined.  That  is  all  I know,  and  I gather 
it  from  sources  which  are  accessible  to  everybody.  I used  it  in  this 
argument  for  the  purpose,  of  course,  of  strenghtening  my  own  case 
and  of  defending  the  railroad  companies  from  the  charge  that  had 
been  made,  that  it  was  the  railroad  companies,  by  their  charges,  had 
increased  the  prices  of  the  necessaries  of  life. 

Q.  Will  you  please  state  the  effect  of  these  speculations  in  grain 
and  other  products  upon  the  transportation  interests  of  the  country? 

A.  Of  course,  none  of  it  comes  forward,  and,  therefore,  neither  the 
railroads  nor  the  steamships  have  any  thing  to  carry  in  that  line. 

Q.  Is  that  the  result  of  its  being  heaped  up  and  held  back  from 
the  market  by  the  speculators  ? 

A.  That  is  how  I understand  it. 

Q.  What  effect  have  these  speculations  upon  the  price  of  bread- 
stuffs  generally  ? 

A.  Very  great. 

Q.  Have  you  any  knowledge  to  what  extent  they  are  advanced  in 
price  ? 

A.  Just  the  exact  extent  that  the  article,  whatever  it  may  be, 
grain,  ])ork,  or  beef,  is  advanced  beyond  its  normal  or  natural  price 
in  an  open  and  uninfluenced  market. 

(2.  Do  you  know  the  limits  to  which  it  may  go — for  instance 
how  much  it  may  change  the  value  or  affect  the  price? 

A.  1 believe  that  ])ork  has  advanced  from  $8  to  $10;  I believe 


7 


wheat  was  advanced  last  summer,  about  sixty  cents  a bushel, 
thirty  cents  of  that  was  speculative  ; that  is  my  impression  ; I am  not 
a grain  dealer,  I am  simply  a general  observer,  — a student  of  all  these 
questions. 

Q.  Your  extensive  business  connections  necessarily  give  you  an 
opportunity  of  knowing  about  these  things,  better  than  a man  who 
does  not  have  such  connections  ? 

A.  I have  studied  the  question  profoundly  to  see  the  effect  it  has 
had  upon  business. 

Q.  How  does  it  affect  your  roads  ? 

A.  All  the  transportation  interest  in  Chicago  and  St.  Louis,  the 
food  products,  are  held  by  a strong  combination,  and  the  railroads 
cannot  get  them  to  come  foward. 

Q.  Do  you  know  how  much  the  price  of  wheat  was  advanced  in 
Chicago,  by  reason  of  these  speculations  within  the  past  year  ? 

A.  I have  just  said  I think  the  speculative  part  was  about  thirty  cents 
a bushel. 

Q.  In  E’ew  York  ? 

A.  Of  course.  New  York  prices  are  governed  by  Chicago  prices; 
the  New  York  price  is  the  same,  plus  the  transportation. 

Q.  Do  you  think  this  advance  was  caused  by  the  legitimate  action 
of  the  laws  of  supply  and  demand  ? 

A.  Probably  all  advanced,  is  probably  about  half  of  it ; there  was 
a short  crop. 

Q.  Do  you  think  that  power  exists  in  the  Legislature  to  make 
laws  to  protect  the  public  interests  against  such  evils  ? 

A.  It  is  very  doubtful. 

Q.  Could  you  not  pass  a law  compelling  a delivery  on  every  sale? 

A.  No,  the  trade  is  too  vast ; I doubt  in  all  these  cases  whether  you 
could  make  laws  that  would  not  interfere  with  the  legitimate  traffic ; 
because  all  these  things  are  done  as  legitimate  transactions  ; they 
don’t  differ  from  them  at  all ; only  tiie  methods  of  legitimate  trans- 
actions are  used  to  accomplish  these  results. 

Q.  But  in  your  opinion  evils  do  exist  in  the  matter  of  these  spec- 
ulations? 

A.  Undoubtedly,  it  w^as  not  only  an  evil,  but  last  summer  it  was 
one  in  a national  sense. 

Q,  What  is  your  opinion  as  to  the  best  remedy  for  that  evil  ? 

A.  I have  not  thought  enough  of  it  to  be  able  to  make  a sugges- 
tion. That  would  require  the  best  thoughts  that  a statesman  could 
give  it. 


Q.  Do  you  believe  it  to  be  the  duty  of  tlie  Legislature  to  en- 
deavor to  protect  the  public  interest  against  the  growth  of  such  an 
evil  ? 

A.  I belive  the  Legislature  as  the  people  in  its  aggregate  capacity 
has  the  power  to  protect  itself. 

Q.  Is  there  any  other  information  that  you  would  like  to  offer 
the  committee  in  regard  to  this  matter  ? 

A.  No ; I am  here  under  a subpoena,  and  I have  stated  all  I know. 
The  reason  I used  these  illustrations  in  my  arguments  was  that  I' 
believed  them  to  be  true.  They  are  the  subjects  of  common  in- 
formation. 

Q.  Do  you  believe  that  these  speculations  tend  to  advance  the 
interests  of  the  producers  in  any  way  ? 

A.  No ; the  producer  gets  no  more ; it  is  after  the  property 
leaves  the  hands  of  the  producer  that  it  is  bunched  into  a few  hands 
and  then  the  price  is  advanced. 

Q.  The  consumer  is  compelled  to  pay  the  difference  ? 

A.  Yes;  compelled  to  pay  the  difference. 

Q.  The  proceeds  go  into  the  hands  of  a few  speculators  engaged 
ill  that  business? 

A.  Yes,  sir ; it  was  stated,  about  two  months  ago,  that  four  or 
five  agents  went  to  Cincinnati  for  the  purpose  of  having  a contest 
of  speculative  skill  with  gentlemen  engaged  in  the  same  business  in 
Chicago  and  that  they  netted  three  millions  of  dollars  on  their  ad- 
venture in  the  course  of  a couple  of  months ; of  course,  that  was 
done  by  advancing. 

Examined  by  Senator  Browning  : 

Q.  It  has  been  charged  that  the  railroads  pool  their  rates  ? 

A.  The  public  must  have  some  scapegoat. 

Q.  That  made  you  look  into  the  matter,  and  you  found  that 
while  freight  rates  were  decreasing,  prices  were  advancing  ? 

A.  Yes. 

Q.  That  led  you  to  give  this  subject  some  consideration  ? 

A.  Yes. 

Q.  And  you  found  an  unnatural  value  % 

A.  Yes. 

Q.  Be  kind  enough  to  tell  us  what  is  a natural  and  an  unnatural 
value,  so  that  we  can  understand  it.  What  ought  to  be  the  natural 
value  of  ]>roduce  from  the  west? 

A.  That  is  a broad  question. 


9 


Q.  What  ought  to  go  into  the  estimate  to  make  up  the  expense 
— how  does  that  compare  with  the  market  price  ? 

A.  We  grow  in  this  country  a large  amount  of  products  beyond 
the  needs  of  our  own  consumption,  and  we  have  been  exporting  them 
to  Europe  for  the  last  few  years  in  such  quantities  thatit  has  turned 
the  balance  of  debt  in  our  favor,  to  the  extent  of  something  between 
two  or  three  hundred  millions  a year.  That  has  been  the  main  cause 
of  our  extraordinary  prosperity  for  the  last  few  years.  We  have 
competitors  for  our  products  in  the  markets  of  Europe,  through  the 
products  of  Russia,  and  the  continent  of  Europe ; and  to  some  ex- 
tent, as  far  as  Australia,  Egypt,  and  some  of  the  islands.  The  price 
at  which  we  can  undersell  these  competitors  fixes  the  price  that  the 
article  is  worth  in  Chicago,  because  the  price  in  Chicago  plus  the 
price  the  transportation  from  Chicago  to  Liverpool  must  be  sufficiently 
low  to  undersell  European  competitors,  with  our  American  produce. 
That  has  been  the  case  for  the  past  two  years,  until  this  last  sum- 
mer. This  last  summer,  I think  little,  if  any,  grain  has  been  trans- 
ported, for  the  reason  that  it  has  been  held  at  a higher  rate  in 
Chicago  than  it  has  been  selling  for  in  Liverpool. 

Q.  There  was  a corner  in  the  west  ? 

A.  In  the  west. 

Q.  You  say  that  the  price  advanced  in  the  west? 

A.  In  Chicago 

Q.  In  grain  ? 

A.  Yes,  in  Chicago. 

Q.  Was  this  not  a result  of  a combination  in  the  Brokers’  Ex- 
change ? 

A.  Yo,  sir ; every  man  all  over  the  country  was  in  it  ; there 
was  where  it  was  done. 

Senator  Boyd  — To  what  extent  was  this  speculation  carried  on 
in  Yew  York  ? 

A.  I don’t  know.  I don’t  think  any  of  it,  so  far  as  the  actual 
transactions,  was  done  in  the  market  here. 

■ Q.  You  say  the  freights  were  reduced  while  the  prices  advanced  ? 

A.  Railroad  freights  have  been  steadily  reducing  for  the  last  ten 
years  on  coarse  goods  — the  freight  on  products  and  the  necessaries 
of  life.  During  the  last  summer  they  were  unnaturall}"  low,  owing 
to  the  railroad  war.  One  of  the  causes  of  that  war  w^as,  that  the 
railroads  could  not  get  any  thing,  so  they  kept  cutting  each  other  to 
get  something. 

2 


* 


10 


Q.  Do  the  railroads 'make  corners  in  prices? 

A.  No;  they  don’t  do  that. 

Examined  by  Sen  ator  Boyd  : 

Q.  Does  the  reduction  in  the  rates  apply  chiefly  to  the  through 
rates  ? 

A.  The  local  rates  are  affected  by  this  reduction  in  the  same 
proportion,  except  on  roads  where  they  charge  a general  reduction  ; 
through  rates  apply  to  local  rates. 

Q.  But  the  railroad  war  — that  had  reference  to  through  rates? 

A.  During  a few  months  of  last  summer.  There  is  a popular 
error  that  the  railroad  raises  the  local  rate  to  make  up  the  losses 
occasioned  by  the  war  on  their  roads ; but  that  is  never  done ; 
there  was  never  an  instance  that  I know  of  where  a local  rate  was 
raised  to  make  up  a loss  on  through  rates. 

Examined  by  Senator  Browning  : 

Q.  Is  it  fair  for  us  to  assume  that  the  price  paid  by  the  producer 
and  the  cost  of  transportation  to  tlie  sea-port  with  the  legal  com- 
mission added,  and  a percentage  would  be  the  natural  value,  and 
all  over  that  an  unnatural  value? 

A.  Yes,  sir. 

Q.  Can  you  give  us  the  cost  of  transportation  from  Chicago  to 
New  York  ? 

A.  Mr.  Jewett  can  do  that. 

Q.  What  is  the  natural  value  of  grain  ? 

A.  That  varies  ; but  taking  the  average,  I think  twenty  cents  on 
the  hundred. 

Q.  You  mean  the  hundred  weight  of  grain? 

A.  Yes ; it  would  cost  probably  quite  as  much  more  from  the 
wheat-field  to  Chicago. 

Q.  Twenty  cents  a hundred  ? 

A.  Yes;  that  is,  taking  all  the  charges. 

Q.  So  that  the  charges  from  the  wheat-field  to  the  port  of  New 
York  is  about  forty  cents? 

A.  Well,  on  reflection,  I can’t  verify  that. 

Examined  by  Senator  Boyd  : 

C2-  Does  the  New  York  consumer  suffer  as  much  from  this 
unnatural  value  as  the  consumer  in  the  country  ? 


11 


A.  Yes ; all  suffer  alike ; 1 think  in  quinine  and  opium ; in  fact 
there  is  hardly  any  thing  that  is  not  liable  to  be  cornered. 

Q.  Imported  by  New  York  merchants? 

A.  Yes;  I think  so.  Congress  took  the  tariff  off  quinine  in 
consequence  of  the  large  consumption  in  this  country,  there  being 
an  immense  malarial  district  ; yet  the  price  was  advanced  to 
that  which  it  was  before  the  tariff  had  been  reduced. 

Q.  Can  you  give  us  the  reason  why  grain  from  the  w^est  is  sold 
more  cheaply  in  the  Liverpool  market  than  it  is  in  New  York  and 
Cliicago  ? 

A.  1 don’t  know  that  that  is  the  case ; I say  the  price  at 
Liverpool  is  the  price  at  Chicago  plus  the  cost  of  the  transportation. 

Q.  Is  that  always  the  fact  ? 

A.  Always  the  fact,  unless  there  is  an  unnatural  cause  ; unless 
the  quantity  of  wheat  gathered  at  Liverpool  is  large,  as  from  a rush 
from  the  Black  sea,  and  it  has  to  be  sold  in  a few  days  at  a very 
much  less  price. 

Q.  It  has  been  argued  in  the  press  and  elsewhere,  that  American 
grain  has  been  sold  at  a cheaper  rate  in  Liverpool  than  in  New 
Y ork  ? 

A.  That  is  impossible  ; the  price  is  governed  by  natural  laws,, 
except  in  the  eases  I have  instanced. 

Hugh  J.  Jewett^  sworn  : 

Examined  by  Senator  Boyd  : 

Q.  Will  yc»u  be  kind  enough  to  state  to  this  committee  3"our 
views  concerning  the  system  of  making  corners  and  dealing  in 
futures,  with  reference  to  its  effect  upon  consumers  and  its  bearing 
upon  the  public  welfare  ? 

A.  Practically,  I have  no  experience  or  knowledge  with  regard 
to  corners;  all  the  information  I have  is  that  which  is  derived  from 
the  public  press  and  from  my  intercourse  wdth  my  neighbors  and 
in  discussion.  If  I understand  it,  I regard  this  system  as  extremely 
vicious  and  detrimental,  not  only  to  the  public  interests,  but  to  the 
public  morals.  If  I understand  what  is  claimed  to  be  a corner  in 
grain,”  it  is  as  explained  by  Mr.  Depew,  where  there  is  a combina- 
tion of  capitalists  who  unite  for  the  purpose  of  securing  the  control 
of  a bulk  of  any  commodity  which  is  in  the  market,  or  is  to  be 
brought  into  the  market,  having  control  of  the  market,  the  market 
advances  and  the  price  becomes  unnatural  and  unreasonable.  These 
pools  are  generally  formed  with  more  or  less  secrecy.  The  ordi- 


12 


nary  lousiness  man  p^jrsiics  an  ordinary  business  course ; he  buys  in 
the  market  to  meet  his  contracts ; lie  sells  at  what  he  agrees  to  be 
the  controlling  market  price,  and  when  he  comes  to  buy  it  for  de- 
livery, it  has  advanced  so  that  he  cannot  deliver  it  at  the  contract 
price.  The  result  is  that  it  is  detrimental  to  the  ordinary  course  of 
business  and  detrimental  to  the  individuals  engaged  in  it.  It  ceases 
to  be  a commercial  transaction  and  becomes  a mere  operation  of 
speculation.  The  most  serious  thing  is  that  it  disturbs  the  normal 
and  proper  condition  of  the  market  and  advances  the  price,  so  long 
as  the  pool  exists,  to  the  consumer  wherever  the  consumer  may  be. 
Those  who  find  it  necessary  to  buy  to  meet  their  delivery  contracts 
have  to  pay  the  advanced  price,  and  consequently  when  it  reaches 
the  consumer,  it  reaches  him  at  a price  beyond  its  real  value,  v/itli- 
out  benefiting  either  the  producer  or  the  legitimate  dealer,  or  the 
transporter  ; the  only  person  benefited  is  the  speculator ; that  is  niy 
idea,  especially  as  to  grain. 

Q.  Ho  you  know  the  principal  points  where  the  making  of 
corners  and  dealing  in  futures  are  carried  on  f 

A.  Ill  grain,  principally  in  Chicago;  I don’t  know  of  any  other 
place ; that  is  a kind  of  a center  of  the  grain  transportation  of  the 
north-west,  and  they  gather  there  from  all  parts  of  the  country ; 
there  may  be  pools  elsewhere,  but  I have  not  heard  of  them. 

Q.  How  is  the  Hew  York  market  affected  by  these  speculations  ? 

A.  The  Hew  Y"ork  market  is  supplied  from  the  west.  If  the 
price  is  advanced  in  Chicago  and  the  necessities  of  Hew  York  re- 
quire it,  it  must  take  it  at  the  advanced  price ; and  it  not  only  ad- 
vances the  price  in  Chicago,  but  to  the  consumer  in  Hew  York,  of 
course,  if  Hew  Y^ork  consumes  one  hundred  barrels  of  flour  a day, 
or  one  hundred  thousand,  and  that  flour  in  Chicago  produces  in  the 
west  $8  instead  of  $5,  it  requires  that  much  more  capital  to  handle 
it.  The  dealers  must  have  a margin,  or  profit  in  proportion  to  the 
risk  he  runs  in  buying,  selling  and  handling  it ; hence  they  must 
meet  the  advanced  price  in' Chicago  with  the  same  advance  here 
with  a reasonable  profit  on  the  increased  capital  required.  It  has 
another  effect  — it  deranges  the  ordinary  course  of  business,  and  it 
reduces  the  stock  in  the  market;  it  cripples  the  dealer  here  in  his 
ability  to  comply  with  his  ordinary  contracts,  and  to  supply  the  wants 
of  his  ordinary  customers,  whether  at  home  or  abroad  ; it  has  a de- 
moralizing effect. 

Q.  'Df)  these  s])eculations  also  aifect  very  injuriously  the  interests 
of  transportation 


A.  Yery  seriously  ; at  the  present  moment  there  is  probably  a 
‘‘  corner  ” that  controls  nine-tenths  of  the  entire  grain,  not  only  in 
Chicago,  but  at  points  accessible  by  way  of  Chicago  ; they  are- 
holding  it  at  an  advance  ; that  is  what  they  call  “ cornering.’’  The 
railroads  must  maintain  their  organization  ; they  must  keep  their 
power,  their  men  and  every  thing  ready  to  meet  the  demand  made 
upon  them,  while  the  ordinary  round  of  business  is  totally  suspended  ; 
at  times  they  are  required  to  be  ready  with  a large  capacity  to  sup- 
ply the  demand  for  traffic,  and  at  others,  within  the  ordinary  traffic 
they  have  to  keep  up  the  capacity  at  a large  expense. 

Q.  You  are  president  of  the  Erie  Railroad  Company  ? 

A.  Yes. 

Q.  R’ow  it  is  called  ? 

A.  The  JSTew  York,  Lake  Erie  and  Western  railroad. 

Q.  How  do  such  speculations  as  you  have  referred  to  affect 
your  road  ? 

A.  Just  as  I have  now  stated  it  affected  the  roads  generally ; I 
don’t  think  our  road  is  affected  to  the  same  extent  as  some  others, 
for  the  reason  that  our  through  traffic  is  not  so  large  in  transporta- 
tion as  others. 

Q.  Do  you  know  what  the  natural  value  of  wheat  and  other  cere- 
als ought  to  be  at  the  present  time  ? 

A.  I don’t  ; it  is  a mere  matter  of  opinion.  - 

Q.  What  is  your  opinion  in  regard  to  it  ? 

A.  My  opinion  is  that  the  farmer  should  have  a reasonable  profit, 
a fair  profit  upon  the  product  of  his  soil ; that  the  middleman 
or  dealer  should  have  a fair  profit  upon  the  capital  or  labor  he  be» 
stows  in  converting  the  products  of  a farm  into  a material  proper 
for  consumption  ; the  transporter  should  have  a reasonable  profit 
for  the  labor  and  risk  he  runs  in  transporting  it,  and  the  consumer 
is  entitled  to  the  product  as  produced  subject  to  these  charges ; that 
would  be  a reasonable  and  natural  price. 

Q.  How  much  has  the  price  of  wheat  been  advanced  beyond  this 
reasonable  and  natural  price  which  you  have  described,  by  reason  of 
these  speculations? 

A.  At  timesr  it  has  been  advanced,  I think,  from  thirty  to  fifty  per 
cent  by  reason  of  these  speculations ; at  times  it  has  been  depressed 
temporarily  by  reason  of  these  speculations  ; as,  for  example,  if  a 
misfortune  should  befall  these  speculators  and  they  should  be  com- 
pelled to  unload  speedily  on  the  market,  that  would  depress  it ; that*^ 
has  been  the  case  once  or  twice  within  my  knowledge. 


14 


Q.  Would  such  a depression  benefit  the  consumer,  or  would  it 
only  tend  to  the  serious  injury  of  the  legitimate  dealer? 

A.  It  would  not,  as  a general  thing,  benefit  the  consumer  ; the 
produce  would  pass  from  the  shorts  ” to  the  “ longs,”  or  from  the 
‘Mongs  ” to  the  '‘shorts;”  they  would  hold  it  until  they  reorgan- 
ized. 

Q.  Would  it  injure  the  legitimate  dealer  ? 

A.  In  my  judgment,  any  thing  out  of  the  ordinary  course  of 
business  is  a serious  detriment  to  the  legitimate  dealer  ; in  other 
words,  in  my  judgment,  this  huge  gambling  in  property,  in  pro- 
duce of  different  kinds,  has  substantially  annihilated  the  legitimate 
dealer. 

Q.  You  have  termed  these  speculations  “huge  gambling”  ope- 
rations, or  words  to  that  effect  ; be  kind  enough  to  explain,  for  the 
benefit  of  the  committee,  how  it  becomes  gambling  ? 

A.  I regard  any  thing  as  gambling  which  is  the  mere  work  of 
chance. 

Q.  Do  you  think  that  any  portion  of  the  advance  which  you 
have  referred  to  as  being  caused  by  these  speculations  was  caused 
by  the ' legitimate  action  of  the  laws  of  supply  and  demand  ? 

A.  This  country  produces  largely  more  than  it  consumes ; I have 
stated  what  I think  should  be  the  proper  charge  to  the  consumer 
here  ; the  market  abroad  for  the  surplus  should  regulate  the  price. 

Q.  Would  the  law  of  supply  and  demand  in  that  case  — there 
being  no  artificial  impediment  — cause  an  advance  or  decline  in 
prices  ? 

A.  That  would  be  so  ; by  combination  the  law  of  supply  and  de- 
mand is  largely  defeated,  and  I don’t  know  of  a single  instance  in 
my  knowledge  of  this  artificial  advance  that  has  not  to  an  extent 
interfered  with  the  law  of  supply  and  demand. 

Q.  You  look  upon  the  operations  of  “cornering”  and  similar 
speculations  as  being  a very  great  public  evil  ? 

A.  I do. 

Q.  Do  you  believe  that  it  is  the  duty  of  the  Legislature  to  exer- 
cise its  prerogative  for  the  purpose  of  remedying  this  evil  ? 

A.  In  every  aspect  or  phase  of  the  case  it  is  just  as  much  its  duty 
to  remedy  it,  as  any  other  public  evil  affecting  the  physical  condi 
tion  and  the  moral  condition  of  the  people. 

Q.  Do  you  think  that  power  exists  in  our  State  and  National 
governments  to  make  laws  to  protect  the  public  interests  against 
such  evils  ? 


15 


A.  I have  no  doubt  of  the  power  of  the  State  of  New  York  to 
make  all  needful  laws  to  protect  the  people  of  New  York  against 
the  practice  of  anj  evil  in  New  York;  I don’t  see  how  the  Legis- 
lature of  New  York  can  prevent  these  combinations  in  Chicago; 
that  would  be  a matter  that  would  require  to  be  regulated  by  the 
Legislature  of  Illinois ; I don’t  know  that  there  is  any  citizen  of 
New  York  engaged  in  this  enterprise ; there  might  be;  that  is  a 
question  I never  thought  of. 

Q.  New  York  consumers  suffer  as  much  from  these  evils  as  con- 
sumers elsewhere  in  any  portion  of  the  country  ? 

A.  I should  think  so. 

Q.  Have  you  any  other  views  in  relation  to  this  matter  which  you 
think  would  tend  to  aid  this  committee  in  its  present  work  of  inves- 
tigation ? 

A.  I have  not ; I have  never  had  my  attention  directed  to  it  v/ith 
the  view  of  concentrating  my  mind  upon  a remedy ; it  is  merely  in 
my  general  intercourse  with  the  business  of  the  country  that  I have 
seen  its  consequences,  and  have  formed  my  opinion  in  regard  to  it. 

Mcaminedhy  Senator  Browning: 

Q.  You  are  president  of  the  ^^New  York  Lake  Erie  & Western 
railroad  ? 

A.  Yes. 

Q.  Incorporated  in  New  York  I 

A.  Yes. 

Q.  Where  is  your  western  terminus  ? 

A.  Dunkirk  and  Buffalo.  ' 

Q.  And  your  eastern  terminus  ? 

A.  In  Jersey  City  — that  is,  at  Piermont. 

Q.  Don’t  you  re-deliver  freight  in  New  York  city? 

A.  Yes. 

Q.  All  the  freight  shipped  from  the  west  is  shipped  to  New  York 
city ; that  is  the  rule  ? 

A.  Yes. 

Q.  Have  you  as  president  assumed,  or  have  you  been  requested 
to  employ  agents  in  the  west  to  purchase  grain  ? 

A.  No,  never. 

Q.  Do  you  believe  a ^^pool”  arrangement  outside  of  the  State  of 
New  York  to  be  carried  into  effect  in  New  York  State,  could  be 
reached  by  the  Legislature  of  that  State? 

A.  That  is  a question  of  law  upon  which  I w^ould  not  like  to 


16 


express  arf  opinion,  bnt  it  seems  to  me  that  there  ought  to  be  a 
remedy. 

Q.  Mr.  Depew  stated  that  tlie  cost  of  transporting  grain  from 
Cliicago  was  twenty  cents  a hundred  weiglit ; what  is  tlie  average 
cliarge  upon  your  road  ? 

A.  I understand  Mr.  Depew  to  say  tliat  liis  average  was  not  based 
generally  ; twenty  cents,  I don’t  think,  is  a living  price. 

Q.  That  is  not  a fair  price  ? 

A.  No,  sir. 

Q.  Is  it  true  that  on  your  railroad  when  prices  advance  you  de- 
crease tlie  rates? 

A.  That  is  the  case  on  every  road  in  the  country  for  tlie  past  fifteen 
years;  for  instance,  when  I came  to  New  York  the  rates  in  New 
York  were  then  from  thirty  to  seventy-five  2:)er  cent  more  than  the 
average  rate  at  present ; there  has  been  a constant  decline  in  trans- 
portation rates  for  years. 

Q.  In  other  words,  you  state  that  the  expenses  and  losses  of  the 
road  have  caused  no  increase  of  rates  ? 

A.  The  cost  of  transportation,  warehousing,  delivering  — every 
thing  within  my  knowledge,  has  probably  not  increased  any  thing. 

Q.  Do  you  know  of  any  ‘‘corners”  in  this  State  to  put  up  prices, 
of  any  commodities? 

A.  I don’t  know  of  any. 

Q.  Do  you  think  a combination  or  pooling  of  issues  a lawful  act  ? 
We  all  see  that  there  is  a combination  among  individuals  to  control 
the  prices  of  certain  commodities,  with  the  view  of  advancing  the 
prices,  which  you  think  are  detrimental  to  the  public  interests  and 
to  the  consumers  — do  you  think  that  a lawful  act,  or  do  you  think, 
if  a lawful  act,  it  can  be  declared  by  the  Legislature  to  be  unlawful 
as  a conspiracy  against  trade  and^commerce  ? 

A.  I have  said  that  I believe  the  pool  arrangement  and  combi- 
nation to  be  detrimental  to  the  moral  and  material  welfare  of  the 
public.  There  are  a thousand  things  detrimental  in  one  man’s 
judgment  which  would  not  appear  to  be  so  in  the  judgment  of 
another ; it  might  be  only  unlawful  if  the  Legislature  declared  it  to 
be  unlawful ; this  has  never  been  declared  to  be  unlawful;  but  I 
have  no  doubt  the  Legislature  can  declare  it  to  be  unlawful,  and  that 
they  can  im})ose  serious  penalties;  can  bring  it  within  legislative 
prohibition,  and  that  it  can  be  made  the  subject  of  penalties -- 1 
have  no  doubt  about  it. 

(L  Your  mind  is  clear  as  to  that? 


17 


A.  Yes,  sir. 

Q.  Could  such  combinations  be  declared  by  the  Legislature  to  be 
an  unlawful  conspiracy  ? can  you  give  us  your  judgment  on  that? 

A.  It  is  a conspiracy,  and  being  a conspiracy  I believe  it  could  be 
dealt  with  by  law;  I have  no  doubt  about  it. 

By  Senator  Boyd  : 

Q.  By  how  much  per  cent  in  your  opinion,  are  the  prices  of 
commodities;  the  necessaries  of  life  used  by  the  masses  of  the  people 
increased  — by  •reason  of  these  speculations?  . 

A.  To  answer  that  question  intelligently  I ought  to  have  more 
information  than  I have  got,  I have  no  doubt  these  speculations 
take  place,  but  I have  no  knowledge  of  them.  But  taking  such  as 
I have  knowledge  of,  that  I know  to  exist,  I should  say  from  thirty 
to  fifty  per  cent. 

Adjourned. 


New  York,  Saturday,  A2?ril  16,  1882. 

Present — Senator  Boyd,  Chairman,  Senator  Browning. 

Franldwi  Edson^  sworn  : 

Examined  by  Senator  Boyd: 

Q.  Where  do  you  reside  ? 

A.  Yew  York  city. 

Q.  What  is  your  business  ? 

A.  Orain  and  commission  merchant. 

Q.  How  long  have  you  been  engaged  in  the  gram  business  ? 

A.  1 have  been  in  the  grain  business,  buying  and  selling  grain, 
for  thirty  years. 

Q.  In  the  city  of  New  York  ? 

A.  And  in  Albany. 

Q.  Were  yon  formerly  president  of  the  Produce  Exchange? 

A.  Yes. 

Q.  Will  3mu  state  to  the  committee  what  you  know  about  the 
whole  system  of  making corners”  and  dealing  in ‘‘futures,”  in 
reference  to  its  effect  upon  the  commerce  of  this  country  and  upon 
the  public  welfare  ? 

3 


1« 


A.  Dealings  in  ‘^lutures”  in  grain  seems  to  have  become  a ne- 
cessity of  the  country  in  order  to  handle  the  grain  product  ; my  im- 
pression is  that  since  dealings  in  futures  ”in  grain  has  been  carried  on 
that  the  grain  in  the  country  is  handled  with  a great  deal  less  B])Oc- 
Illation  than  it  used  to  be  before  that  system  was  inaugurated  ; that 
is,  so  far  as  the  legitimate  business  of  the  country  is  concerned  ; tlie 
dealings  in  “futures”  legitimately  at  pi’esent  is  this  wise,  that 
whereas,  in  former  times  a man  in  Illinois,  Ohio  or  Minnesota  wiio 
had  a warehouse  in  which  he  gathered  together  dilferent  quantities 
of  grain,  sent  it  to  market,  and  waited  until  it  got  to  market  before 
he  could  sell  it ; in  that  way  that  man  and  all  such  men  were  specu- 
lating in  that  grain  ; from  the  time  he  bought  it  until  the  time  he 
liad  sold  it  in  the  market,  he  did  not  know  whether  he  was  mak- 
ing a profit  or  loss ; now^  that  same  man  fills  his  warehouse  with, 
grain,  and  when  the^  market  in  New  York  or  Chicago,  from  which 
lie  gets  quotations  every  day,  or  every  hour  in  the  day,  is  a satisfac- 
tory market  to  him,  he  will  sell  it,  deliverable  in  the  future  ; that  is, 
he  will  sell  in  April  to  deliver  in  May,  for  by  that  time  it  is  sure 
to  get  here,  and  he  does  not  speculate  at  all ; it  is  a.  very  necessary 
and  a very  pretty  business  and  without  any  speculation  on  liis  part, 
but  then,  of  course,  the  dealing  in  -the  future  is  a very  easy  way  of 
speculating,  and  to  some  extent  it  is  undoubtedly  demoralizing  to 
the  legitimate  trade  of  the  country,  but  at  the  same  time  it  has  its 
other  side  as  well ; in  the  case  of  “ cornering”  grain,  of  course,  it 
is  those  who  sell  what  they  have  not  got,  and  those  people  who  buy 
what  they  don’t  want  and  get  very  much  injured  ; but  there  are 
two  sides  to  it,  for  a “ coi’oer  ” in  grain  enhances  the  price  of  bread- 
stuffs  temporarily ; at  the  same  time  it  gives  the  producer  so  much 
more  for  the  produce  whicli  he  raises  on  his  farm  ; as  to  selling  in 

futures”  being  gambling,  I think  there  may  be  some  doubt  about 
that  ; I think  it  is  very  likely  to  cure  gambling,  for  a man  getting 
‘‘cornered”  in  grain  is  likely  to  get  careful  about  it;  a man 
who  undertakes  to  “corner  ” in  grain  usually  gets  “cornered,”  so 
far  as  my  information  goes;  1 have  never  been  “cornered”  nor 
have  I ever  “ cornered  ” any  one. 

Q.  Would  you  ])lease  define  the  word  “corner”  as  it  is  used  in 
ordinaiy  transacttions 

A.  To  “ corner”  grain  means  to  buy  all  th.e  grain  thei*e  is,  and  as 
miicli  more  as  they  will  s(dl  ; that  is,  a man  makes  a conti-act  for 
grain  “ toai-j*iv(3  ” at  some  future  time,  of  as  much  grain  as  he  cau 
get  j)e-o])l(i  to  agi*(M3  to  d(Tver  to  him  at  tliat  time. 


19 


Q.  Are  you  familiar  witli  the  term  puts  ” and  “ calls  ’ ’ ? 

A.  ISTo ; lam  not  familiar  with  them ; I know  what  they  are. 

Q.  State  what  they  mean  ? 

A.  If  I should  give  you  $100  for  the  privilege  of  “calling  ” on  you 
for  10,000  bushels  of  wheat  during  the  month  of  May,  if  you  please, 
that  would  be  a “ call.  ” If  I sliould  give  you  $100  for  the  privi- 
lege of  delivering  to  you  10,000  bushels  of  wheat,  during  May,  that 

would  be  a jput.  ” 

By  Senator  Browning  : 

Q.  It  would  be  a put  at  a certain  jirice  ? 

A.  It  would  be  a put  at  a certain  price. 

Continued  by  Senator  Boyd  : 

Q.  Do  you  know  what  the  advance  in  the  price  of  grain  and  other 
products,  caused  by  speculations  of  this  kind  has  been  within  the 
past  year  ? 

A.  Iso  ; I could  not  tell  ; I think  it  would  be  very  difficult  to 
tell.  hTow,  it  is  generally  supposed,  or  is  supposed  by  some  people, 
that  the  commerce  of  the  country  has  been  injured  by  reason  of  the 
advance  in  grain,  by  the  consequent  inability  of  it  to  export  it,  as 
compared  with  former  years  ; my  opinion  is,  that  that  is  a mis- 
take ; my  opinion  is,  that  if  we  had  exported  grain,  if  the  price 
had  been  kept  to  the  point  where  the  exporters  would  have  taken 
wheat  freely,  as  they  have  done  within  the  last  two  years,  that  we 
would  now  be  importing  grain  for  our  own  use,  and  that  would  be 
more  demoralizing  than  any  “ cornering”  j)rocesse3  you  could  im- 
agine. 

Q.  To  what  extent  is  this  system  of  “ cornering  ” carried  on  in 
the  city  of  Aew  York  ? 

A.  Yery  little  ; I don’t  recollect  but  one  attempt  at  “cornering” 
in  the  market  in  New  York  to  any  serious  extent,  and  that  was  two 
years  ago,  I think  ; we  have  had  very  little  of  that  sort  of  thing 
here. 

Q.  To  what  extent  is  this  system  of  dealing  in  “ futures  ” carried 
on  in  the  city  of  New  York  ? 

A.  That  is  carried  on  to  a consideralile  extent  now,  and  is  in- 
creasing, I think,  quite  a good  deal ; increasing  quite  largely ; I 
don’t  know  that  I could  give  an  idea  of  the  extent,  because  I have 
not  the  data  upon  which  to  make  a judgment  on  that. 

Q.  In  what  other  cities  is  this  system  of  dealing  in  “ corners  ” and 
^‘futures”  carried  on  in  the  United  States? 


20 


A.  Chicago  duu«  the  largest  business  of  that  sort ; and  it  is  done 
in  Milwaukee,  Toledo  and  Baltimore;  not  to  any  great  extent  in 
any  other  city. 

Q.  To  what  extent  are  any  of  the  cities,  to  which  you  have  re- 
ferred, besides  New  York,  interested  in  these  speculations? 

A.  I could  not  say  ; it  is  impossible  for  me  to  judge. 

Q.  What  effect  has  this  form  of  speculation  upon  our  railroads? 

A.  At  times  it  undoubtedly  has  temporarily  reduced  the  quantity 
which  would  otherwise  have  been  carried  at  the  time,  where  these 
speculations  or  ‘‘  corners”  were  going  on  ; but  in  the  long  run  I don’t 
believe  they  have  had  any  serious  effect  upon  them;  if  they  were 
temporarily  demoralized  in  consequence  of  corners”  they  ultimately 
got  all  the  wheat  and  grain  to  carry  which  would  have  gone  to  the 
market. 

Q.  How  have  they  affected  the  steamers  and  canal  boats? 

A.  In  the  same  way  ; temporarily  demoralized  their  business ; 
but  in  the  long  run  it  has  not  done  them  harm,  I think. 

Q.  How  have  they  affected  our  merchants  and  smaller  dealers  ? 

A.  It  has  affected  those  who  have  been  interested  in  corners  either 
on  one  side  or  the  other ; in  almost  every  case  disastrously  ; of 
course  those  who  have  not  been  interested  on  one  side  or  the  other 
have  been  temporarily  affected  by  it  injuriously. 

Q.  Can  you  recite  any  particular  instance  in  which  corners  have 
been  made  which  have  affected  all  the  markets  ? 

A.  You  mean  all  the  markets  for  grain  ? 

Q.  Yes;  all  produce  ? 

A.  No  ; I don’t  know  of  one. 

Q.  Mr.  Jewett,  president  of  the  Erie  Railroad  Company,  described 
this  system  of  speculating  as  a national  calamity ; what  is  your  opin- 
ion as  to  that  ? 

A.  I don’t  think  I could  say  that  it  is  a national  calamity  by  any 
means ; I don’ t see  why  it  should  be  called  a national  calamity,  for  the 
reason  that  I don’t  believe,  or  in  other  words,  I do  believe  that  most 
people  in  this  country  have  a desire  to  become  rich  quickly  when 
they  start  out  in  the  world,  and  if  they  undertake  to  do  that  in  grain, 
that  is  unfortunate  ; but  they  are  just  as  likely  to  do  that  in  stocks 
and  other  things  as  they  are  in  grain ; in  other  words,  I think  we 
are  born  speculators  and  we  are  quite  likely  to  indulge  in  specula- 
tive tendencies  in  grain  and  we  desire  to  follow  it  up. 

Are  you  not  of  opinion  that  such  a s^^stem  of  speculation 
enhances  the  cost  of  the  necessaries  of  life  to  the  consumer  ? 


21 


A.  I think  any  system  of  speculation  is  likely  to  enhance  the 
cost  of  the  necessaries  of  life  in  an  article  in  which  speculation  is 
carried  on. 

Q.  To  what  extent  does  it  enliance  the  cost  of  the  necessaries  of 
life  to  the  consumer,  such  as  grain  and  articles  of  food  ? 

A.  Well,  I think  to  a small  extent — a very  small  extent  in- 
deed— I think. 

Q.  What  is  your  knowledge  on  the  subject? 

A.  In  the  cases  of  corners  which  have  been  made  in  the  west 
the  prices  to  the  consumer  have  always  been  temporarily  advanced 
in  any  kind  of  grain  ; but  the  reaction  usually  follows  which  causes 
a corresponding  depression  in  values,  so  that  on  an  average  I don’t 
believe  the  consumer  pays  a much  higher  cost  for  the  necessaries  of 
life  which  would  result  from  speculation  in  grain  ; speculation  in 
grain  is  always  based  on  some  reason  or  other,  that  is,  except  in  cor- 
ners ; they  may  be  based  simply  upon  the  power  of  a man  to  buy 
what  there  is  in  the  market  and  hold  it  without  regard  to  the  sup- 
ply or  demand  ; but  speculation  is  based,  to  some  extent,  upon  the 
laws  of  supply  and  demand. 

Q.  Do  you  know  the  price  paid  per  bushel  to  the  producer  in 
the  west,  within  the  last  3"ear,  for  wheat  ? 

A.  I could  not  tell  that  at  any  particular  time  during  last  year. 

Senator  Browning — An\*  particular  time  jmu  think  of  ? 

A.  I would  not  undertake  to  remember  that  ; I could  tell  at  my 
office.  ^ 

Continued  by  Senator  Boyd  : 

Q.  Can  you  state  the  prices  paid  after  the  grain  was  harvested 
and  threshed  out  ? 

A.  Yes;  we  have  ourselves  paid  fora  load  of  wheat — of  white 
wffieat,  $1.25  to  $1.40  per  bushel. 

Q.  AV hat  does  such  wheat  sell  for  in  New  YYrk  city  a bushel  ? 

A.  Such  wheat  has  been  sold  as  high  as  — Mr.  Bingham  of  the 
Produce  Exchange  here  will  remember  that  better  than  1 can  — 
$1.52  to  $1.54  in  New  York,  not  at  those  times;  I have  given 
3’ou  the  prices  I have  paid  from  time  to  time,  and  I have  given  you 
the  highest  prices  for  which  this  produce  would  have  sold  for  in 
New  York.  I can  tell  you  this  — to  give  you  an  idea  of  what  you 
are  tr\nng  to  get  at  — that  the  same  wheat  which  we  buy  in  the 
country,  at  whatever  price  we  can  buy  it,  we  usually  sell  it  the  same 
da}"  by  selling  a future”  against  it.  AYe  buy  of  people  in  the 


22 


country,  we  sell  the  same  day,  and  we  are  glad  if  we  can  get  one 
cent  a bushel  commission,  and  receive  the  X)rice  we  paid  here  and  the 
cost  of  freight. 

Q.  You  first  buy  the  wheat? 

A.  In  the  country. 

Q.  And  sell  it  the  same  day  ? 

A.  Sell  it  the  same  day  by  selling  a “ future  ” far  enough  ahead, 
for  New  York,  and  then  deliver  it  upon  the  contract  we  make. 

Q.  You  say  you  sell  at  an  advance  of  a cent  a bushel  ? 

A.  Yes,  and  very  glad  to  get  a constant  commission  of  a cent  a 
bushel. 

Q.  How  much  is  that  wheat  supplied  to  the  consumer  at  per 
bushel  ? 

A.  I can’t  tell  you ; we  don’t  go  so  far  as  that ; we  buy  wheat  in 
the  country,  and  we  pay  the  freight  on  it  and  the  cost  of  delivery 
here  or  in  the  harbor,  and  we  get  one  cent  a bushel  for  our  own 
commission,  and  we  sell  to  the  miller  or  exporter  if  he  want  it. 

Q.  There  seems  to  be  some  doubt  with  regard  to  “ corners  ’’  — 
whether  the  seller  or  purchaser  is  responsible  for  ‘‘corners?” 

A.  It  would  be  absolutely  impossible  to  create  “ corners”  unless  a 
man  sold  what  he  did  not  have,  and  did  not  know  where  he  was 
going  to  get  it. 

• Q.  Is  it  not  true  that  a speculator  very  frequently  sells  grain 
which  he  does  not  possess  ? 

A.  Yes. 

Q.  VV^hat  is  the  effect  of  such  a system  of  speculation  upon  busi- 
ness generally  ? 

A.  Well,  of  course,  it  has  no  good  effect  upon  business  generally, 
but  it  is  a question  whether  it  has  any  very  demoralizing  effect  upon 
business. 

Q.  Would  you  characterize  such  a system  of  speculation  as  gam- 
bling ? 

A.  It  is  a species  of  gambling  there  is  no  doubt ; it  is  a species  of 
betting  on  the  price  of  grain  at  some  future  time.  But  I would  like 
to  correct  an  idea  which  seems  to  have  been  entertained,  although  it 
makes  no  particular  difference  with  reference  to  the  inquiry  you  are 
making,  that  it  is  not  generally  understood,  perhaps,  that  every  pur- 
chaser and  seller  of  grain  for  future  delivery  in  the  city  of  New 
York  or  on  the  Produce  Exchange  is  a matter  of  written  contract. 
It  is  not  simply  a “bet”  or  any  thing  of  that  sort ; it  is  a matter  of 
written  contract  which  is  just  as  binding  as  the  contract  of  a mason. 


23 


to  build  or  erect  a building,  and  every  man  who  makes  one  of  these 
contracts  is  bound  to  deliver  or  to  receive  the  grain  which  he  has 
contracted  to  deliver,  and  the  buyer  of  the  grain  has  always  the  right 
and  the  power  to  demand  the  delivery  of  the  actual  grain  and  nothing 
else,  and  not  any  settlement  for  the  ditlerence. 

Q.  Do  you  think  it  would  be  for  the  interest  of  the  public  to 
enact  a law  forbidding  the  making  of  corners  ? 

A.  I have  thought  of  the  matter  and  it  does  not  seem  to  me 
possible  to  enact  a law  which  would  not  be  more  demoralizing  in 
its  elfects  than  a few  corners  ” which  may  ever  be  made  in  grain. 

Q.  Please  state  how  such  a law  would  be  demoralizing  in  its 
effects  ? 

A.  In  this  way  ; suppose  I had  a large  number  of  customers 
throughout  the  west  — in  the  agricultural  districts  of  the  west  — they 
direct  me  to  buy  for  their  account  in  New  York,  for  delivery  in 
June,  July  and  ikugust,  which,  for  reasons  of  their  own,  may  seem 
very  good  to  them,  or  to  buy  for  June  v/heat,  and  I may  go  on  and 
fulfill  their  orders  from  time  to  time,  until  I had  bought  a large 
quantity  of  wheat  and  without  any  intention  whatever  to  make  a 
corner  in  wheat  — without  any  idea  of  making  a corner  in  wheat; 
when  the  month  of  June  comes  they  demand  the  delivery  of  this 
wheat,  on  the  orders  of  my  customers  in  the  west,  from  parties  who 
have  contracted  to  deliver  it  to  me  ; they  have  got  it  west ; but  got 
it  at  no  place  where  it  can  be  found ; why  then  I am  accused  of 
running  a “ corner no  such  idea;  they  sold  to  me  and  I have 
exercised  my  right  to  buy  what  I please  in  the  market,  and  they 
have  exercised  their  right  to  sell  to  me ; it  is  a business  matter  with 
them  as  to  whom  they  are  going  to  sell ; for  what  they  have  got ; 
to  pin  them  down  to  an  exact  point.  I may  be  considered  to  be  a 
very  imprudent  man  if  I attempted  that;  then  I have  made  my 
contracts  and  I am  unable  to  get  wheat  low  against  the  cornerers 
and  operators  against  me,  and  I am  perfectly  innocent;  no  man 
would  be  safe;  no  commission  merchant  would  be  safe  in  fulfilling 
large  orders  for  any  particular  kind  of  grain  for  delivery  for  any 
particular  month  on  a legitimate  demand  if  such  a law  were  enacted; 
it  would  be  what  unfavorable  legislation  has  tended  to  do  for  any 
other  kind  of  business  in  New  York  ; it  would  drive  it  just  out  of 
the  State  of  New  York  to  just  outside  of  the  State  of  New  York. 

Q.  Then  in  your  opinion  there  is  no  way  to  prevent  men  from 
selling  grain  or  any  other  produce  they  do  not  possess  ? 

A.  I don’t  believe  that  if  any  man  is  willing  to  make  a contract 


24 


to  deliver  a certain  article  next  month  and  lie  ^ave  me  a good  and 
sndicient  contract,  that  there  ought  to  be  any  law  requiring  me 
to  refuse  to  make  the  contract  with  him. 

Q.  You  admit  that  a public  evil  results  from  this  ‘‘cornering” 
and  dealing  in  futures? 

A.  There  are  very  few  things  under  the  sun  that  can’t  be  made 
to  result  in  an  evil,  if  abused  ; and  it  is  very  difficult  to  ])revent 
abuses.  I thirik  these  things  make  their  owm  correction’s  by  the 
laws  of  trade,  and  much  better  than  can  be  made  by  the  laws  of  the  . 
State. 

Examined  by  Senator  Bro^vning  : 

Q.  You  have  told  ns  what  “ puts  ” and  what  “calls”  mean;  and 
what  “corners”  are;  I don’t  know  that  you  explained  thoroughly 
what  a “future”  is;  tell  us  what  a “ future”  is? 

A.  Yes,  if  1 sell  to  you  10,000  bushels  of  wheat  for  delivery 
at  my  option,  during  the  month  of  May  ; that  is  a ‘*  future.” 

Q.  Is  that  what  you  call  an  “ option  ? ” 

■ A.  That  option  consists  in  delivering  at  my  option  in  May,  at 
a certain  price. 

Q.  Do  you  have  the  terms  of  “ long  ” and  “short;”  what  are 
‘ ‘ long  ” and  ‘ ‘ short  ? ’ ’ 

A.  A man  is  “ long  ” when  he  has  bought  more  than  he  has  sold 

Q.  Has  “ long  ” of  the  article  ? ^ 

A.  Yes. 

Q.  When  he  is  all  sold  out,  he  is  “ short?  ” 

A.  Yes,  when  he  is  all  sold  out  he  is  “ short.” 

Q.  What  is  a “ squeeze  ; ” don’t  you  squeeze  people  out  ? 

A.  No  “ squeezing,”  no  “ cornering.” 

Q.  When  people  are  driven  out  of  the  market,  are  they  not 
squeezed  out  ? 

A.  No,  they  can’t  be,  unless  they  are  “ busted.” 

Q.  Don’t  men  get  “ busted  ? ” 

A.  Yes,  when  they  sell  what  they  have  not  got  and  are  unable  to 
fulfill  their  contracts;  unable  to  put  up  a margin  to  cover  the  loss, 
“R(pieeze”  is  a term  I seldom  hear. 

Q.  What  is  “ settlement  day  ?” 

A.  They  have  hi  day  on  which  settlements  are  made;  the  very 
last  day  of  the  month  ; it  is  called  “ settlement  day  ; ” that  is  the 
last  day  in  which  a contract  can  be  settled  up  for  that  month.  If 
I sell  to  you  10, ()()()  bushels  of  wheat  at  $1.30  during  the  month  of 


25 


May  ; the  last  day  for  which  that  delivery  can  be  settled  is  the  last 
day  of  May. 

Q.  And  then  I pay  you  so  much  money  ; or  you  pay  it  to  me  ? 

A.  Yes. 

Q.  Wliat  is  spot  ? ” 

A.  To  buy  grain  on  ‘^spot;”  grain  in  the  harbor  would  be  grain 
on  the  “ spot.” 

Q.  Do  you  know  that  there  is  a corner  in  No.  2 mixed  oats? 

A.  No. 

Q.  Do  you  know  that  there  is  a corner  in  No.  1 white,  in  the 
market  ? ' 

A.  No,  I think  now  that  there  is. 

Q.  Do  you  know  at  any  time  within  the  last  two  months,  that 
No.  2 mixed  oats  sold  higher  than  No.  1 white  oats? 

A.  My  impression  is  that  that  is  the  case  ; but  I don’t  remember 

Q.  Was  there  not  a corner  ? 

A.  No  ; I don’t  know  if  there  has  been  a corner  in  oats. 

Q.  Would  you  think  if  a proposition  to  deliver  50,000  bushels  of 
No.  1 white  oats  for  No.  2 mixed  oats  was  refused,  that  would  indi- 
cate a “ corner”  in  oats  ; in  other  words,  if  you  have  agreed  to  de- 
liver me  No.  2 mixed  oats  and  you  offer  me  No.  1 white  oats  and  1 
refuse  it,  is  it  not  a sign  of  a corner  in  mixed  oats  ? 

A.  Yes. 

Q.  What  effect  has  that  upon  the  trade  ? \ 

A.  That  would  have  the  temporary  effect  of  making  people  who 
wanted  No.  2 mixed  oats  to  pay  more  than  they  ought  to  have 
paid. 

Q.  Do  people  on  the  Produce  Exchange,  on  the  floor,  do  business 
by  operating  in  options  ? ” 

A.  I presume  there  may  be  some  people  who  do  business  by  ope 
rating  in  options. 

Q.  Have  no  basis  whatever  ? 

A.  They  have  capital  ; but  they  simply  deal  in  the  market  in 

options.” 

Q.  Never  make  a delivery? 

A.  I presume  they  do  some  times,  and  that  they  are  then  obliged 
to  make  a delivery. 

Q.  Don’t  you  think  that  this  injures  the  trade  in  its  legitimate 
business. 

A.  There  are  two  sides  to  it ; if  dealing  in  options  enhances  the 
price,  the  market  price,  why  then  the  producer  gets  so  much  more, 
4 


20 


and  if  tlie  consumer  has  to  pay  so  much  more  for  liis  breadstufts,  I 
would  not  like  to  say  that  it  is  injurious  to  the  trade  of  the  country. 

Q.  Is  there  a class  of  operators  on  the  floor  known  as  “ oj)tioii 
brokers  ? ” 

A.  Yes. 

Q.  Have  they  a basis  ? 

A.  They  have  a basis  ; they  are  brokers  ; they  do  business  with 
other  people. 

Q.  You  speak  of  ‘‘  option  brokers”  — not  buying  for  delivery? 

A.  Every  man  who  buys  on  the  Exchange  buys  tor  delivery. 

Q.  Do  you  know  of  any  one  on  the  the  floor  called  “ scalpers  ? ” 

A.  No  ; I don’t  know  such  men  ; I presume  there  are  99 out  of  ICO 
people  on  the  Produce  Exchange  who,  if  they  see  the  market  ad- 
vance rapidly  for  any  reason  in  the  world,  they  are  likely  to  make  a 
purchase,  and  sell  as  much  as  they  can  get  and  make  something  out 
of  it;  that  is  ‘‘scalping”  the  market. 

Q.  You  have  “calls”  every  day?  ^ 

A.  Yes. 

Q.  What  is  the  average  amount  of  “calls  ” every  day  ? 

A.  I can’t  tell. 

Q.  Have  you  sales  outside  of  “ calls  ? ” 

A.  Yes;  greatly  exceeding  them. 

Q.  There  is  a way  of  ascertaining  the  number  of  bushels  deliv- 
ered at  this  market  ? 

A.  Yes. 

Q.  Do  you  know  the  amount  of  grain  in  the  market  to-day  ? 

A.  No. 

Q.  The  elevators,  are  they  full  ? 

A.  No  ; the  stocks  are  very  light  here  ; wheat,  corn  and  oats 
were  all  very  light. 

Q.  I believe  you  stated  what  effect  the  option  has  on  tlie  legitimate 
trade  ; what  is  the  condition  of  the  market  to-day  in  regard  to  grain,, 
is  it  high  or  low  ? 

A.  High. 

Q.  How  do  you  account  for  that  ? 

A.  The  scarcity  of  grain. 

(T  T understand  it  is  coining  in  plentifully  ? 

A.  That  is  not  very  clear. 

(^.  You  state  you  don’t  know  who  owns  the  bulk  of  the  oats  in 
the  market  to-day  ? 

A.  a\o;  r have  not  given  it  any  attention. 


27 


Q.  One  of  the  sections  of  the  cliarter  incorporating  the  Produce 
Exchange  states  that  the  corporation  is  for  the  ])urpose  of  securing 
suitable  rooms,  and  to  adopt  fair,  just  and  legitimate  principles  of 
trade  % 

A.  Not  exactly  that;  but  it  is  for  the  purpose  of  providing  suita- 
ble rooms  in  the  citj'of  New  York,  and  for  the  purpose  of  inculcat- 
ing equitable  principles  of  trade. 

Q.  Has  the  Exchange  ever  taken  notice  of  betting  upon  the  floor 
of  the  Exchange  ? 

A.  Yes;  and  of  any  evil,  so  construed  to  be  on  the  Produce  Ex- 
change, is  always  taken  notice  of. " If  a man  fail  to  fultill  a conti’act 
which  he  has  made,  whether  written  or  verbal,  he  will  not  be  per- 
mitted to  be  a member  of  the  Produce  Exchange.  Every  man  who 
makes  a contract  there  must  fulfil  that  contract. 

Q.  Do  you  know  of  option  brokers  on  the  floor  of  the  Exchange 
making  settlements  every  day  ? 

A.  Made  every  day  by  people  who  deal  in  options. 

Q.  And  can  a boy  with  $10,  by  handing  it  to  an  option  broker,, 
buy  on  “calls?”  I give  you  $10  or  you  give  me  $10?  . 

A.  I don’t  think  there  is  such  a thing  going  on  on  the  Produce 
Exchange;  I think  if  you  go  to  the  Produce  Exchange  and  give 
your  order  for  a broker  to  buy  or  sell,  and  you  leave  with  him  a 
margin  to  protect  him  against  loss,  he  will  make  the  transaction  tor 
you. 

Q.  If  it  should  appear  that  boys  on  the  floor  of  the  Exchange  are 
in  the  habit  of  giving  option  brokers  $10  ©r  $20,  more  or  less,  before 
the  day  is  over,  and  do  this  repeatedly,  would  the  Exchange  take 
notice  of  it  ? 

A.  The  Exchange  would  not  permit  any  such  dealings. 

Q.  The  Exchange  does  not  know  that  that  is  the  fact? 

A.  No  ; I don’t  think  it  possible  for  a boy  to  do  such  a thing. 

Q.  You  would  be  likely  to  know  it,  if  it  was  the  fact? 

A.  I think  so. 

Q.  It  was  stated  by  gentlemen  who  represented  railroads  at  our 
last  sitting,  that  prices  have  advanced  from  thirty  to  fifty  per  cent 
on  grain  by  reason  of  this  system  of  speculation, and  they  both  denied 
that  the  producer  reaped  any  benefit ; now,  do  you  think  the  pro- 
ducer receives  any  share  of  that  advance;  is  that  what  you  mean  us 
to  understand  ? 

A.  Yes. 

Q.  Mr.  Depew  and  Mr.  Jewett,  I believe  both  of  them,  stated 


28 


that  the  prices  of  grain  were  advanced  on  account  of  speculation  and 
speculators,  from  thirty  to  fifty  per  cent;  and  that  the  producer  re- 
ceived no  part  of  that  increase  ? 

A.  That  advance  has  been  made  within  what  time? 

Q.  He  means  from  the  time  it  leaves  the  ivoducer’s  hands,  till 
it  reaches  the  consumer,  the  price  has  been  unnaturally  advanced 
from  thirty  to  fifty  per  cent  ? 

A.  Continually,  or  just  for  the  present  ? 

Q.  He  did  not  specify  the  time  ; I think  he  meant  thirty  per  cent 
the  lowest,  and  fifty  per  cent  the  highest;  between  that  would  be  a 
fair  average  of  the  continual  advance,  and  of  the  natural  value  of 
the  produce  of  the  west;  in  other  words,  while  the  railroads  were 
continually  decreasing  their  rates,  the  prices  of  produce  had  been 
continually  advancing,  and  that  that  was  due  to  speculation  ? 

A.  That  the  railroad  companies  have  reduced  their  rates,  and  that 
the  price  of  produce  had  continually  advanced,  of  late,  so  that  they 
cannot  carry  grain  ; and  that  that  advance  has  been  on  account  of 
speculation  only  ? 

Q.  Yes,  sir. 

A.  It  is  not  true  ; the  fact  is  that  the  advance  of  from  thirty  to 
fifty  per  cent  on  grain  — I think  fifty  per  cent  too  high  — the  thirty 
])er  cent  advance  has  been  due  to  the  bad  crops  of  last  year,  and  to 
its  going  out  of  the  country  ; last  year,  and  the  year  before,  we 
should  have  been  an  importer  instead  of  an  exporter  of  grain. 

Q.  Have  you  bought  any  grain  recently  ? 

A.  We  constantly  buy. 

Q.  AY  hat  can  you  buy  grain  for  to-day — ^ say  wdiite  wheat — in 
the  market  to-day  ? 

A.  I did  not  go  to  market  to-day. 

Q.  AYell,  yesterday  ; in  what  market  do  you  buy  wheat  in  the 
west  ? 

A.  AYe  buy  of  any  person  we  can  ; we  buy  of  the  producer,  and 
buy  in  the  market,  and  in  Toledo,  or  Kansas,  or  St.  Louis,  or 
Chicago  ; in  California  and  other  places  — anywhere  where  we  can 
make  a commission. 

Q.  AYhen  you  buy  red  or  white  wheat  at  $1.25,  and  you  buy  that 
in  the  west,  what  is  the  price  paid  to  the  producer  ? 

A.  We  have  bought  wheat  from  the  producer  in  the  State  of  Kew 
York. 

Q.  Have  you  bought  of  the  ])roducer  in  Illinois  ? 

A.  Not  in  Illinois;  but  of  the  man  who  buys  of  the  producer. 


29 


Q.  What  1 am  trying  to  get  at  is  this  — you  say  you  bought  red 
and  white  wheat  at  from  $1.25  to  $1.40  a bushel  on  such  a day,  adding 
the  amount  paid  for  transportation,  and  I suppose  commission  ? 

A.  Not  commission. 

Q.  What  is  the  natural  value  then  ? I want  to  find  out  the  dif- 
ference between  the  natural  and  artificial  value  — the  speculative 
value  ; you  buy  at  $1.25  ; what  do  you  do  after  that  ? 

A.  We  pay  freight  and  the  cost  of  delivery  in  the  port  of  New 
York  under  the  rules  of  the  Produce  Exchange.  We  buy  of  the 
producer  as  far  as  possible,  and  we  sell  to  the  miller  in  the  State  of 
New  York  and  all  we  gain  is  our  commission — one  or  two  cents  a 
bushel.  If  there  is  any  advance  in  the  market  we  can  get  one  or 
two  cents  more  ; but  there  is  the  natural  price  you  want  to  get  at ; 
we  buy  from  the  producer  in  the  State  of  New  York,  and  w’e  sell 
in  the  State  of  New  York  at  a commission  of  one  or  two  cents  a 
bdshel. 

Q.  What  advance  is  there  generally  on  the  producer’s  price? 
when  wheat  is  $1.25  what  ought  to  be  the  price  in  the  market? 

A.  1 don’t  gather  your  meaning. 

Q.  If  I call  on  you  for  50,000  bushels  of  red  wheat  at  $1.25  to 
day  — what  would  you  give  for  that  in  the  market  to-day  ? 

A.  I should  have  sold  it  for  $1.25  ; by  the  rules  of  our  market,, 
if  I can  buy  wheat  in  the  w^est  and  lay  it  down  here  at  $1.25,  our 
market  will  not  realize  to  us  more  than  a cent  a bushel  above  that ; 
that  rules  the  price  in  our  market;  not  over  one  cent  a bushel. 

Q.  Is  it  not  a fact  that  the  price  of  wheat  in  Chicago  is  higher 
than  its  price  in  New  York  ? 

A.  Higher  here,  when  you  have  paid  the  freight  and  cost  of 
delivery. 

Q.  If  you  sell  to  me  in  Chicago  50,000  bushels  of  wheat  at  $1.25, 
what  would  that  sell  for  in  this  market  — wdien  yon  say  that  you 
add  one  cent  a bushel  for  freight  and  commission,  what  would  that 
amount  to  ? If  you  sell  to  me  in  Chicago  50,000  bushels  of  wheat 
at  $1.25  a bushel,  adding  the  freight,  which  we  will  call  twenty 
cents,  and  the  cost  of  delivery  in  New  Y^ork,  wddch  we  will  call 
one  cent,  and  the  commission,  which  we  will  caJlone  cent  more,  and 
will  sell  it  then  at  $1.25,  with  twenty  cents  ad^ed  — $1.45  and  with 
two  cents  added,  making  it  $1.47,  and  you  will  sell  it  to  anybody — 
that  is  the  natural  value  of  the  wheat  ? 

A.  Y^es. 

Q.  If  some  one  in  the  market  purchasing  that  from  you,  so  that 


30 


he  got  a inimber  of  these  lots  so  tliat  lie  could  influence  the  quantity 
of  wheat  in  the  market  he  would  get  a “ corner  ?” 

A.  Yes. 

Q.  And  when  yon  are  obliged  to  deliver  to  him,  that  puts  up  the 
price  ? 

A.  Yes. 

Q.  And  that  is  where  the  unnatural  ” value  comes  in  ? 

A.  I am  not  speaking  of  values. 

Q.  Mr.  Depew  and  Mr.  Jewett  wanted  the  committee  to  under- 
stand that  the  advance  of  from  thirty  to  fifty  per  cent  is  due  to  that 
system  of  cornering  and  speculating  in  grain  ; is  that  the  fact  when 
such  speculation  occurs  ? 

A.  At  the  present  time  it  is  not  the  fact ; but  the  advance  in  the 
price  of  grain  is  legitimate,  because  it  is  on  the  basis  of  supply  and 
demand.  The  supply  cannot  affect  the  demand  for  home  use, 
consequently  we  have  nothing  to  spare  to  export,  and  this  requirement 
for  exj^ort  has  nothing  to  do  with  it. 

Q.  You  say  a law  to  prevent  speculating  in  ‘‘ futures  ” might 
interfere  with  the  legitimate  trade,  as  you  say  you  might  receive  a 
large  order  ? 

A.  Aggregates  make  a large  order. 

Q.  Suppose  you  were  to  fill  an  order  for  No.  2 mixed  oats,  or 
some  one  had  agreed  to  deliver  to  you  some  thousand  bushels  of 
that  quality,  and  to  fulfill  this  order  he  should  come  to  you  and 
say  he  had  not  that  quality,  but  he  would  give  you  a better 
class  of  oats.  No.  “ 1”  white  oats,  could  you  fill  the  order  with 
that  ? 

A.  No. 

Q.  The  buyer  could  refuse  to  take  the  better  quality  than  the  one 
he  had  agreed  for  ? 

A.  Yes;  they  are  not  of  better  quality. 

Q.  Is  not  No.  1 white  oats  better  than  No.  2 mixed? 

A.  That  may  be  and  may  not  be. 

Q.  What  may  be  the  usual  difference  in  the  price,  when  there  are 
no  corners  and  when  the  market  is  in  a normal  condition,  between 
No.  1 white  oats  and  No.  2 mixed  oats? 

A.  Two  or  three  cents  in  favor  of  white  oats. 

Q.  You  say  you  cannot  fill  an  order  for  the  better  class  of  oats 
than  for  mixed  oats  ? 

A.  Yes;  but  tlierc  are  certain  rules  on  the  Produce  Exchange. 
'iflicHi  are  certain  grades  of  grain  ; and  there  is  sometimes  a demand 


31 


for  a certain  grade  of  grain  wliich  will  increase  the  price  of  that 
grade  of  grain  over  another  grade  of  grain  which  may  be  of  a con- 
siderably better  quality  than  that  ; that  is  in  consequence  of  the 
speculation  in  that  grade  of  grain. 

Q.  Then,  so  far  as  the  delivery  is  concerned,  it  would  not  pre- 
vent you  from  delivering  the  goods,  if  you  offered  a better  quality 
of  oats  than  that  you  had  agreed  to  deliver,  so  far  as  the  delivery  is 
concerned,  for  the  purpose  of  speculating,  and  they  would  not  ac- 
cept a better  quality  ? 

A.  That  is  it  exactly. 

Q.  Do  you  know  of  any  other  period  in  the  past  two  or  three 
months  of  “ J^fo.  2”  having  sold  for  a higher  price  than  No.  1 ? ” 

A.  I think  in  the  latter  part  of  March  ; I think  it  was  the  fact 
that  “No.  2”  sold  higher  than  “No.  1.” 

Q.  That  would  indicate  a corner,  then  ? 

A.  Yes;  about  that  time. 

Examined  by  Senator  Boyd  : 

Q.  Your  testimony  has  been  chiefly  in  regard  to  legitimate  trans- 
actions in  grain  ? 

A.  Yes. 

Q.  Have  you  any  knowkjdge  as  to  the  manner  in  which  these 
illegitimate  transactions  are  carried  on  ? 

A.  I don’t  know  what  are  called  “illegitimate”  speculations. 

Q.  Such  as  are  complained  of  as  occurring  in  Chicago  ? 

A.  Cornering? 

Q.  AYs. 

A.  I think  I have  described  that  to  some  extent : the  man  who 
believes  in  better  prices  in  the  future  comes  to  buy  of  the  man  who 
does  not  believe  it,  and  who  sells  to  him  proportionately;  sells  that 
which  he  has  not  got,  and  when  he  sells  too  much,  more  than  can  be 
delivered,  why  there  is  a “ corner ; ” buj  whether  it  is  to  be  called 
“illegitimate”  is  a question. 

Q.  When  prices  are  forced  up  by  such  transactions  the  burden 
falls  upon  the  consumer,  does  it  not? 

A.  Temporarily  the  consumer  may  have  paid  somewhat  more  for 
bis  food,  but  then  there  is  invariably  a limit,  and  if  it  is  an  illegiti- 
mate corner,  there  is  invariably  a reaction  which  gives  to  him  the 
benefit  of  a less  price  than  he  would  have  had  to  pay  if  the  corner 
had  never  been  made. 

Q.  Does  holding  grain  corners  for  a length  of  time  not  force  the 


32 


races  ot  transportation  np  to  a liiglier  grade  than  if  there  were  no 
cornel’s  'i 

A.  That  tendency  is  botli  waj^s ; during  a time  grain  would  I'e 
lield  in  the  west,  and  if  sold  in  Chicago,  and  the  railroad  com])anies 
had  nothing  to  carry,  the  freight  rates  might  he  reduced,  and  then 
Avhen  there  was  a great  abundance  to  carry  — after  the  corners  had 
been  broken  — then  the  rates  might  be  advanced  because  of  supply 
and  demand. 

Q.  Is  there  any  other  information  concerning  this  subject  which 
you  desire  to  give  the  committee  "^ 

A.  I think  not ; I don’t  think  of  any  thing  now. 

Examined^  by  Senator  Bkowntng  : 

Q.  Wherever  you  liave  known  of  corners  ” they  have  been 
operated  by  one  or  more  persons  ? 

A.  Generally  by  more  than  one. 

Q.  So  that  there  is  a combination;  a forced  entry  into  a pool  for 
the  purpose  of  increasing  the  price  and  getting  the  bulk  of  that 
article  ? 

A.  So  far  as  I have  ever  known  ‘‘corners,”  they  have  been 
directed  by  “pools,”  or  to  use  a later  term,  “ syndicates.” 

Q.  Don’t  you  believe  they  can  be  r^ched  by  legislation  ? 

A.  I don’t  think  so. 

Q.  Don’t  you  think  it  demoralizing  and  injurious  to  trade  and 
commerce  ? 

A.  ±Sot  more  now  than  it  was  ; I don’t  think  any  laws  of  trade 
would  be  a benefit,  or  would  prevent  men  from  making  an  option, 
just  such  as  they  please,  provided  they  can  find  men  who  are  wdlling 
to  take  the  contract ; I don’t  believe  that  an  attempt  to  correct  these 
evils  by  legislative  enactment  would  be  successful  ; in  the  first  place 
I think  it  would  be  more  demoralizing  to  the  trade  than  cornering 

Q.  Has  the  Produce  Exchange  ever  taken  up  the  question  with 
the  view  of  checking  the  evils  growing  out  of  it  ? 

A.  There  are  evils  which  you  cannot  reach ; what  no  Exchange 
can  reach  ; for  what  you  have  suggested  is  new  to  me ; I come  to 
the  Exchange  and  give  some  broker  on  the  Exchange  an  order  ta 
buy  a lot  of  wheat  and  sell  it  Avhen  it  loses  $10,  and  to  buy  it  when 
itrmikes$10;  such  a thing  might  be  done;  at  the  same  time  we 
are  always  taught  to  believe  that  this  is  a free  country,  and  that  a, 
man  has  a right  to  buy  and  sell  as  he  likes. 


33 


By  Senator  Browning  : 

Q.  And  bet  if  he  want  to  ? 

A.  And  bet  if  lie  want  to. 

Isaac  H.  Reed,  sworn  : 

Examined,  by  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  At  tile  New  York  Hotel. 

Q.  AVhat  is  your  business  \ 

A.  .Commission  and  grain,  receiving  and  selling. 

Q.  Where  is  your  place  of  business  ? 

A.  Five  State  street. 

Q.  How  long  have  you  been  engaged  in  that  business  ? 

A.  For  a very  long  time ; in  this  particular  business  some  forty 
years,  probably. 

Q.  Will  you  state  to  the  committee  your  opinion  in  regard  to  the 
wdiole  system  of  making  “corners’’  and  “futures”  in  reference  to 
its  effect  on  commerce  and  its  influence  on  the  public  welfare  ? 

A.  It  is  a subject  to  which  I have  not  given  much  thought ; it 
has  its  good  and  bad  results  ; it  makes  business  very  irregular  and 
somewhat  hazardous,  because  we  are  almost  entirely  at  the  mercy  of 
the  speculator. 

Q.  Does  it  tend  to  cause  an  unnatural  fluctuation  in  the  market  ? 

A.  Undoubtedly  unnatural. 

Q.  Please  state  to  what  extent  these  fluctuations  are  made  ? 

A.  I am  not  familiar  enough  with  them,  to  say. 

Q.  Are'you  familiar  with  the  terms  “ puts  ” and  “ calls  ? ” 

A.  I know  them,  sir. 

Q.  “Corners”  and  ‘‘futures?’’ 

A.  I do. 

Q.  Please  explain  their  meaning? 

A.  A “ put  ” would  be  a privilege  given  to  me  for  a consideration, 
or  you  may  give  me  a certain  consideration,  or  I will  give  you  a 
certain  consideration  to  put  a cargo  of  wheat  to  you  at  a certain 
price,  at  a given  time  — a time  to  come,  or  to  send  it  to  me,  or 
transfer  it.  A “ call ’’means  that  for  a consideration  I can  call  upon 
you  for  a cargo  of  wheat,  to  be  delivered  to  me  at  a certain  price ; 
if  the  market  falls  under  the  price,  the  proposition  is,  that  I shall 
give  it  to  you  or  make  you  pay  me  the  price,  or  if  the  price  advances 
I shall  call  upon  you  to  give  me  the  property. 

5 


34 


Q.  Upon  wliat  natural  conditions  would  the  regulation  of  prices 
depend  ? 

A.  That  would  depend  naturally  upon  the  8up})ly  and  demand  ; 
then  it  could  be  aliected  artihciaUy. 

Q.  And  it  is  chiefly  these  artificial  effects  that  you  refer  to,  when 
speaking  of  the  injurious  effect  on  the  market? 

A.  I speak  in  that  way. 

Q.  Please  explain  what  a “ corner  ” is  ? 

A.  A “corner”  is  as  Mr.  Edson  ex})lained  it;  a ])arty  gets  all 
tlie  property  that  exists,  by"  a contract  or  otherwise,  or  buys  up  all 
on  the  spot  — as  much  as  he  can  get ; and  when  the  time  comes  to 
deli\"er  by  another  party,  he  can’t  find  it,  aiid  the  one  who  has 
bought  up  the  property  makes  his  own  price  for  it  and  to  deliv^er  it ; 
that  is  what  we  call  corners.  ” 

Q.  To  what  extent  do  citizens  suffer  from  these  “ corners?” 

A.  Those  who  are  concerned  by"  it  and  the  consumer  probably  ; 
it  produces  an  artificial  value  in  the  commodity. 

Q.  To  what  amount  has  this  artificial  value  been  created  gener- 
ally ? 

A.  I have  no  knowledge  of  the  extent ; I don’t  know  that  we 
have  had  any  “ corners  ” in  wheat ; we  have  had  speculations  in 
wheat  which  have  sent  up  the  price,  and  which  is  continually  going 
on,  or  what  we  term  a ‘‘speculative  demand,  ” going  beyond  the 
price  that  the  exporter  can  take  it  at  ? 

Q.  Who  is  responsible  for  the  creation  of  these  “corners,”  the 
seller  or  the  purchaser? 

A.  The  purchaser,  I should  say* ; I should  think  that  the  seller  was 
the  innocent  party  ; of  course,  he  wishes  to  sell  his  property"  to  the 
best  advantage ; it  is  the  purchaser  who  makes  the  corners. 

Q.  When  a man  undertakes  to  sell  property  which  he  docs  not 
possess,  would  he  not  thereby  create  a corner  ? 

A.  That  is  a question  of  morals,  I think  ; 1 don’t  know  whether 
he  would  be  considered  a moral  man  or  not ; he  would  be  respon- 
sible for  “ corners.” 

Q.  Is  it  not  true  that  speculators  sell  large  quantities  of  grain  that 
they  do  not  j)ossess  ? 

A.  That  is  the  case  with  “option  ’’  dealers. 

Q.  What  effect  has  such  transactions  upon  the  legitimate  market  ? 

A.  Cannot  state;  the  market  is  very  large,  and  there  is  a specu- 


35 


lative  demand  for  a commodity  ; people  ask  me  as  to  one  course 
and  another  course  ; all  intending  to  make  money  ; they  will  buy  at 
the  lowest  price,  and  sell  in  the  future  at  two  or  three  months  ahead. 
A purchaser  will  think  differently  from  a seller,  being  of  opinion 
that  he  has  a better  knowledge  ; one  man  may  have  more  knowl- 
edjre  than  another. 

Q.  That  would  be  a legitimate  speculation  ? 

A.  Yes,  it  is  legitimate  and  illegitimate  in  these  futures;  for  in- 
stance, parties  in  the  west  who  want  to  avail  themselves  of  the  market 
at  the  present  prices,  and  who  have  large  quantities  to  sell,  sell  it  forth- 
with, and  will  direct  their  factor  to  sell  for  June  delivery.  In  April 
when  the  canals  open  they  may  say — we’ll  sell  the  property  ” de- 
liverable in  May,  and  they  have  the  right  to  sell,  deliver  and  send  it 
forward ; you  can’t  pretend  that  that  is  “ option  ” selling  ; it  is  a 
fair  proceeding. 

Q.  Would  you  describe  the  illegitimate  “ option  ? ” 

A.  Artificially  buying  and  selling  in  the  market,  and  taking  the 
'chances  ; a man  sells  to  take  the  chances  of  buying  at  an  advance. 

Q.  Don’t  you  think  there  should  be  some  law  to  prevent  that? 

A.  I have  no  opinion  on  the  subjecjt. 

Q.  Do  you  think  such  a law  practicable  ? 

A.  I have  no  opinion  on  that  point. 

Q.  To  what  extent  are  these  unjust  speculations  — illegitimate 
speculations  — carried  on  in  the  city  of  New  York? 

A.  I am  not  aware ; it  is  impossible  to  tell. 

Q.  What  operations  have  been  made  for  delivery,  and  what  arti- 
ficial ? 

A.  Last  February  what  is  termed  gambling  operations  amounted 
to  759,000,000  of  bushels,  and  the  trade  operations  to  97,000,000 
bushels  in  wheat,  corn  and  oats  in  February. 

By  Senator  Browning: 

Q.  Th^  legitimate  sales  would  be,  some  for  exportation  and  some 
for  consumption? 

Jixamination  by  Senator  Boyd  continued: 

Q.  The  smaller  amount  would  be  for  ? 

A.  For  exportation  ; that  is  what  we  call  “spot  wheat” — wheat 
on  hand  — “ spot  grain . ” 


36 


By  Senator  Browning  : 

Q.  Ninety-one  millions  were  the  call  sales? 

A.  Ninety-seven  millions. 

Q.  “ Call  ” sales  ? 

A.  No;  sold  altogether. 

Exarmnation  by  Senator  Boyd  continued  : 

Q.  The  sales  were  legitimate  sales  ? 

A.  Yes. 

Q.  The  others  were  gambling  ? 

A.  Y^es,  the  February  number  of  this  magazine  will  show  it. 

Q.  Did  that  occur  in  the  city  of  New  Y^ork  ? 

A.  Yes. 

Q.  By  whom  were  these  illegitimate  and  gambling  speculations 
carried  on  ? 

A.  These  option  dealers — by  different  dealers  and  buyers  and 
sellers. 

By  Senator  Browning  : 

Q.  Does  the  amount  of  money  involved  appear  in  that  paper  you 
have  there? 

A.  It  does  not. 

Examination  by  Senator  Boyd  continued : 

Q.  Does  the  value  appear  there  ? 

A.  It  does  not. 

Q.  What  effect  do  these  speculations  have  upon  the  transporta- 
tion interests  of  the  country? 

A.  I don’t  know. 

Q.  How  does  this  temporary  speculation  affect  the  interests  of  the 
consumers  ? 

A.  Variously;  sometimes  for  their  benefit  and  sometimes  not, 
according  as  the  price  is  depressed  or  advanced  by  these  operations ; 
a meml)er  of  the  committee  has  asked  about  boys  paying  $10  ; I 
don’t  think  that  has  ever  taken  place  there,  because  the  transactions 
arc  confined  to  8,000  bushels. 

Q.  A re  you  a member  of  the  Stock  Exchange  ? 

A.  No,  sir. 

C^.  Of  the  “ Farmers’  ? ” 

A.  I was  not,  sir. 


37 


Q.  Are  you  familiar  as  to  what  extent  these  illegitimate  specula- 
tions are  carried  on  in  other  kinds  of  the  necessaries  of  life  besides 
*grain  ? 

A.  It  is  done  in  provisions,  in  pork  and  lard;  I think  in  last  year 
a very  large  operation  was  carried  on  by  western  houses,  but  they 
all  broke;  that  advanced  the  prices,  I think,  upwards  of  $10  a bar- 
rel ; it  took  place  in  connection  with  a Chicago  house  and  a house 
here  ; tliat  was  done  by  purchasing  up  the  whole  commodity. 

Q.  Were  these  combinations  by  New  York  and  Chicago  mer- 
chants of  frequent  occurrence  ? 

A.  No  ; I think  not;  this  is  the  only  instance  that  has  occurred 
wdtliin  ni}^  knowledge,  within  one  or  two  years. 

Q.  Is  there  any  other  information  you  can  give? 

A.  I have  none  to  give ; I have  a paper,  published  in  Brooklyn, 
from  which  I got  a good  deal  of  information  pertinent  to  this  ques- 
tion, and  which  I would  like  the  members  of  the  committee  to  read. 

Q.  Are  there  any  extracts  which  you  would  like  to  read  before 
the  committee  ? 

A.  I will  leave  the  paper  with  the  committee ; they  can  read  it 
for  themselves. 

Q.  Do  you  know,  of  your  own  knowledge,  that  those  statements 
are  true? 

A.  I can  confirm  most  of  these  statements. 

Q.  Please  read  those  which  you  would  confirm  ? 

A.  I will  read  : — “ Legitimate  business  has  been  for  years  entirely 
at  the  mercy  of  the  speculator.  The  short  road  to  wealth  through 
speculation,  which  is  traversed  by  visionaries  without  capital,  has 
generally  proved  to  be  a very  dangerous  one,  and  the  poor  but  san- 
guine traveler  is  lucky  to  escape  entirely  from  the  rich  brigands  who 
are  always  lurking  in  such  places.  A certain  degree  of  spirit  and 
love  of  adventure  is  necessary  to  a new  country,  to  be  sure,  as  it 
peoples  prairies,  ciits  down  the  forests,  builds  up  factories,  and  fills 
our  marts  with  grain  and  provisions  of  all  kinds.  But  it  gives  us 
‘‘  bulls  ” and  bears,”  and  while  in  the  former  case  it  gives  us 
national  wealth,  to  the  latter  it  often  causes  financial  disaster.  The 
time  has  passed  when  gold  was  the  medium  of  the  speculative  mania, 
and  unfortunately  for  the  prosperity  of  the  country,  wheat  has  taken 
its  place  in  all  our  large  cities.  Dealers  in  bread-stuffs  buy  and  sell 
their  “ options  ” the  same  as  the  stock-jobber  sells  his  puts  and  calls. 
A corner  is  made  in  articles  of  food,  and  there  is  scarcely  a ripple  on 
the  journalistic  sea  of  trade  reports.  Politics,  which  is  somewhat 


38 


speculative  in  its  way,  absorbs  most  of  the  time  of  the  journalist, 
while  business,  which  is  far  more  important,  there  Ijeing  more  en- 
gaged in  it /and  more  capital  invested  in  it,  is  often  let  go  by  ‘ tlie  ^ 
board.’  It  is  difficult  to  see  the  philosophy  of  callingone  set  of  men 
‘gamblers’  because  they  happen  to  deal  in  stocks,  and  another  set 
‘merchants’  because  they  happen  to  deal  in  food  products.  It  is 
about  time  this 'casuistry  was  exposed,  as  men  wlio  obtain  shipments 
in  the  west  to  make  fictitious  markets  in  the  east,  are  far  more  dan- 
gerous to  the  public  at  large  than  those  who  buy  up  certain  stocks 
to  make  shorts  in  them  scpieal.” 

Q.  We  would  like  to  have  you  read  any  important  fact  contained 
there  which  you  can  draw  the  attention  of  the  committee,  and  to  that 
fact  we  would  like  to  have  your  indorsement  as  being  more  reliable? 

A.  Yes,  sir;  I wdll  read  further  : “All  trading,  that  is,  buying 
and  selling  commercial  commodities  for  a profit,  partakes  more  or 
less  of  risk  incident  on  fluctuations  in  price  and  changes  in  the  rela- 
tion of  supply  and  demand,  production  and  consumption.'’ 

“The  old-time  merchant  fitted  a ship  with  a cargo  and  sent  her 
to  foreign  ports,  where  it  was  sold  and  a return  cargo  bought  and 
brought  back  for  sale  in  the  home  market.  The  round  voyage 
often  occupied  one  or  more  years.  The  man  of  sagacity,'  fore- 
thought and  thorough  knowledge  of  the  trade  in  which  he  was  en- 
gaged was  usually  successful,  while  ill-planned  and  badly-managed 
ventures  were  generally  disastrous. 

“ Transactions  of  the  present  day  involve  the  same  elements  of 
risk  during  the  period  between  the  purchase  and  the  sale.  Since 
the  introduction  of  the  telegraph  and  the  (piick  means  of  transit, 
risks  of  fluctuation  have  been  reduced  to  a minimum.  The  dis- 
tributing dealer  now  being  sure  of  replenishing  at  any  time  on  short 
notice  takes  lighter  stocks,  the  heavier  risk  being  left  with  the  im- 
porter or  producer  of  the  intervening  wholesale  dealer.  A mer- 
chant in  Brazil  or  Chili  has  an  early  advice  of  ^ur  markets.  He 
takes  a ship,  buys  her  cargo  of  grain,  which  he  telegraphs  to  his 
correspondent  in  New  York,  Boston  or  New  Orleans,  and  such 
parts  of  it  as  proves  satisfactory  as  to  profit  is  sold  before  it  is  loaded 
on  board  the  ship,  the  buyers  carrying  the  risk  of  fluctuation  during 
the  voyage.  If  the  cargo  has  been  bought  in  the  home  market  for 
consumption  in  a foreign  market,  the  merchant  is  in  expectation  of 
a profit  upon  it  soon  after  its  arrival  at  tlie  port  of  destination.  If 
he  becomes  {ipprehensive  he  can  telegraph  to  his  fact  or  in  Liverpool 


39 


or  Santiiigo  to  sell  the  cargo  to  arrive,  in  order  to  avoid  a loss  or 
gecure  a protit.  Again,  the  miller  in  Liverpool  or  New  York  has 
an  opportniiity  to  contract  for  many  months’  production  of  his  mill 
* at  an  assured  though  small  profit,  if  he  can  secure  the  grain.  II is 
cash  capital  is  too  small  for  so  large  a supply,  and  it  would  both 
strain  his  credit  and  advance  the  price  to  buy  on  time.” 

A grain  man  finding  he  is  getting  a large  stock  on  hand  will  sell 
it  out  and  buy  a future  to  save  himself ; now,  if  you  should,  by 
legislative  enactment,  prevent  him  from  dealing  in  options,  it  would 
be  hard  on  him. 

Q.  In  what  way  ? 

A.  Because  he  could  not  make  this  disposition  of  the  propertjf  ; 
we  could  not  save  the  owner  from  loss ; he  would  rather  hold  his 
property  and  pay  storage,  but  he  prefers  to  sell  it  now  and  buy  in 
the  future. 

Q.  Suppose  a law  should  be  enacted  forbidding  dealing  in 
futures,  all  transactions  would  then  be  according  to  or  based  upon 
the  natural  value,  would  it  not  ? 

By  Senator  Browning  : 

Q.  It  would  then  be  a natural  value  all  the  time  ? 

A.  Yes  ; but  you  could  not  prevent  speculation  ; I could  buy  ^ up 
all  the  wheat  in  the  country  and  keep  buying  it  up  and  advance 
prices  in  that  manner. 

Continued  by  Senator -Boyd  : 

Q.  Don’t  you  think  that  would  be  an  illegal  and  immora* 
transaction  ? 

A.  The  question  was  put  about  dealing  with  white  oats  in  the 
place  of  mixed  oats ; that  a party  had  contracted  to  deliver  mixed 
oats  and  offered  white  oats,  and  the  other  had  declined  to  take  it  be 
cause  he  wanted  mixed  oats  ; that  was  a speculation. 

Examined  by  Senator  Browning  : 

Q.  You  want  the  difference  between  the  price  that  you  sold  for 
or  bought,  or  the  oats  delivered  without  regard  to  its  quality  ? 

A.  Yes  ; running  the  price  up  and  it  would  be  delivered  to  me  ; 
I wont  take  another  article ; I am  a speculator,  and  my  efforts  have 
been  to  raise  the  price,  and  I want  you  to  deliver  to  me  mixed 
oats  ; that  is  a fair  transaction. 


40 


Examined  by  Senator  Boyd  : 

Q.  What  increase  per  cent  in  the  price  of  grain  has  been  caused 
by  these  illegal  s]_>ecnlations  ? 

A.  I don’t  know,  sir. 

Q.  Any  such  increase  or  the  burden  of  any  such  increase  would 
fall  upon  the  consumer? 

A.  Upon  the  consumer  of  the  recjuired  commodity;  I am  not  my- 
self taking  an  active  part  in  the  business,  for  that  reason  1 am  igno 
rant  of  some  of  these  subjects  upon  which  you  require  information. 

Examined  by  Senator  Browning  : 

Q.  Mr.  Edsotj  stated,  and  I suppose  you  will  concur  with  him  in 
the  opinion,  that  the  present  price  of  grain  in  the  market  is  owing 
to  a sliort  crop  ? 

A.  It  is  in  a great  measure. 

Q.  Now  in  connection  with  that  I would  like  to  ask  if  “ futures” 
are  sold  without  possession,  or  without  the  immediate  ])rospect  of 
possession  ? 

A.  Yes  ; independent  of  that. 

Q.  So  that  persons  can  deal  in  futures”  without  the  prospect 
of  possession,  with  a view  to  increase  the  price? 

A.  Legitimate  business  would  do  that. 

Q.  Then  although  you  raise  the  market,  that  would  not  have  any 
thing  to  do  in  regulating  the  pilces? 

A.  Not  of  sales  in  the  future;  but  when  the  price  declines  then 
there  is  a large  quantity  in  the  market,  and  a man  who  has  got  a 
‘‘future”  would  get  the  benefit  of  it. 

Q.  Don’t  you  think  the  present  price  of  grain  due  more  to  deal- 
ing in  “futures”  than  to  a scarcity  of  supply? 

A.  That  question  I am  unable  to  answer;  that  is  rather  a specu- 
lative inquiry. 

Q.  If  the  proportion  of  business  done  in  sales  in  the  future  or 
options  is  so  much  greater  than  that  of  spot  as  shown  by  the  figures 
you  have  stated,  has  not  that  a great  deal  to  do  in  advancing  the 
price,  or  keeping  it  up? 

A.  It  is  hard  to  determine  ; we  see  these  fluctuations  all  the  time  ; 
they  may  in  the  future  elevate  the  price  or  they  may  knock  the 
j)rice  down. 

Q.  If  that  is  the  tendency,  do  you  think  it  detrimental  to  the  con- 
sumers? We  represent  the  people  and  we  are  trying  to  And  out 


41 


some  remedy  for  their  benefit,  and  we  want  your  best  judgment  on 
the  question  ? 

A.  It  is  a difficult  matter  to  offer  a judgment  on. 

Q.  Do  you  know  of  any  corners  in  No.  2 mixed  oats  ? 

A.  No. 

Q.  Do  you  know  of  an  attempt  to  get  up  a corner  in  winter 
wlieat  ? 

A.  I don’t ; I am  not  familiar  with  the  doings  on  ’change. 

Q.  How  do  you  do  it  ? 

A.  There  arc  my  partners  and  clerks  who  take  an  active  part. 

Q.  Have  you  ever  held  an  official  position  on  the  Produce  Ex- 
change ? 

A.  I have  been  the  president  of  that  Exchange. 

Q.  At  what  period  'i 

A.  In  1870  and  1871  I was  president. 

David  Bingham^  sworn  : 

Examined  by  Senator  Boyd: 

Q.  Where  do  you  reside? 

A.  In  New  Jersey. 

Q.  Where  do  you  do  business  ? 

A.  New  York. 

Q.  What  is  your  business? 

A.  Exporter  of  grain. 

Q.  Your  place  of  business? 

A.  47  Exchange  place. 

Q.  You  are  connected  with  the  Produce  Exchange  ? • 

A.  Yes,  wdth  the  board  of  managers. 

Q.  Have  you  ever  held  any  official  position  ? 

A.  Nothing,  except  that. 

Q.  Have  you  been  president  of  the  Exchange  ? 

A.  No. 

Q.  Will  you  state  to  the  committee  what  you  know  and  your  views 
concerning  the  system  of  making  corners  and  dealing  in  futures,  in 
reference  to  its  effect  on  commerce  and  the  public  welfare? 

A.  The  dealing  in  ^‘futures”  within  the  last  few  years  has  been 
encouraged  on  the  Produce  Exchange  and  was  beneficial  to  the 
business  of  New  York  ; dealing  in  futures  involves  dealing  in  what 
a man  has  not  got  and  the  buying  of  what  he  does  not  want.  And 
in  dealing  in  that  way,  the  Exchange  has  endeavored  to  keep  the  run 
6 


42 


of  the  State  ; the  extreme  of  this  speciilatioiiis  wliat  is  called  ‘‘  cor- 
ners ” and  it  bears  a relation  to  o])tions  ; the  extreme  is  a decided' 
evih  The  Produce  Exchange  does  not  recognize  “ corners  ” and 
hao  rules  against  these  — ])erhaps  not  tlie  best  rules  — “puts” 
and  “ calls”  are  not  recognized  at  all.  An  effort  is  now  being  made 
to  enforce  these  rules ; but  with  all  that  it  cannot  be  very  well  pre- 
vented. The  Exchange  has  had  under  consideration  regulations. 

Q.  Do  “ corners”  ever  occur  among  dealers  in  New  York  ? 

A.  Yes;  there  was  a corner  in  March,  and  one  in  oats  last  Mon- 
clay. 

By  Senator  Browning  : 

Q.  Is  it  broken  ? 

A.  That  breaks  always  the  last  day  of  the  month  ; if  the  par- 
ties who  have  sold  the  oats  object  to  deliver  and  are  not  satisffed 
with  the  price,  the  other  party  can  appeal  to  the  committee  to  decide 
what  a fair  price  is. 

Q.  That  is  in  the  Produce  Exchange  ? 

A.  Yes. 

Q.  They  are  ordinary  dealers  ? 

A.  Certainly  ; on  the  Exchange. 

Q.  They  are  all  dealers  belonging  to  the  Exchange  ? 

A.  Practically  tiiey  do  all  the  option  business  done  there. 

Q.  Describe  some  of  the  evils  relating  to  the  making  of  “cor- 
ners” and  dealing  in  ‘‘  futures?  ” 

A.  I don’t  recognize  any  evils  in  dealing  in  futures,  ” and  I 
don’t  see  why  a man  can’t  buy  and  sell  goods  and  deliver  them  in 
the  future  as  on  “ to-day  ; ” the  evil  arises  where  a body  of  men 
get  together  and  combine  to  take  advantage  of  speculation  and 

squeeze”  other  men  like  an  honest  Quaker  half  a dozen  men  . 
get  together  and  have  an  idea  that  they  can  “ pluck  ” another  man.. 

Q.  Does  this  frequently  occur  in  New  York? 

A.  V^ery  rarely  ; none  of  that  character  ever  occur  here. 

Q.  \\Tiere? 

A.  In  Chicago. 

Q.  Have  you  known  an  option  broker  squeezed  out  of  business  — 
off  the  floor. 

A.  An  option  broker  is  a man  who  does  not  do  business  on  his 
own  account ; a broker  docs  business  for  another  man ; an  option 


43 


dealer  does  biisines  on  his  own  account ; I have  known  option 
dealers  “ squeezed  ” out,  by  selling  more  than  they  were  able  to 
carry  ; of  course  they  can  be  “ squeezed  out.  ” 

Continued  by  Senator  Boyd  : 

Q.  Do  yon  know  of  New  York  dealers  taking  a part  in  specula- 
tions at  Chicago  or  elswhere  ? 

A.  I expect  they  all  do. 

Q.  What  effect  has  these  speculations  upon  the  transportation  in- 
terests of  the  country  ? 

A.  The  effect  is  to  disarrange  them  ; to  give  them  a large  amount 
of  freight  when  they  don’t  want  it,  and  to  keep  it  away  when  they 
do. 

Q.  How  does  it  affect  the  rates  of  transportation  ? 

A.  It  affects  the  rates  in  this  way  — that  a man  who  can  control 
five  or  six  million  bushels  of  wheat  can  afford  to  wait  until  the  rail- 
roads can  carry  it  at  a reasonable  rate. 

By  Senator  Browning  : 

Q.  What  effect  would  it  have  on  the  export  trade  ? 

A.  It  does  not  affect  it  much  ; we  can  generally  buy  for  export 
at  a legitimate  value,  whatever  its  speculative  price  may  be.  We 
can  buy  in  our  own  markets  at  a fair  value. 

Q.  To  what  extent  does  it  tend  to  increase  the  price  of  bread- 
stuffs  and  other  commodities? 

A.  We  consider  it  to  be  a very  severe  corner  that  would  advance 
prices  ten  per  cent. 

Q.  Above  the  natural  price  ? 

A.  Yes.  In  Chicago  they  are  selling  April  wheat  at  $1.36,  and 
it  costs  three  cents  to  carry  that  into  May  ; you  can  buy  the  same 
in  May  at  $1.39 ; you  can  buy  for  delivery  on  that  day  at  $1.39. 

Q.  Then  the  difference  of  price  goes  into  the  pockets  of  the 
speculators  ? 

A.  Yes. 

Q.  The  producer  gets  none  of  the  benefit  of  it? 

A.  Yery  little.  Some  producers  will  send  their  grain  in  when 
there  is  a corner,  but  they  don’t  reduce  the  corner;  the  producer 
cannot  spoil  the  corner,  the  consumer  might ; he  can  generally  buy 
cheaper  than  the  speculator. 

Q.  What  remedy  would  you  propose  for  the  prevention  of  these 
evils  ? 


44 


A.  The  only  remedy  would  be  to  make  all  men  moral  and  honest; 
you  can’t  do  it  by  law  ; the  Exchange  is  the  most  efficient  machinery 
to  work  with,  and  they  can’t  do  it. 

Q.  But  yon  could  prevent  the  gambling  ? 

A.  I don’t  think  so. 

Q.  Do  you  think  that  a power  exists  in  the  Legislature  to  remedy 
this  gambling  in  grain  ? 

A.  I think  not,  because  Chicago  is  open  to  the  traffic  and  so  is 
New  Jersey. 

Q.  There  was  a law  passed  in  Illinois  in  relation  to  this  matter  ; 
do  you  know  what  that  law  was  ? 

A.  The  law  permits  all  this  kind  of  dealing,  but  people  on  the 
Exchange  don’t  pay  much  attention  to  them;  if  a man  should  appeal 
to  the  law  they  would  turn  him  out  of  the  Exchange  ; if  you  go  to 
work  and  make  a law  the  Exchange  did  not  think  desirable,  and  a 
man  were  to  appeal  to  it,  they  would  turn  him  out. 

Q.  Has  it  ever  been  done  ? 

A.  Yes;  we  constantly  turn  men  out  for  appealing  to  the  law 
Avhen  they  make  a contract;  we  settle  everything  by  arbitration,  in- 
cluding these  option  contracts. 

By  Senator  Boyd  : 

Q.  What  you  mean  to  say  is  that  if  a man  violates  the  terms  of 
his  contract,  that  then  you  turn  him  out  ? 

A.  Yes. 

Continued  by  Senator  Browning  : 

Q.  The  witness  meant  — appeal  to  any  thing  outside  of  the 
authority  of  the  Exchange  ? 

A.  That  is  what  I meant;  if  a man  makes  a contract  and  he  agrees 
to  abide  by  certain  rules,  if  he  does  not  abide  by  those  rules,  of 
course  they  turn  him  out. 

Q.  The  impression  was  that  you  had  such  rules  that  if  a man 
attem])ted  to  obtain  legal  redress  you  would  turn  him  out  ? 

A.  All  contracts  are  made  under  the  rules  of  the  Exchange.  Con- 
tracts, as  j’egards  “])uts”  and  calls,”  the  Exchange  will  not  enforce; 
men  b)*ought  up  under  it  would  not  pay  attenticn  to  it. 

Examined  by  Senator  Boyd  : 

Q.  Have  you  known  ]>ersons  who  have  been  injured  financially 
by  reason  of  these  transactions? 


45 


A.  Yes. 

Q.  Know  many  such  persons  ? 

A.  Yes;  there  is  a list  of  tliem  on  ’change. 

Q.  Are  they  of  frequent  occurrence  ? 

A.  Kot  very  frequent;  perhaps  once  in  a while  — once  in  a 
month  or  so. 

Examined  by  Senator  Browning  . 

Q.  Do  you  know  whether  there  are  any  rules  permitting  or  pre- 
en ting  members  of  the  Exchange  from  doing  business  outside  of 
Exchange  \ 

A.  There  are  no  such  rules. 

Q.  Are  there  any  understandings  between  mill-owners,  that  they 
will  not  sell  except  upon  the  floor  of  the  Exchange,  or  through  the 
Exchange  ? 

A.  I don’t  know  of  any  such  agreements ; the  Exchange  has  a 
rule  that  it  will  not  enforce  a contract  made  after  four  o’clock. 

Q.  Now,  being  an  exporter,  when  you  are  seeking  a vessel  you 
call  that  trying  to  “ get  a charter  *”  is  that  the  term  used  ? 

A.  Yes. 

Q.  A broker’s  charter  ? 

A.  Yes,  it  is  done  through  brokers. 

Q.  Do  they  ever  get  up  a corner”  in  charters? 

A.  No  corner  in  charters,  because  nobody  will  sell  them  unless 
he  has  them;  there  is  no  ‘'option”  trade  in  charters;  I have 
known  men  charter  more  vessels  than  they  can  get ; I have  known 
men  undertake  to  supply  3,500  quarters  and  were  not  able  to  get 
more  than  3,000;  I don’t  call  that  “cornering,”  men  undertaking  to 
get  charters  at  certain  rates. 

Examined  by  Senator  Boyd  : 

Q.  Do  you  think  this  system  is  opposed  to  public  policy  ? 

A.  I think  not,  if  confined  within  legitimate  bounds. 

Q.  Don’t  you  tliink  the  Legislature  has  power  to  pass  some  law 
by  which  it  could  be  confined  within  legitimate  bounds  ? 

A.  I think  not;  I know  of  no  law  that  the  Legislature  could 
pass,  or  of  any  existing  law,  that  would  enable  a man  who  had  been 
mulcted  in  any  difierence  to  collect  it  back  ; a law  may  be  passed 
that  might  be  appealed  to  by  assignees  or  executors,  or  which  might 
be  a sort  of  terror  to  evil-doers;  no  other  law  could  be  appealed  to  > 
if  I were  selling  grain  and  got  into  a “corner,”  I would  not 


46 


appeal  to  the  law;  I would  face  the  music  and  settle  ; in  case  of  a 
man’s  death,  his  executor  or  an  assignee  could  appeal  to  the  law. 

Q.  Don’t  you  think  that  a law  could  be  enacted  that  would  be 
heneficial  to  the  public  to  ])revent  men  selling  grain  ajid  other 
products  which  they  do  not  possess  ? 

A.  I think  not  — what  they  expect  to  possess;  I sold  grain  to- 
day, I expect  to  possess,  because  dealing  in  the  market  entirely  for 
one  kind  of  grain  I have  got  coming  now,  to-day  ; but  to-day  some 
spring  wheat  and  red  winter  wheat  are  sold  instead. 

Senator  Browning  : 

Q.  Explain  that  ? 

A.  I paid  to-day  for  wheat  from  western  parts  — wheat  of  a 
choice  quality  — $1.40,  delivered  in  I^ew  York  ; that  will  give  par- 
ties in  Chicago  about  $1.30  on  board  their  vessel ; that  is  just  ten 
cents  for  bringing  it  down  at  the  present  rate  of  freight,  by  lake 
nr  canal ; Isold  against  that  No.  2,  red  winter  wheat,  to  deliver  in 
May, at  $1,471;  the  intrinsic  difference  in  the  value  of  these  two  wheats 
tor  milling  both  of  theni  does  not  exceed  five  cents  a bushel,  and  I 
will  therefore  have  a difference  of  twelve  and  one-fourth  cents  to  save 
any  probable  corner  in  May;  1 receive  my  wheat  grain  afloat  instead  of 
in  store,  because  in  these  option-contracts  they  bet  on  grain  in  store 
which  we  hold  at  about  one  and  one-lialf  cents  less  than  grain  afloat. 

Q.  Is  there  more  profit  ? 

A.  No. 

Q.  Explain  how  you  can  make  money  by  the  transaction  ? 

A.  If  a firm  controls  red  winter  wheat  they  put  the  price  beyond 
all  reason  so  that  we  can’t  settle  contracts  at  a fair  price  — we 
should  lose  money — but  if  they  should  settle  legitimately,  or  near 
tlie  value  of  the  wheat,  we  can  make  a little ; Ave  do  this  business 
constantly. 

Q.  Does  the  one  depend  on  the  other  ? 

A.  Yes  ; we  make  a ])resent  purchase  of  wheat  and,  therefore,  we 
sell  options  against  it  to  protect  it  until  it  arrives  here  and  we  get  a 
better  quality  of  wheat  and  we  take  a chance  of  selling. 

By  Senator  Boyd  : 

Q.  Mr.  Dej)ew  stated  that  there  were  instances  where  shippers 
have  offered  to  transport  wheat  without  cost,  even  that  a premium 
has  been  offered  by  ship-owners  who  will  carry  grain  as  ballast: 
ean  you  tell  us  about  that? 

l 


47 


A.  I shipped  some  wheat  and  the  company  offered  to  take  it  for 
nothing.  I paid  a farthing  a bushel  to  Liverpool ; we  would  not. 
ship  it  for  nothing,  because  if  we  did  we  could  not  make  the  steamer 
responsible  in  case  of  damage. 

Q.  Do  yon  know  whether  they  refuse  payment  ? 

A.  Yes;  in  JL)ston  they  gave  some  people  a premium  to  ship 
grain ; it  makes  good  ballast,  as  it  also  costs  but  little  for  stowage. 

Q.  What  is  the  difference  in  the  price  of  grain  on  the  other  side 
and  on  this  side  ? 

A.  The  price  is  about  on  a par  ; the  wheat  we  bought  was  just 
about  the  Liverpool  price. 

Q.  What  is  the  natural  condition  which  regulates  the  price  ? 

A.  Supply  and  demand  fixes  the  price  legitimately. 

Q.  Is  tliere  any  increase  of  price  beyond  the  natural  price  caused 
by  artificial  means  and  speculation? 

A.  Yes,  but  it  can  only  be  of  a temporary  character;  something 
like  a dam  stopping  the  water  of  a river;  when  it  is  broken  the 
water  rushes  through. 

• 

By  Senator  Browning  : 

Q.  Can  you  allow  the  best  grain  to  be  delivered  to-day  cheaper 
than  you  can  buy  it  ordinarily  in  the  market  when  there  is  no 
delivery  ? 

A.  We  sell  and  buy  it  constantly;  the  prices  might  change  to- 
morrow. We  bought  to-day  at  $1.45  ; the  price  for  the  same 
wheat  for  delivery  in  May  would  be  $1.48J- ; for  delivery  in  June 
would  be  $1.46J. 

Q.  Selling  in  the  future  is  generally  for  more  or  less  ? 

A.  Generally  less;  ^‘futures”  are  generally  discounted  more 
months  in  a year  than  they  are  at  a premium.  In  May  and  June 
they  might  be  at  a discount  ; but  when  we  come  along  in  the  months 
of  November  and  December,  and  each  succeeding  months  of  the 
winter,  and  the  canals  are  closed,  and  we  are  supposed  to  have  a 
stock  laid  in,  they  would  probably  bear  a premium  the  succeeding 
months  at  a higher  premium  than  the  preceding  ones;  the  winter 
stocks  command  a premium  ; but  when  we  are  expecting  a harvest, 
the  premium  becomes  lower. 

By  Senator  Boyd  : 

Q.  Have  you  any  further  information  you  can  give  us  ? 

A.  Nothing  further^;  except  to  give  you  a copy  of  our  rules. 

Adjourned  till  April  22,  1882,  at  2 o’clock. 


48 


April  22,  1882. 

No  meeting  of  the  committee  took  place. 


April  29,  1882. 

Present  — Senator  Boyd,  Chairman,  Senator  Browning. 

Isaac  H.  Reed^  recalled  : 

Examined  by  Senator  Boro  : 

Q.  Any  additional  statement  you  wish  to  make,  you  will  please 
make  it  now  ? 

A.  I was  asked  at  the  previous  session,  if  a seller,  who  sold  what 
he  did  not  possess,  was  not  responible  for  the  consequences.  I 
replied,  that  that  was  a moral  question ; I did  not  comprehend 
the  meaning  of  the  question  asked  me ; certainly  he  is  respon- 
sible ; but  for  what  ? — for  whaU  is  the  question  ; what  knowledge 
do  you  desire  to  acquire  by  that  question ; I was  asked  if  a man  sold 
wheat  he  did  not  possess,  was  he  not  responsible  for  the  consequen- 
ces. Whether  it  was  an  immoral  act,  may  be  a question.  I replied, 
that  it  Avas  a moral  question  ; I don’t  know  whether  I put  the  right 
interpretation  upon  it. 

Senator  Boyd — I don't  recollect  the  question. 

Mr.  Peed  — Q.  Whether  he  was  responsible  for  bringing  about  a 
state  of  things,  if  he  sold  Avheat  which  he  did  not  have ; that  is  to 
say,  by  selling  what  he  has  not,  and  a corner’^  comes  upon  them, 
is  he  responsible  for  his  own  acts  in  getting  up  corners  ; ” have 
you  any  further  questions  % 

In  regard  to  legislative  action  in  the  matter  of  this  option 
business,  I do  not  see  why  the  Legislature  should  interfere  with  any 
legitimate  trade;  it  is  considered  legitimate;  there  are  several 
reasons  why  these  options  should  be  made,  if  necessary.  A farmer 
cultivating  a large  quantity  of  ground,  if  he  can  make  a sale  for  de- 
livery at  the  time  of  the  harvest,  and  he  wishes  to  avail  himself  of  it, 
he  should  not,  therefore,  be  trammeled  ; he  should  be  permitted  to 
make  a sale.  If,  on  the  other  hand,  a party  thinks  the  market  is 
going  to  he  lower  or  higher,  whicheA^er  it  may  be  — Avhether  he 
thinks  the  market  Avill  be  Ioav  or  high,  he  makes  an  option  ” con- 
ti-act  for  the  future  delivery  at  a ]>rescnt  low  price;  men  are 
bound  to  make  money  and  they  make  it  in  various  Avays  ; business 
is  always  more  or  less  a speculation  ; for  instance,  you  Avill  findy 


40 


that  wlion  cotton  in  the  soutli  is  likely  to  be  very  short,  parties 
who  deal  in  mannhictnred  goods  would  want  a large  amount  of 
those  goods  in  anticipation  of  higher  prices  ; the  intelligence  of  the 
merchant  enables  him  to  speculate  and  anticipate  the  wants  of  the 
■people. 

Q.  Is  the  case  of  a farmer  who  sells  his  crop  of  wheat  deliverable 
at  a future  time  not  very  different  from  the  case  of  a speculator  ? 

A.  The  case  is  different ; a speculator  will  take  the  hazard  ; a 
farmer  wishes  to  realize  at  once  ; his  profits  are  from  the  sale  of  his 
commodity  ; he  is  satisfied  with  the  price  and  there  his  share  ends ; 
but  that  of  the  speculator  is  continuous  ; it  occurs  to  me,  that  a law 
should  not  be  made ; that  no  legislative  action  is  necessary  to 
govern  these  option  transactions.  There  are  abuses,  as  there  are  in 
all  things  * we  must  take  the  good  with  the  bad. 

Q.  "Will  you  please  state  what  these  abuses  are,  Mr.  Reed,  to 
which  you  have  referred  ? 

A.  For  instance  corners  ” in  any  one  commodity,  to  monopolize 
it,  to  prevent  other  people  getting  it,  except  at  a very  high  price  ; but 
the  party  who  is  so  unwise  as  to  dispose  of  what  lie  has  not  got,  he 
is  the  sufferer;  but  that  is  the  i-esult  of  speculation  ; upon  another 
occasion  he  might  be  more  successful,  but  that  comes  in  within  the 
abuses  — these  option  dealings. 

Q.  What  effect  would  any  legislation,  which  would  limit  specu- 
lation in  this  kind  of  dealing  in  ‘‘futures”  and  “ corners,”  have 
upon  the  Produce  Exchange  ? 

A.  It  might  decrease  the  volume  of  business  unless  it  could  be  in 
some  Avay  avoided. 

Q.  Would  that  affect  the  pecuniary  interest  and  business  prospects 
of  the  members  of  the  Corn  Exchange  ? 

A.  It  would  affect  their  pecuniary  interest,  because  it  is  a matter 
of  considerable  profit  to  members  of  the  Exchange  — this  dealing 
in  ootions. 

Q,  In  what  way  is  it  a matter  of  profit  to  members  of  the  Pro- 
duce Exchange  to  have  such  dealings  in  the  future  and  options? 

A.  It  pays  us  a profit  for  doing  the  business  — a commission  ; we 
derive  a commission  from  doing  the  business.  Very  many  mem- 
bers do  simply  a commission  business  on  the  Exchange  ; they  deal 
largely  in  these  options  on  commission. 

Q.  Any  legislation  wdiich  would  place  any  restrictions  upon  such 
dealings  as  are  now  carried  on,  on  the  Produce  Exchange,  would 

7 


I 


50 


injuriously  affect  the  interests,  pecuniary  and  otherwise,  of  iriemhers 
of  the  Produce  Exchange  ? 

A.  It  would,  if  it  could  he  prev^ented  by  legislation. 

Q.  Are  you  a member  of  the  Produce  Exchange  ? 

A.  I am. 

Q.  Have  you  any  other  testimony  3mu  are  desirous  to  give? 

A.  No  ; I have  none,  except  what  I have  given  lieretofore.  I 
think  I stated  previously  that  very  often  the  grain  warehouses  go 
heated,  and  a party  does  not  wish  to  dispose  of  the  grain  at  the 
present  price,  anticipating  a higher  price ; he  desires  to  ])ur- 
chase  ahead  and  would  sell  and  purchase  for  subsequent  months  ; 
now  to  prevent  that  by  legislation  would  be  a veiy  unfair  thing. 

Q.  Don’t  yon  think  a law  could  be  framed  which  would  tend  to 
remedy  existing  abuses,  which  you  admit  to  exist,  without  materi- 
ally affecting  legitimate  business  and  speculation  ? 

A.  That  is  a question  I can’t  answer  satisfactorily  to  m^’self ; to 
give  an  offhand  answer — I don’t  see  how  it  can  be  done. 

Charles  Partridge^  affirmed  : 

Examined  by  Senator  Boyd  : 

Q.  Where  do  you  reside? 

A.  20  East  Twenty-second  street ; my  business  place  is  43  Front 
street. 

Q.  In  what  business  are  ymu  engaged  ? 

A.  The  flour  and  commission  business. 

Q.  How  long  have  you  been  engaged  in  that  business  ? 

A.  I think  since  1862. 

Q.  And  you  are  familiar  with  all  the  proceedings  of  the  trade  ? 

A.  Yes;  with  the  flour  trade. 

Q.  Are  you  a member  of  the  Produce  Exchange  ? 

A.  Yes. 

Q.  How  long  have  you  been  a member  ? 

A.  Ever  since  that  time  (1862). 

Please  state  your  views  with  reference  to  the  system  of  mak- 
ing “ corners”  and  dealing  in  ^'futures”  in  relation  to  its  effect  on 
the  commerce  of  the  country  and  upon  the  public  welfare? 

A.  1 think  it  is  very  disastrous  to  both  ; as  to  commerce,  there 
is  no  commerce  in  it.  I have  just  been  looking  up  the  trans- 
actions in  this  city,  of  actual  sales  and  options,  “puts”  and  “ calls” 
etc.,  and  the  result  is  sui-pilsing. 


51 


I will  explain  to  you : 

At  about  the  time  of  gathering  of  the  food  cropis  of  the  world, 
say  in  September,  a statement  of  the  crops  and  requirement  of  the 
different  countries,  their  shortages  and  surplus  is  made.  I present 
to  you  such  statement  for  the  year  1879,  as  follows : 


Surplus. 


Eussia 

Austro-Hungary 

Chili 

Canada  and  Manitoba. 

British  India. 

Egypt.. 

Australia. 

United  States,  


35,  000,  000 
12,  000,  000 
4,  000,  000 
13,  000,  000 
8,  000,  000 
2,  000,  000 
8,  000,  000 
185,  000,  000 


267,  000,  000 


Deficiency. 


Switzerland,  Spain  and  Portugal, 

Italy 

Germany,  Holland  and  Belgium. 

England 

France 


8,  000,  000 
12,  000,  000 
18,  000,  OOo 
137,  000,  000 
55,  000,  000 

230,  000,  000 


Surplus  over  all 


37,  000,  000 


Up  to  this  time,  1879,  no  combination  of  men  had  been  formed 
to  control  the  crops  of  the  world  or  the  crops  of  this  country,  but 
the  above  statement  showing  Europe’s  necessity  and  America’s  sur- 
plus, inspired  certain 'moneyed  men  in  Hew  York,  Buffalo,  Toledo, 
Chicago,  Milwaukee,  Cincinnatti,  St.  Louis  and  other  food  markets, 
to  combine  together  and  buy  up  and  control  the  surplus  food  of 
America,  and  put  those  who  needed  it  at  home  and  abroad  under 
money  tribute  to  them  or  starve.  In  this  statement  1 will,  if  you 
please,  confine  myself  to  illustrations  of  the  dealings  of  this  combi- 
nation in  v/heat,  which  methods  they  also  applied  to  other  food  pro- 
ducts. 

To  make  my  statements  easily  understood,  I explain  that  there 
are  different  grades  or  qualities  of  wheat,  and  each  market  has  its 
chosen  inspector  to  examine  the  car  loads  of  wheat  and  determine 
its  grade,  each  grade  bearing  a relative  price. 


52 


The  largest  share  of  wheat  grades,  number  two  winter  and  number 
two  spring,  ‘‘and  number  two  red  winter  wheat,  is  almost  exclu- 
sively dealt  in  by  these  combinations  in  New  York.’’ 

The  spring  wheat  is  traded  in  mostly  in  Chicago,  and  retl  winter 
wheat  in  New  York;  they  uniformly  have  a relative  value  and  are 
largely  exported. 

The  combination  of  speculators  in  1870,  and  since,  send  their' 
agents  into  the  wheat  sections,  and  buy  (generally  at  the  doors  of  the 
millers  and  elevators  on  the  railroads),  the  wheat  offered,  commenc- 
ing with  the  early  delivery  of  the  crops;  this  wheat  is  sent  forward 
and  fills  the  elevators  on  the  Atlantic  coast  and  in  Buffalo,  Toledo, 
Chicago,  Milwaukee  and  other  markets,  and  in  New  York  and 
Chicago  they  press  lake  and  canal  boats  into  storage  services. 

From  the  first  receipts  of  a new  crop  of  wheat  until  the  storage 
capacity  is  filled,  these  speculators  gradually  run  up  the  price  of 
wheat  and  hold  it  above  the  prices  the  needful  .countries  can  get 
supplies  from  other  countries,  and  make  their  money  by  themselves, 
pretentiously  selling,  “generally  through  brokers,”  to  themselves  and 
others,  large  quantities  at  high  prices,  and  further  on  at  low  prices 
to  inveigle  the  unwary  into  buying  or  selling  “ futures  ” one,  two 
and  three  months  in  advance,  and  when  these  periods  expire  the 
combinations  sell  or  buy  of  each  other  and  to  others,  in  the  opposite 
direction,  to  make  price  and  scoop  the  difference  in  price  into  their 
own  pockets,  and  in  this  way  they  make  more  money  than  they 
would  to  sell  at  prices  at  which  foreign  countries  would  take  it,  and 
for  such  dealings  they  can  afford,  as  they  generally  do,  to  sell  late  in 
the  season  (say  March,  April  or  May)  for  export,  for  twenty-five 
cents  or  more  per  bushel,  less  than  they  could  have  taken  for  it 
in  December,  January  or  February ; but  while  they  have  made 
money  by  this  management,  our  own  people  pay  their  unreasonable 
and  arbitral^  prices,  and  they  have  filched  their  victims  in  deals  in 
futures,  options,  puts,  calls,  etc.,  and  the  country  has  lost  in  gold  the 
difterence  in  the  price  the  wheat  could  have  been  sold  for  and  the 
price  they  take,  averaging  say  twenty-five  cents  per  bushel. 

I have  before  said  that  number  two  red  winter  wheat  represents 
a very  large  share  of  the  whole  winter  wheat  crop,  and  that  this 
grade  is  chiefly  dealt  in  by  speculators  in  New  York  (this  is  No.  2 
spring  wheat),  and  is  the  wheat  mostly  used  and  exported.  I have 
got  together  the  dealings  on  the  New  York  Produce  Exchange,  in 
number  two  red  winter  wheat,  daily,  from  first  July,  1879,  to  the 
twentieth  A])ril,  1882.  The  sales  for  use  separately  from  the  specu- 
lative deals,  and  the  prices  which  I offer  in  evidencel 


EXHIBIT  ‘‘A.” 


Column  1.  Humber  of  bushels  of  Bed  Winter  Wheat  sold  in  the 
Produce  Exchange  in  Hew  York  city. 

Column^.  Humber  of  bushels  dealt  in  by  “Futures,”  “Puts,” 
Options,”  “ Calls,”  etc. 

Column  3.  Prices  of  Spring  Wheat  Ho.  2,  the  sales  of  which 
are  not  reported. 

• Column  4.  Prices  of  Bed  Winter  Wheat,  at  different  data,  in  the 
Produce  Exchange. 

Column  5.  Prices  at  which  Ho.  2 Bed  Winter  Wheat  was  sold  at 
various  times  for  one,  two  and  three  months  “ Future.” 


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EXHIBIT  A — ( Continued). 


84 


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EXHIBIT  A.— (Continued). 


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88 


EXHIBIT 

Neio  York  Produce  Exchange — Sales  of  luheat. 


Spot  or  cash. 

Option,  Futiires, 
Puts  and  Calls, 
Lontj:  and  Siiort. 
Straddle.s,  etc. 

Bush. 

Bush. 

8,025,000 

ll,153,0()(i 

12,415,00(1 

20,207, 0<'() 

12,192,000 

20,713.000 

9,985,000 

29, 350,  OHO 

8,207, 0(J0 

19,109,000 

5,901,000 

21,810,000 

4,712,000 

20,770,000 

5,180,000 

22,207,000 

0,451,000 

22,477,000 

G,472,n00 

27,910,000 

7,540,000 

19,779,000 

8,170,000 

14,799,000 

7,710,000 

22,500,000 

8,111,000 

19,140,000 

10,033,000 

21,270,000 

9,089,000 

27,054,000 

7,024,000 

34, 725,  (00 

7,012,000 

40,935,0'  0 

.5,774,000 

25,388,000 

5,715,000 

27,404, < 00 

8,294,000 

32,787,'  00 

0.819,000 

30,200,1  OH 

7,780,000 

37,418,  H(0 

8,257,000 

42,049,0UH 

5,934,000 

39,005,000 

10, 448,000 

55.520,000 

8,081,000 

49, 059,  ( 00 

0,149,000 

50,224,00h 

5,022,000 

55,798,000 

5,111,000 

52,341,000 

3,470,000 

55,340,000 

3,092,000 

72,984,000 

4,820.000 

03,818.000 

2,053,000 

35,014,000 

244,075,000 

1,154,207,000 

1879. 

July 

August 

September 

October 

November *. 

December 

1880. 

January  

February  

March 

April 

May  

June 

July 

August 

September 

October 

November 

December 

1881. 

January 

February 

March 

April 

May  

June 

July 

August 

September 

October 

November 

December 

1882. 

January 

February 

March 

April  20th 


S9 


Q.  Where  were  these  transactions? 

A.  On  the  Produce  Exchange,  in  New  York  city? 

Q.  Was  this  in  wheat  alone? 

A.  In  wheat  alone. 

Q.  Then  of  course  there  were  similar  transactions  in  .various  other 
produce  ? 

A.  In  corn,  oats,  barley  and  other  cereals  ; and  in  pork,  lard  and 
eotton  ecpially  with  wheat  corners,  options  and  such  trade  ; but  I 
have  only  selected  “ wheat”  as  representing  the  trade,  and  the  pro 
ducts  of  the  country  generally,  in  the  markets  of  the  country.  In 
Ohicago  the  speculative  deal  is  double  what  it  is  here  ; in  Milwaukee 
as  much  as  it  is  in  New  York.  I don’t  know  about  Cincinnati,  St. 
Louis  and  other  markets;  but  it  might  be  treble. 

Q.  What  effect  has  such  transactions  as  these  upon  the  legiti- 
mate market? 

A.  It  ruins  it ; I had  a legitimate  business,  and  I won’t  do  any 
other,  it  ruins  it,  because  the  legitimate  rules  of  trade  are  set  aside, and 
prices  are  arbitrarily  put  up  and  down  any  day  they  please  ; and  our 
millers  throughout  the  country  and  the  trade  here  know  not  what  a 
day  might  bring  forth  in  prices ; it  depends  upon  these  men  who  hold 
the  wheat ; legitimate  trade  cannot  live  in  competition  with  gambling. 

Q.  Then  you  designate  this  illegitimate,  this  speculative  way  of 
doing  business,  as  gambling?  ” 

A.  I don’t  see  wliat  other  name  you  can  give  it;  it  can’ the  for 
use  ; some  of  these  “ futures  ” go  through  the  hands  of  fifty  men, 
and  each  man  expects  to  make  something  on  them,  and  not  a kernel 
of  wheat  of  these  options  and  futures  is  delivered ; it  is  settled  by 
paying  differences  in  price  — there  is  not  a delivery  in  this  whole 
option  business  ; it  is  a bet  on  the  price' of  wheat  a month  or  three 
months  future,  they  pay  the  difference  ; the  result  is  that  for  the 
last  three  years  flour  in  the  market  has  been  from  one  to  two  dollars 
a barrel  higher  than  if  tins  gambling  had  not  been  permitted  ; and 
this  and  the  fraudulent  or  w^atered  stocks  of  railroads,  and  the  con- 
sequently high  freight  creates  the  necessity  for  these  strikes  ” all 
over  the  country  ; that  is  what  ails  the  laborers. 

Q.  How  much  per  cent  do  you  believe  the  cost  of  breadstuffs  is 
enhanced  by  reason  of  illegitimate  speculation  ? , 

A.  At  certain  times  in  1S79,  and  since  then,  fifty  cents  per  bushel 
on  wheat;  the  average  would  be  about  twenty-five  cents  per  bushel 
on  wheat,  and  one  to  two  dollars  per  barrel  on  flour. 

Q.  Who  receives  the  fifty  cents  a bushel  ? 

12 


90 


A.  Tliese  men. 

Q.  These  speculators? 

A.  Yes. 

Q.  Does  tlie  })roducer  derive  any  proht  ? 

A.  Koiie  wliatevur ; on  the  contrary,  to  my  own  knowledge,  I 
know  farme/s  and  producers  are  as  much  against  this  trade  as  I 
am.  I can  state  that  one  of  the  largest  dealers  in  this  trade  of 
options  in  Milwaukee  told  me  he  had  to  do  it  in  self-defense  and  he 
wished  it  could  be  set  aside  ; ho  was  a miller  ;and  all  millers — the 
whole  milling  interest  — were  injuriously  affected  ; because  the  laws 
of  trade  were  set  at  defiance  and  they  were  at  the  mercy  of  these  men 
as  to  prices,  and  they  don’t  know  when  to  buy  and  when  to  sell  ; 
the  miller  cannot  safely  buy  wheat  and  send  flour  here,  subject 
to  sudden  and  arbitrary  changes  in  price.  It  is  very  difficult  for  him 
to  do  business ; these  speculators  usually  send  out  their  agents  to  all 
the  towns  where  there  is  any  market  or  mills ; I have  seen  them 
myself  buying  for  these  people  in  Kew  York,  buying  at  the  doors 
of  the  millers  and  in  competition  with  the  millers;  it  ruins  the 
milling  interest  of  this  country  and  all  legitimate  trade  both  in 
wheat  and  in  flour. 

Q.  How  is  it  relative  to  corn  ? 

A.  The  same  thing  ; oats,  pork  and  lard,  the  same  thing. 

Q.  About  how  much  is  the  price  of  pork  enhanced  by  these  ille- 
gitimate speculations,  beyond  the  natural  value  ? 

A.  Probably  double  ; in  one  case  a party  who  undertook  to  con- 
trol it  carried  the  price  up  from  eight  dollars  to  sixteen  dollars  a 
barrel  in  a short  time ; they  got  control  of  the  pork  of  our  country. 

Q.  Who  is  compelled  to  pay  in  the  end  all  these  extra  prices  ? 

A.  Everybody  who  eats  this  pork  or  lard  or  oats  or  flour ; the 
poor  men  in  our  country  pay  it. 

Q.  ATliat  effect  has  such  a speculation  upon  our  transportation 
interests  ? 

.V.  Well,  they  sometimes  have  more  wheat  than  they  can  bring  ; 
at  other  limes  they  have  not  any  to  l)ring,  and  for  the  reason  that 
this  combination  in  1S79  bought  up  the  wheat  all  through  the 
country,  and  filled  the  elevators  on  the  Atlantic  coast  with  wheat 
and  ])ressed  into  their  service  for  storage  all  the  canal  boats;  they 
did  the  same  thing  iii  Chicago  until  the  railroads  gave  notice  here 
and  issued  notices  to  tlnni’  agemts  not  to  i-eceive  wheat  as  they  had 
no  ]>lace  to  ])ut  it  ; therefore  the  trade  was  cut  off  for  a time,  and 
was  ov(,*rbuj’d(med  when  these  gamblers  choose  to  bring  it  forwards 


91 


Q.  Have  you  that  notice  with  you  ? 

A.  There  is  a notice  in  the  paper  reporting  ‘‘  corners’’  in  wheat; 
20th  January,  1880. 

Q.  Do  these  speculations  afiect  the  markets  of  the  whole  country  ? 

A.  They  do. 

Q.  How  do  they  afiect  our  canal  boat  system  ? 

A.  Well,  they  make  it  irregular  ; when  these  people  buy  wheat 
and  fill  the  warehouses,  the  boats  and  the  railroads  Iiave  nograin  to 
carry.  It  is  just  the  same  with  the  shipping ; in  1879  it  was  reported 
here  in  the  papers  and  otherwise,  that  there  were  some  872  ships  of 
all  grades  and  descriptions  idle  in  the  docks  of  New  York,  which  came 
here  to  carry  away  our  products,  which  were  controlled  by  a com- 
bination, and  they  held  the  wheat  then  at  from  five  to  fifteen 
cents  higher  than  what  foreign  countries  would  pay  for  it,  even  it' 
the  vessels  were  willing  to  take  it  at  a small*  rate  of  freight,  and 
they  did  ofier  to  take  it  for  less  than  one  cent  a bushel,  and  take  it 
for  ballast ; but  this  combination  would  not  let  it  go,  and  they  held 
the  wheat  into  March  and  later,  and  sold  it  then  for  twenty-five  cents 
a bushel  less  than  it  could  have  been  sold  for  in  December  and  Janu- 
ary, and  that  difiFerence  was  aloss  in  gold  to  this  country  ; besides  the 
loss  and  disappointment  to  the  shipping. 

Q.  Please  explain  the  term  “ options?  ” 

A.  A man  may  say  to  me,  Mr.  Partridge  I will  give  you  $100  if 
you  will  give  me  the  option  to  draw  upon  ^mu  for  so  much  wheat 
one,  two  or  three  months  hence,  at  a price  specified. 

Q.  Is  there  any  limit  to  the  price  ? 

A.  We  make  a price  and  he  says:  I will  give  you  $100  to  have 
the  privilege  of  taking  10,000  bushels  of  wheat  on  the  first  of  May  or 
the  first  of  June  ; ” generally  from  two  to  three  months  ; if  wheat 
goes  up  so  that  he  can  make  something  he  takes  it ; if  not,  he  loses 
his  $100 ; it  is  a bet  but  there  is  a limit  to  it. 


Examined  by  Senator  Browning  : 

Q.  You  limit  the  price  ? 

A.  I risk  that  $100  on  the  wheat.  These  men  turn  up  and  down 
prices  and  scoop  the  difference  into  their  pockets.  You  will  find 
wrecks  of  gambling  in  our  products  all  over  our  country,  thousands 
of  men  who  have  been  ruined  by  this  gambling  in  wheat. 

Q.  Will  yon  please  describe  the  term  ‘‘  calls  ? ” 

A.  It  is  about  the  same  thing  ; “ I’ll  give  you  so  much  to  allow 


92 


ine  to  call  upon  yon  for  so  much  wheat  in  the  future,  at  such  a 
price  ; ’’  aud  I put  down  $100  for  the  privilege  of  that  “ call.” 

Q.  Then  the  terms  puts  ” and  “ calls  ” arc  used  synonymously  ? 

A.  Yes,  nearl}^  ; in  the  one  case  — a put  ” I give  you  $100  to 
allow  me  io put  so  much  wheat  at  such  a price  ; a call  ” is  where 
a man  allows  me  to  call  upon  him  for  so  much  wheat  at  a future 
time  at  such  a price. 

Examined  by  Senator  Boyd  : 

Q.  A question  has  been  suggested  to  me  as  to  the  effect  of  ‘‘  cor- 
ners ” in  producing  exportation  ; is  not  the  tendency  of  that  to  make 
prices  cheaper  than  thej^  otherwise  would  be  \ 

A.  Why  no  ; corners  make  things  so  high  that  foreigners  can’t 
afford  to  take  our  products  ; they  can’t  get  over  that ; we  don’t  eat 
our  products  in  any  thing  like  the  quantity  we  raise  ; we  raise 
products  for  ourselves,  and  to  furnish  foreign  countries  ; when  it  is 
raised  above  a certain  price  other  countries  can’t  take  it,  which  is 
not  only  a loss  to  them  but  to  us. 

Q.  Has  it  not  a tendency  to  make  food  cheaper? 

A.  Ko  ; higher  all  the  time.  A boat  load  of  wheat  is  sold  and 
resold,  and  passed  through  one  hundred  persons’  hands,  brokerage 
having  to  be  paid  upon  each  sale,  and  the  purchaser  expects  to  make 
something,  all  of  which  is  added  to  the  price  of  the  wheat  for  the 
consumer  to  pay.  One  settlement  or  one  delivery  cancels  and  settles 
all  of  the  sales ; and  not  one  kernel  of  the  wheat  is  delivered  to  the 
ninety- nine  gamblers. 

Examined  by  Senator  Browning  : 

Q.  Have  you  a form  of  a contract  with  you  ? 

A.  Yes ; here  are  some  provided  and  used  by  the  Hew  York  Pro- 
duce Exchange  under  its  rules : 


93 


PORK. 


FIRST 

CALL. 

SECOND  CALL. 

Sales. 

Bid. 

Asked. 

Bid. 

Asked. 

LARD. 


Bid. 

! Asked. 

j 

Bid. 

Asked. 

Sales. 

1 

' 

WFIEAT  CALLS  — First  Call. 


Grade  and 
Delivery. 

Bid. 

Asked. 

Bid. 

Asked. 

* 

i 

94 


CORN  CALLS— Second  Call. 


Delivery. 

Bid. 

Asked. 

Bid. 

Asked. 

Sales. 

Str 

Cash 

No.  2 

Str 

No.  2 

Str  . . .... 

No.  2 

Str 

No.  2 

Str 

No.  2 

Str 

No.  2 

Str 

No.  2 

• 

Q.  Head  the  columns  there,  if  you  please? 

A.  The  headings  are  pork  ” first  column,  bid  asked ; ” second 
column,  “bid  asked.” 

Q.  This  being  understood  that  they  have  two  calls  a day  ? 

A.  Yes;  on  the  Produce  Exchange,  New  York. 

Q.  The  same  with  wheat 

A.  Yes. 

Q.  Grain  ? 

A.  Yes;  that  is  comparatively  recent,  within  four  years,  prob- 
ablv  less  ; this  business  was  not  done  on  the  Produce  Exchange  four 
or  five  years  ago,  it  was  inaugurated  in  1878;  now  you  see  the 
enormous  proportions  it  has  grown  into. 

Examined  by  Senator  Boyd  : 

Q.  You  are  of  the  settled  opinion  that  these  speculations  are  con- 
trary to  sound  public  ])olicy  ? 

A.  Not  merely  believe  it,  but  I know  it;  they  are  not  only  con- 
trary to  })ublic  ])olicy  but  are  hurtful  to  the  morals  of  our  people, 
and  the  interests  of  our  people  in  every  way. 

Q-  '^vhat  means  could  our  market  be  regulated  naturally? 

A.  By  the  natural  laws  of  trade  which  have  been  in  operation 
sirjcte  the  time  of  Moses  ; tin?  laws  of  su])])lv  and  demand,  and  that 
everybody  knows  or  could  know,  and  innke  tlieir  own  judgments 
upon  the  basis  of  all  1rad(;,  su])])ly  and  demand.  • 


95 


Q.  Are  the  markets  affected  in  any  degree  by  the  products  in 
other  countries  ? 

A.  Yes;  in  1879  when  these  men  expected  to  get  SI. 65,  for 
wlieat  they  broke  and  caused  a panic  here,  because  in  the  European 
markets  the  people  there  sought  elsewhere  for  supplies,  and  drew 
wheat  from  nooks  and  corners  nobody  ever  heard  of  before,  and 
they  got  their  supply. 

Q.  From  .what  countries  do  tliey  usually  get  such  supplies? 

A.  Russia,  Hungary,  Egypt,  Australia,  Chili,  Hew  Zealand  and 
British  India.  The  impulse  given  to  the  production  of  wheat  in 
British  India,  Eastern  Turkey  and  Persia  by  this  artiticial  condition 
of  our  market,  proves  to  be  of  far  greater  importance  than  this 
super^cial  clique  had  any  conception  of ; on  the  Euphrates  and 
Tygris  rivers,  also  on  the  Persian  Gulf,  this  artificial  stimulant  given 
to  the  production  of  wheat  resulted  in  an  increased  production  in 
many  localities  of  eight  to  ten  fold,  as  compared  with  the  production 
of  1879,  as  indicated  by  a comparison  of  the  receipts  of  wheat  at 
Kurrachee  (the  mouth  of  the  Persian  Gulf),  in  1879,  with  those  of 
1881,  and  the  same  ratio  of  increased  production  is  noticeable  in  the 
grain  producing  sections  of  British  India;  and  the  operations  of 
these  cliques  have  thus  resulted  in  building  up  a formidable  coni 
petition  of  wheat  that  may  ultimately  result  in  a great  growers 
misfortune;  indeed,  it  would  be  difficult  to  estimate  the  prospective 
injury.  During  the  past  seasons,  1880-81,  the  exports  from 
Bombay,  Calcutta,  etc.,  exceed  twenty-eight  million  bushels  through 
the  Suez  canal,  previously  they  did  not  average  seven  million  bushels 
per  year. 

Q.  What  time  was  that  ? 

A.  In  1879  the  stimulant  was  given  by  the  gambling  scheme. 

Q.  Were  any  importations  made  to  our  country  from  these 
countries  ? 

A.  Ho  ; not  any. 

Q.  How  long  has  this  system  of  corners  ” existed  ? 

A.  The  first  I knew  of  was  in  1879  ; I think,  that  one  was  the 
first. 

Q.  Was  that  the  first  of  the  options  ? 

A.  Probably  not ; but  they  had  not  carried  it  to  such  an  extent 
before  that  as  to  make  corners  ; ” not  that  I know  of. 

Q.  How  long  has  the  Produce  Exchange  been  in  operation  ? 

A.  I can’t  tell ; Mr.  Reed  could. 

Mr.  Reed  — Fifty  years. 


9G 


Q.  What  is  your  opinion  with  reference  to  ])roper  legislation  to 
remedy  this  state  of  things? 

A.  By  all  means ; I would  make  it  a penalty  of  a fine  and  impris- 
onment to  thus  deal  in  the  products  our  country  illegitimately. 

Q.  Are  you  of  opinion,  that  legislation  on  this  subject  is  practi. 
cal)le  ? 

A.  lam. 

Q.  Would  legislation  have  a tendency  to  affect  commercial  in- 
terests injuriously  ? 

A.  j^o ; beneficially ; this  is  not  a commercial  interest ; it  is  a 
chance  bet ; a gambling  deal  which  has  a tendency  to  make  men 
lazy,”  “useless,”  “ vicious,”  “ unprincipled  ” loafers,  a burden  upon 
society  and  destroyers  of  domestic  happiness. 


Examined  by  Senator  Browning  : 

Q.  Have  you  formed  an  opinion  how  it  may  be  prevented  ? 

A.  Perhaps  not  a sound  one  ; I have  views  upon^it ; I think  we 
should  have  laws  making  it  punishable  with  fine  and  imprisonment 
to  deal  in  products  of  a country,  on  which  people  depend  for  their 
living,  so  as  to  increase  their  cost  by  “ options  ” and  pretensions, 
useless,  and  illegitimate  dealing ; it  is  not  handling  property,  it  is 
gambling  in  it ; I don’t  see  how  it  can  continue  in  this  way  ; there 
ought  to  be  the  strongest  law  to  prevent  it. 

Q.  How  would  you  prepare  a law  to  prevent  my  agreeing  to  de- 
liver to  you  in  a month  50,000  bushels  of  wheat  by  a contract? 

A.  If  you  had  a farm  and  was  raising  wheat  and  agreed  to  de- 
liver it  to  me,  that  would  be  legitimate  ; if  you  were  in  the  city  of 
New  York  and  had  no  business  but  to  stand  round  on  ‘‘change,” 
pretentiously  buying  and  selling,  and  making  paper  contracts  for 
receiving  and  delivering  products  “one,”  “two”  or  three  months 
future,  and  never  receiving  nor  ever  delivering,  but  settling  all 
contracts  by  paying  or  “ receiving”  the  difference  in  price  of  the 
article  at  the  termination  of  the  contract.  I should  be  equally  guilty 
with  you  to  deal  with  you.  There  should  be  a law  to  prevent  such 
trading  ; a law  that  a trade  should  not  be  settled  by  paying  margins, 

Q.  Suppose  I made  an  agreement  with  a producer  to  take  all  the 
grain  he  could  deliver  to  me  and  with  prospect  of  the  possession  of 
the  grain,  I agre(*d  to  deliver  by  contract  ? 

A.  Tliat  is  to  agi’ce  t(»  deliver  to  you  wliat  he  can. 

Is  not  that  tlie  theory  upon  which  these  sales  are  made? 


97 


A.  No  ; both  the  seller  and  the  buyer  understand  that  the  property 
is  not  to  change  hands,  but  margins  are  to  be  paid  in  settlement. 

Q.  Now  the  injurious  effect  y)roduced  on  the  market  by  specula, 
tions  in  grain,  pork  and  lard  has  a tendency  to  affect  the  prices  of 
various  other  commodities,  has  it  not  ? 

A.  It  affects  oats,  tobacco,  etc.,  and  other  products  somewhat  in 
the  same  way. 

Q.  Fresh  meat  — has  it  a tendentw  to  affect  that  in  any  way  ? 

A.  Well,  I don’ t know  that  corners  ” in  pork  affected  fresh  meat ; 
I don’t  know  whether  it  affected  trade  in  cattle. 

Q.  Would  it  not  regulate  it  in  some  way,  so  as  to  have  a tendency 
to  enhance  the  price  of  other  articles  ? 

A.  I don’t  think  it  would  tea  and  coffee  ; I don’t  know  the  effect 
on  fresh  meat ; but  sales  that  affect  wheat  in  this  way  would  affect 
all  grains,  beans  even,  and  probably  meats  ; I think  they  would 
affect  them  in  some  way.  While  there  was  a ‘‘corner”  in  pork,  it 
ran  up  from  to  $16  a barrel,  and  I think  beefsteak  was  affected 
probably  to  the  extent  of  one  cent  a pound. 

Q.  What  effect  is  produced  by  corners  upon  the  transportation  ; 
does  it  not  have  a tendency  to  affect  the  prices  of  transporting 
other  commodities  so  as  to  enhance  their  price  ? 

A.  When  combinations  to  “ corner  ” have  bought  wheat,  and  filled 
the  storage  capacity,  railroads  have  given  notice  to  agents  in  the 
west  not  to  take  wheat,  and  when  the  corners  break  and  sell  for 
export,  wheat  moves  freely,  and  transportation  is  overburdened  and 
charge  more  freights  on  all  commodities. 

Examined  by  Senator  Boyd  : ^ 

Q.  Could  you  suggest  the  form  ot  any  law  which  would  tend  to 
remedy  these  evils  ? 

A.  I don’t  know  that  I should  be  ready  at  this  time ; but  I will 
do  so,  if  you  will  give  me  another  opportunity;  I would  have 
some  legal  consultation  about  that. 

Q.  You  will  do  so  at  some  other  time? 

A.  Yes  ; I will.  ^ 

Examined  by  Senator  Browning  : 

Q.  Take  this  paper  and  read  the  heading  to  it  ? 

A.  “ To  the  Honorable  Senate  and  House  of  Bepresentatives  of 
tlie  United  States  in  Congress  assembled  ?” 

Q.  What  is  it  supposed  to  be  ? 

13 


98 


A.  It  is  supposed  to  be  a petition  to  Congress  to  pass  a law'  to 
prevent  these  things  which  liave  been  spoken  of. 

Q.  Does  it  set  forth  all  the  evils  ? 

A.  Not  all  ; I have  circulated  this  petition  and  I have  visited 
many  persons  who  have  sent  me  dour  and  I have  taken  it  with  me  ; 
there  is  not  a miller  in  the  country  that,  I have  seen  hut  who  w'as 
glad  to  sign  it,  nor  a farmer  that  was  not  glad  to  sign  it ; I have 
about  a thousand  or  more  substantial  meii  throughout  our  country 
who  have  signed  this  petition. 

By  Senator  Boyd  : 

Q.  Do  you  know  the  contents  of  this  document  to  he  correct  ?, 

A.  I believe  it  to  he  so. 

Senator  Browning  — How  nearly  correct  is  it  to-day? 

A.  1 think  the  statements  are  correct  — I ask  your  attention  to 
the  wheat  crop  in  the  United  States  for  three  years,  1879,  1880, 
1881,  as  per  returns  of  the  United  States  Agricultural  Department  : 


Aggregate  products. 
Bush. 

Acreage. 

Total,  1879 

448,  750,  630 
495,  549,  868 
380,  280,  090 

32,  545,  950 
37,  986,  717 
37,  709,  020 

Total,  1880 

Total,  1881 

1,  324,  586,  588 

108,  241,  687 

Senator  Boyd — This  was  the  wheat  crop  of  the  United  States? 

A.  Yes;  during  these  years,  as  per  report  of  the  Agricultural 
Bureau  at  Washington. 

Q.  Will  you  offer  this  in  evidence? 

A.  Yes. 


INIQUITIES  OF  COMMEKCE,  EXHIBIT 

SPECULATORS  IN  HUMAN  SUFFERING. 

It  is  customary  in  the  month  of  September  for  experts  to  make 
up  from  the  most  reliable  dg,ta  the  surplus  and  deficiency  of  wheat 
in  the  several  countries,  and  the  result  in  September,  1879,  was  as 
follows : 


Russia 

Austro- 1 lungary. 
Chile 


Surplus. 


35,  000,  000 
12,  000,  000 
4,  000,  000 


99 


Canada  and  Manitoba 13,  000,  000 

British  India 8,  000,  000 

Egypt 2,  000,  000 

Australia 8,  000,  000 

United  States 185,000,000 


Deficiencies. 


2G7,  000,  000 


Switzerland,  Spain  and  Portugal 8,000,000 

Italy 12,  000,000 

Germany,  Holland  and  Belgium 18,  000,  000 

England 137,  000,  000 

France 55,  000,  000 


230,  000,  000 


'Surplus, 


37,  000,  000 


This  showing  drew  together  moneyed  men,  some  of  whom  had 
never  dealt  in  wheat  or  flour,  to  form  a syndicate  for  the  purpose  of 
securing  to  themselves  a profit  of  fifty  cents  per  bushel  on  our  im- 
mence  wheat  crop.  To  accomplish  this  purpose,  they  sent  out  agents 
into  all  the  grain-growing  States  to  buy  wheat,  and  they  continued 
this  business  until  their  purchases  had  raised  the  price  of  wheat  ^ 
sixty-five  cents  per  bushel,  and  exhausted  the  storage  capacity  in  the 
interior  and  Atlantic  markets,  and  had  pressed  into  this  service 
numerous  lake  boats  in  the  AVest,  and  hundreds  of  canal  boats  in 
New  York  and  other  Atlantic  markets.  The  railroads  were  com- 
pelled to  order  their  agents  west  not  to  accept  grain  consigned  for 
storage,  as  there  was  no  room  for  further  deposits — thus  a complete 
blockade  of  the  grain  crop  of  the  United  States  was  formed  early  in 
January,  1880. 

It  was  estimated  then  that  120,000,000  bushels  of  the  crop  of 
wheat  remained  in  the  farmers’  hands,  and  the  syndicate  owned  and 
controlled  60,000,000  bushels,  which  they  held  during  January  and 
February  twelve  cents  per  bushel  above  the  price  at  which  the  de- 
ficient foreign  countries  were  obtaining  their  supplies  from  Russia, 
Hungary,  Australia  and  elsewhere,  which  materially  diminished  ex- 
ports. 

The  syndicate  found  they  could  not  put  down  the  price  and  sell 
freely  for  export  without  carrying  down  prices  of  wheat  in  all  the 
markets  of  the  world.  Hence  they  arbitrarily  held  their  wheat  at 
high  prices,  in  the  faith  that  the  surplus  in  other  countries  would  be 
used  up,  and  the  necessities  of  the  people  would  aid  their  purpose 
to  extort  their  tribute  of  fifty  cents  per  bushel. 

In  this  dilemma  the  syndicate  commenced  coining  money  by  de- 
mand ing  high  prices,  and  reporting  fictitious  sales  of  wheat  among 
themselves,  or  otherwise,  for  export,  future,  long,  short,  &c.,  at 
fabulous  figures,  for  the  purpose  of  inveigling  novices  into  buying 
or  selling  wFeat,  whereupon  the  old  sinners  at  the  crank  turned 


100 


. • < 


prices  in  the  opposite  direction,  creating  what  are  called  corners,’^ 
and  thus  swindling  the  unwary  out  of  their  money.  They  abrogated 
the  laws  of  supply  and  demand,  and  disregarded’  the  relative  prices 
of  wheat  in  the  different  States  and  in  all  the  iriarkets  of  the  world. 

For  example,  they  created  a ‘-corner”  in  Chicago,  whereupon  this 
gamlding  ring  arbitrarily  put  the  price  of  wheat  in  that  city  twelve 
cents  per  bushel  higher  relatively  than  in  New  York,  and  five  cents 
per  bushel  higher  than  in  Milwaukee,  at  which  place  legitimate  trade 
prices  are  the  same  as  at  Chicago,  showing  that  the  absolute  control 
of  prices  was  possessed  and  exercised  by  the  syndicate  to  swindle 
the  victims  of  their  duplicity  and  to  break  up  legitimate  trade. 

The  millers  throughout  the  country  have  been  obliged  to  pay 
gambler’s  prices  for  wheat  to  grind.  They  have  consigned  their 
hour  to  the  interior  and  Atlantic  markets,  and  drawn  advances  on 
the  same,  with  instructions  generally  to  have  the  hour  stored  urdess 
the  cost  price  of  it  could  be  obtained.  The  quantity  so  shipped  and 
stored  exceeded  the  requirements  of  the  people  by  2,000,000  barrels, 
which  has  been  held  at  $2.00  per  barrel  above  its  real  value,  which 
$2.00  our  people  are  obliged  to  pay  for  permitting  gambling  in  wheat. 
This  hour  cannot  be  sold  to  foreign  countries  in  need  of  it  without 
a loss  of  $2.00  per  barrel,  which  has  already  ruined  many  millers, 
and  has  seriously  injured  all  of  them  ; and  it  is  now — the  1st  of  A])ril, 
*18S0 — estimated  that  three-fourths  of  the  mills  have  remained  idle 
two  months,  and  must  so  remain  until  this  nefarious  syndicate  is  de- 
prived of  its  power  for  mischief. 

The  same  estimate  of  the  surplus  and  dehciencies  of  wheat  in  the 
several  countries,  in  September  last — which  inspired  our  rich  men 
to  combine  for  the  purpose  of  preventing  people,  at  home  and  abroad, 
from  getting  bread  without  paying  tribute  to  them — naturally  in- 
spired honest  and  generous  men  to  bring  their  ships  to  our  shores  to 
take  away  our  surplus  products  to  the  countries  which  need  them, 
and  the  result  was  500  ships  lay  at  the  New  York  docks  for  months, 
the  owners  pleading  for  wheat  even  at  ruinously  low  freights — two 
and  three  pence  per  bushel,  and  some  even  as  ballast ; but  the  greedy 
gamblers,  steeled  against  every  plea,  all  human  sympathy  and  hon- 
orable dealing,  sent  the  ships  away  empty — the  owners  declaring 
they  would  not  bring  sliips  to  our  markets  so  long  as  unprincipled 
gamblers  are  permitted  to  arbitrarily  control  the  products  of  the 
country. 

It  has  been  expected  that  the  opening  of  the  lakes  and  canals, 
with  the  usual  reduction  in  prices  of  freights,  would  enable  farmers 
and  merchants,  not  connected  with  the  ring,  to  get  their  products  to 
the  Atlantic  and  foreign  markets,  and  realize  cost ; but  it  is  made 
known  that  the  Trunk  lines  of  railroads  have  united  with  the  ring 
to  keep  u])  freights  and  save  the  gandders.  To  effect  this  they  have 
chartered  and  otherwise  got  control  of  the  steamboats  and  other 
grain  carrying  vessels  on  the  lakes. 

The  New  York  Central  and  Erie  have  lines  to  Buffalo,  and  the 
I Ynnsylvania,  to  Erie;  the  Baltimore  and  Ohio  to  Sandusky,  and  the 


101 


Wabash  from  Toledo  to  Bufhilo.  And  now,  having  obtained  con- 
trol of  lake,  canal  and  rail  freights,  of  the  products  of  our  country, 
we  may  expect  they  will  exercise  it  in  their  combined  interest,  irre- 
spective of  either  the  people’s  needs  or  rights. 

The  end  of  this  nefarious  business  is  foreshadovved  by  the  failure 
of  the  ring  clique  in  Grand  Ihipids,  Michigan,  involving  the  banks 
in  the  sum  of  $d00,000.  Thus  it  is  shown  that  the  institutions 
which  the  people  have  chartered — banks  and  railroads — for  the  peo- 
])le’s  benefit,  are  combined  and  organized  in  this  most  wicked  scheme 
to  extort  money  from  all  consumers,  and  to  starve  the  poorer  classes 
of  our  people.  It  is  estimated  tliat  the  Jim  Keene  Syndicate,  so 
called,  has  caused  a loss  to  the  United  States  by  not  selling  wheat 
to  foreign  countries  before  prices  declined,  and  to  those  whom  they 
have  inveigled  into  dealing  with  them — the  millers,  the  sliipping 
interest,  legitimate  dealers  and  consumers  of  Hour  in  the  United 
States — which  amounts  to  300,000,000  of  dollars.  They  have 
abrogated  the  laws  of  trade — supply  and  demand — and  the  relative 
prices  in  different  markets,  and  interdicted  commerce  between  the 
States  and  foreign  countries  ; they  have  broken  up  legitimate  trade 
and  generally  demoralized  a most  important  branch  of  commerce, 
thus  bringing  sorrow  and  suffering  upon  our  people. 

I am  in  favor  of  enacting  laws  by  Congress,  and  in  all  the  States, 
making  it  a penal  offense,  punishable  by  fine  and  imprisonment, 
for  any  ])erson  to  sell  that  which  they  do  not  possess,  or  to  purchase 
merchandise  which  they  do  not  expect  to  receive  and  pay  for.  All 
contracts  which  are  to  be  settled  by  the  one  paying  and  the  other 
receiving  the  difference  between  the  contract  price  and  the  value  of 
the  article  at  some  future  day,  and  all  species  of  luck  or  chance  trade, 
dealing  or  gambling,  of  whatever  description,  should  be  declared 
illegitimate,  and  punishable  under  the  law. 

To  the  honorable^  the  Senate  and  House  of  Representatives  of  the 

United  States^  in  Congress  Assembled: 

Your  Petitioners  beg  leave  respectfully  to  call  the  attention  of 
your  Honorable  body  to  a serious  and  widespread  evil,  which  has 
long  been  allowed  to  exist  in  the  community  over  which  the  law- 
making power  of  Congress  extends — an  evil  whose  ill  consequences 
are  felt  by  all  classes  in  this  and  other  countries. 

Your  Petitioners  have  especial  reference  to  the  accumulation  of 
immense  quantities  of  the  cereal  products  of  the  soil  in  the  hands  of 
a few  capitalists,  combining  for  objects  of  speculation. 

It  is  the  custom  for  these  speculators  to  form  pools  or  syndicates 
for  the  purpose  of  buying  and  storing  grain  and  flour  in  such  large 
quantities  as  to  arbitrarily  dictate  prices  and  control  sales,  without 
regard  to  the  natural  laws  of  trade,  which  regulate  values  in  the 
ratio  of  supply  and  demand. 

As  only  men  of  large  means  or  extensive  credit  are  capable  of  en- 
gaging in  these  enterprises,  they  become  essentially  an  array  of  cap- 


102 


ital  against  the  industrial  classes,  wherein  the  l)anks  and  moneyed 
institutions  are  almost  invariably  drawn  to  the  support  of  tlie  for-- 
mer  against  the  latter,  and  are  measurably  de])endcnt  upon  the  suc- 
cess of  their  schemes. 

Some  of  the  more  prominent  evils  resulting  from  these  combined 
operations  may  be  briefly  summarized  as  follows: 

1.  An  unhealthy  and  feverish  state  in  the  produce  market,  wherein 
quoted  rates  furnish  no  criterion  of  actual  values. 

2.  The  utter  paralyzation  of  one  of  the  leading  industries  of  the 
land,  in  the  instance  of  very  many  of  our  great  flouring  mills,  in 
which  large  amounts  of  capital  are  employed. 

3.  The  almost  utter  suspension,  for  indefinite  periods  of  cereal  ex- 
ports, which  give  employment  to  our  shipping,  and  meet  at  fair  rates 
the  demands  of  foreign  nations  more  or  less  dependent  upon  ours 
for  the  necessities  of  life. 

4.  The  imposition  of  heavy  and  unnecessary  burdens  upon  a num- 
erous class  of  our  citizens,  whose  immediate  necessities  compel  them 
to  accede  to  the  exorbitant  demands  of  venal  and  selfish  monopolists. 

To  illustrate  what  has  been  said,  we  subjoin  the  following  care- 
fully prepared  estimate  of  surplus  and  deficiency  in  the  single  article 
of  wheat  in  some  of  the  leading  countries : 


SUKPLUS. 


Kussia 35,  000,  000 

Austro-Hungary 12,000,000 

Chili 4,  OOO,  000 

Canada  and  Manitoba 13,  000,  000 

British  India 8,  000,  000 

Egypt 2,  000,  000 

Australia 8,  000,  000 

United  States 185,  000,  000 


267,  000,  000" 


Deficiency. 


Switzerland,  Spain  and  Portugal 

Italy 

Germany,  Holland  and  Belgium 

England 

France 


8,  000,  000 
12,  000,  000 
18,  000,  000 
137,  000,  000 
55,  000,  000 


230,  000,  000 


Surplus  over  all 37,  000,  000 


It  is  concluded  by  a fair  estimate  that  a single  one  of  the  so-called 
syndicates  has  owned  and  controlled,  since  September  last,  upward 
of  70,001), 000  bushels  of  wheat,  hoarded  and  held  at  prices  above  the 
ratesat  which  foreign  markets  are  able  to  obtain  their  supplies  from 
other  countries. 

Hence  it  is  that  foreign  shipments  are  arrested,  and  the  gold  which 


103 


would  naturally  flow  into  our  treasury,  is  diverted  to  others.  Nor 
is  this  all.  The  ‘M^reak ’’ which  is  sure  to  follow,  comes  too  late, 
and  the  commodity  which  was  refused  at  fair  rates  to  other  markets, 
becomes  a glut  in  ours,  to  the  detriment  of  the  producing  districts, 
over  which  the  backsetting  wave  spreads  and  stagnates. 

Your  Petitioners,  therefore,  pray  that  your  Honorable  body  may 
see  tit  to  devise  some  means,  not  inconsistent  with  the  utmost  free- 
dom of  legititnate  trade,  to  effectually  put  an  end  to  the  evils  herein 
complained  of. 

Exainmation  continued  by  Senator  Boyd  : 

Q.  Have  you  any  other  testimony  to  offer  that  would  be  of  in- 
terest to  this  committee? 

A.  I find  that  the 'Chicago  railroads  demanded  a freight  of  from 
fifty  to  eighty  cents  per  bushel.  The  elevators  would  contain  in  the 
aggregate  15,000,000  bushels  and  frequently  they  were  filled  to 
their  utmost  capacity.  Several  railroads  refused  to  receive  grain 
for  that  market,  because  they  bad  no  accommodation  for  it  and  there 
was  a large  expense  attending  it.  There  is  in  storage  eight  million 
bushels  of  wheat,  four  millions  of  bushels  of  corn  and  4,250,000 
bushels  of  oats  and  barley ; ten  millions  more  than  last  year. 
There  are  about  a million  bushels  afioat  in  the  harbor  of  Chicago. 
This  offers  only  an  exhibition  of  a grain  syndicate  of  which  Mr. 
Keene  was  the  representative,  which  by  constant  purchases  had 
forced  the  market  price  up  to  a point  where  there  would  be  a large 
loss  in  shipping  it  to  Liverpool ; I read  from  a report  Dublished  in  a 
Chicago  paper,  dated  January  11,  1880. 

Q.  What  is  it  published  in  ? 

A.  I take  it  from  a Chicago  paper;  ‘‘  The  Times.” 

Q.  That  is  what  the  press  said  about  that  state  of  things  at  that 
time  ? 

A.  Yes,  sir;  the  press  ‘Hlailroad  men  ” and  large  dealers. 

By  Senator  Browning  : ' 

Q.  To  what  extent  has  grain  exports  declined  within  the  last  year 
compared  With  other  years,  especially  during  the  last  three,  four  or 
five  months  — say  in  value?  I understand  that  grain  exports  have 
been  falling  off  until  to  day  — that  they  are  $5,000,000  less  than 
they  have  been  in  other  years,  so  that  the  balance  of  trade  will  be 
against  us,  in  a short  time,  if  we  don’t  look  out  ? 

A.  Here  I have  the  exports  per  month  from  1879  to  date' — I 
think  — 


♦ 


lOi 


JBy  Senator  Boyd  : 

Q.  Be  kind  enongli  to  read  this  ? 

WiTNiiss  — Tlie  amounts  are  put  down  four  times  a inontli. 

Q.  In  sucli  a condition  as  you  liave  them  there  ? 

A.  The  exports  of  wheat  from  New  York,  Jkiltimore,  Philadel- 
phia, Boston,  Portland,  Montreal  and  San  Fi*aneiscu,  from  Septem- 
ber 1,  1879,  to  — 

Q.  On  an  average  what  ought  to  have  been  the  natural  ])rice  of 
wheat  during  that  time? 

A.  In  December  and  January  it  was  ])robably  five  to  twenty 
livo  cents  higher  than  it  would  have  been,  had  it  not  been  tor  this 
outside  ti'ade. 

Q.  Per  bushel  ? 

A Yes. 

Q.  These  fluctuations  in  prices  are  not  caused  by  legitimate  trans- 
actions ? 

A.  Not  at  all ; it  is  caused  by  the  manipulation  of  s])eculators 
at  the  expense  of  the  consumer. 

Q.  What  are  the  limits  between  the  liighest  and  the  lowest 
prices? 

A.  I will  take  tie  year  1879  — No.  2 red  wheat,  August  2, 
Sl.17 ; October  18,  $1.51^;  December  25  to  27,  $1.60;  29, 
$1.60J ; 30,  $1.60;  31,  $1.60^;  a difference  between  $1.17  and 
$1.60i. 

Q.  Is  not  an  inferior  grade  of  wheat  higher  in  price  than  first- 
class  wheat,  by  reason  of  these  “corner”  speculations? 

A.  Yes;  when  a grade  of  wheat  is  cornered  a superior  grade  is 
then  offered  instead. 

By  Senator  Browning  : 

Q.  I hand  you  this  paper  ; the  question  I asked  was  in  reference 
to  the  decline  in  grain  exports  — please  to  read  it — this  is  the 
number  of  busliels  of  grain  exported  from  this  country  ; look  at  the 
month  of  April  and  say  what  is  the  total  amount  exported  in  April, 
1880? 

A.  The  total  amount  for  that  month,  exported,  was  11,725,085 
bushels. 

( J In  the  month  of  April,  1881,  state  the  total  number  of  bushels 
(;xj)orted  ? 

A.  12,515,637. 

( >.  State  the  total  number  in  1882  in  the  same  montli  — April  ? 


105 


A.  5,185,633. 

Q.  Can  yon  account  for  the  decline  in  the  last  month  compared 
with  the  other  month  ? 

A.  The  crop  thisye^r  was  not  so  large;  that  may  in  ])art  account 
for  it,  and  another  part  of  it  arises  from  this  combination  ; wheat  is 
used  at  home  in  a pretty  large  quantity,  and  our  people  Ijave  to  pay 
the  gamblers  expense,  which  they  add  to  the  natural  price  of  wheat 
^nd  flour. 

Q.  What  was  grain  worth  on  an  average  per  bushel  in  April, 
ISSO  — I mean  wheat  — what  was  the  price  of  wheat  on  flrst  of 
April,  1880  ? 

A.  W^ell  on  the  Idth,  No.  2,  Chicago,  was  worth  $1.26  ; No.  2, 
red  winter,  $1.36. 

Q.  What  was  it  worth  in  April,  1881  ? 

A.  On  the  18th,  No.  2,  Chicago,  was  worth  $1.19  ; red  winter, 

$1,221. 

Q.  AVhat  was  it  worth  in  1882,  the  same  month  ? 

A.  On  the  lltli  April,  1882,  red  winter  was  worth  $1.43J  ; No. 
2 spring  wheat  in  Chicago  and  in  Milwaukee,  under  legitimate 
trade,  is  the  same  price;  they  can  send  here  for  the  same  freight  and 
the  same  price,  but  a corner  was  made  between  Chicago  and  Mil- 
waukee in  1880,  so  that  on  the  21st  July,  1880,  in  Chicago,  No.  2 
was  worth  95|-  and  in  Milwaukee  99| ; they  made  a corner  there  of 
flve  or  six  cents  a bushel  between  Chicago  and  Milwaukee  which 
was  entirely  arbitrary  ; the  prices  in  there  grain  markets  are  the  same 
under  ordinary  trade ; this  will  show  that  at  this  time  they  made  a 

corner  ” and  took  out  of  somebody’s  pockets  flve  or  six  cents  a 
bushel. 

By  Senator  Boyd  : 

Q.  Were  they  illegitimate  sales? 

A.  They  were  illegitimate  sales. 

EXHIBIT  “D.” 

Exports  of  WHEAT  from  Neio  York,  Baltimore,  Pliiladelpliia,  Bos- 
ton, Portland,  Montreal  and  San  Francisco  from  September  1, 1879, 

to  August  31,  1881. 


For  week  ending  from  September  1 to  12,  1879  6,845,186 

“ “ “ »19.  “ 7,034,339 

“ “ “ 26,  “ 5,241,953 


. Total  for  month  of  September 19,121,478 


14 


For  week  ending  October  3,  1879. 5,0G0,03G 

“ " “ 10,  “ 4,(m,247 

“ “ “ 17,  “ 2,8^19,210 

“ “ “ 24,  “ 4,r>28.9r>3 

“ “ “ 31,  “ •. 3,070.257 


Total  for  month  of  October 21,382,739 


For  Aveek  ending  November  7,1879  4,908,574 

“ “ • “ 14.  “ 3,335,829 

“ “ “ 21,  “ 2,440,838 

“ “ “ 28,  “ 1,980,950 


Total  for  month  of  November 12,720,197 

For  week  ending  December  5,  1879 3,024,248 

“ “ “ 12,  “ 2,238,738 

“ “ “ 19,  “ 1,797,530 

“ “ “ 26,  “ 1,099,780 


Total  for  month  of  December 8,700,302 


For  week  ending  January  2,  1880 1,008, ,541 

“ “ “ 9,  “ 905,724 

“ “ “ 16,  “ 857,050 

“ “ “ 23,  “ 1,634,832 

“ “ “ 30,  “ 1,754,523 


Total  for  month  of  January 6,820,070' 


For  Aveek  ending  February  6,  1880  1,826,237 

“ “ “ 13,  “ 701,939' 

“ “ “ 20,  “ 2,088,26.5' 

“ “ “ 27,  “ 1,133,449 


Total  for  month  of  February 5,749,896 


For  Aveek  ending  March  0,  1880 1,683,468 

“ “ “ 12,  “ 1,306,550 

“ “ “ 19,  “ 2,437.700 

“ “ “ 26,  “ 2,617,002 


Total  for  month  of  March 8,044,720 


For  week  ending  April  2,  1880.^ 1.957.119’ 

“ “ “ 9,  “ 2,288,499 

- “ “ 10,  “ 2,092,589 

“ “ “ 23,  “ 3,658,412 

“ .30,  “ 1,728.466 


Total  for  month  of  April, 


11.725.085 


107 


For  week  ending  May  7,  1880 1,776,807 

‘‘  “ “ 14,  “ 1,897,528 

“ “ “ 21,  “ 1,999,281 

" “ “ 2^  “ 1,909,044 


Total  for  month  of  May 7,042,720 


For  week  ending  June  4,  1880.. 2,355,575 

“ “ “ 12,  “ 2,902,450 

“ “ “ 19,  “ 3,309,b84 

“ “ “ 25,  “ 2,988,993 

“ “ “ 30,  “ 2,194,896 


Total  for  month  of  June 13,751,798 


For  week  ending  July  9,  1880 3,030,305 

“ 16,  “ 3,018,684 

“ “ “ 23,  “ 2,935,110 

“ “ “ 30,  “ 3,307,471 


Total  for  month  ot  July 12,291.570 


For  week  ending  August  6,  1880  . . 4,608,495 

“ “ “ 13,  “ 4,595,819 

“ “ “ 20,  “ 3,194,935 

27,  “ 4,064,296 

31,  “ 4,435,353 


Total  for  month  of  August 20,898,898 


For  week  ending  from  September  1 to  10,  1880 2,787,309 

“ “ “ 17,  “ 2,580,314 

“ “ “ 24,  “ 3,277,722 

“ “ “ 31,  “ 3,884,624 


Total  for  month  of  September 12,529,909 


For  week  ending  October  8,  1880 3,095,756 

- “ “ 15,  “ 5.250,419 

“ “ “ 22,  “ ■ 3,587,090 

“ “ “ 29,  “ 3,220,182 


Total  for  month  of  October 15,759,447 


For  week  ending  November  5,  1880 2,843,709 

“ “ “ 12,  “ 2,895,236 

“ “ “ 19,  “ 3,068,106 

“ 26,  “ 2,730,752 

Total  for  month  of  November 11,537,863- 


108 


For  week  ending  December  3,  1880  2,113,008 

“ “ “ 10,  “ ' 2,290,020 

“ “ 17,  “ 2,005,833 

“ “ “ 23,  “ 1,000,484 

“ “ “ 30,  “ 3,327,753 


Total  for  month  of  December 11,038,708 


For  week  ending  January  7,  1881 1,790,213 

“ “ “ 14,  “ 1,007,152 

“ “ “ 21,  “ 1,542,233 

“ “ “ 28,  “ 2,345,007 


Total  for  month  of  January 7,351,505 


For  week  ending  February  4,  1881 2,107,470 

“ “ “ 11,  “ 1,753,443 

“ “ “ 18,  “ 1,842,449 

“ “ ‘‘  25,  “ 1,040,195 


Total  for  month  of  February 7,403,557 


For  week  ending  March  4,  1881 2,023,100 

“ “ “ 11,  “ 2,792,471 

“ 18,  “ 2,347,315 

“ “ “ 25,  “ 2,161,033  X 


Total  for  month  of  March 9,924,885 


For  week  ending  April  1,  1881 3,047,275 

“ “ 8,  “ 2,308,780 

“ “ “ 15,  “ 2,377,147 

“ “ “ 22,  “ 2,608,441 

“ “ 29,  “ 2,173,394 


Total  for  month  of  April. 12,515,037 


For  week  ending  May  6,  1881 2,994,213 

“ “ “ 13,  “ 2,768,556 

“ “ “ 20,  “ 1,834,554 

“ “ “ 27,  “ 1,654,812 


Total  for  month  of  May 9,252,135 


For  week  ending  June  3,  1881 2,957,454 

“ “ “ 10,  “ 2,627,972 

“ " “ 17,  “ 2,634,976 

“ “ “ 2'l,  “ 3,093.529 

“ “ 30,  “ 2,065,200 


Total  for  month  of  June 13,379,131 


t 


109 


For  week  ending  July  8,  1881 2,172,978 

“ “ “ 15,  “ ' 2,010,922 

“ “ “ 22,  “ 2,151,580 

“ “ " 29,  “ 1,214,554 


Total  for  month  of  July 7,550,037 


For  week  ending  August  6,  1881 3,510,895- 

“ “ “ 13,  “ 3,049,382 

“ “ “ 20,  “ 2,980,705 

“ “ “ 27,  “ 7,717,097 

“ “ “ 31,  “ 2,090,279 


Total  for  month  of  August 19,301,018 


For  week  ending  September  1 to  10,  1881 4,370,314 

“ “ 23,  “ 2,371,454 

“ “ “ 30,  “ 2,800,750 


Total  for  month  of  September 9,548,518 


For  week  ending  October  7,  1881  2,784,499 

“ “ ' “ 14,  “ 1,241,424 

“ “ “ 21,  “ 2,014,^54 

“ “ ‘‘  28,  “ 1,024,749 


Total  for  month  of  October 7,005,120 


For  Aveek  ending  Novembe.  4,  1881 1,635,929 

“ ‘ 11,  “ 2,345,418 

“ “ “ 18,  “ 1,907,982 

“ “ “ 25,  “ ...  2,099,180 


Total  for  month  of  November 7,988,515 


For  week  ending  December  3,  1881 2,345,989 

10,  “ ' 1,551,711 

“ “ “ 17,  “ 2,275,406 

24,  “ 1,243,389 

“ “ “ 31,  “ 2,578,321 


Total  for  month  of  December 9,994,816 


For  week  ending  January  6,  1882 1,375,143 

“ “ ‘ 13.  “ 2,179,900 

“ “ 20,  “ 1,445,544 

- ‘ “ 27,  “ 1,259,(318 


Total  for  month  of  January 6,259,605 


110 


For  week  ending  February  3,  1882 1,409,544 

“ “ 10,  “ l,058,f3]G 

“ “ “ 17,  “ 2,228,220 

“ “ “ 24,  " 1,300,870 


Total  for  month  of  February 5,007,208 


For  week  ending  March  3,  1882 1,500,015 

“ “ “ 10,  “ 1,571,278 

“ “ “ 17,  “ 1,023,472 

“ “ “ 24,  “ 1,203,070 

“ “ 31,  “ 1,344,208 


Total  for  month  of  March 7,243,333 


For  week  ending  April  0,  1882 985,030 

“ 13,  “ 1,348,006 

“ “ “ 20,  “ 1,790,882 

“ “ “ 27,  “ 1,001,055 

Total  for  month  of  April 5,185,033 


By  Senator  Browning  : 

Q.  Be  kind  enough  to  tell  ns  if  “ corners  ” are  effected  by  people 
doing  business  in  this  city  alone,  or  whether  they  are  effected  by 
people  doing  business  in  Albany  and  Buffalo? 

A.  'These  combinations  extend  for  corners  to  different  markets, 
they  have  to,  because  Cliicago  is  a large  grain  market,  larger  than 
this,  and  it  controls  other  markets  by  a combination  for  the  purpose 
and  they  understand  each  other  ; they  communicate  by  telegraph 
many  times  a day. 

Q.  Is  there  a Produce  Grain  Exchange  in  Albany  ? 

A.  Not  in  Albany. 

Q.  At  Buffalo? 

A.  Yes. 

Q.  Do  you  know  of  any  other  in  the  State  of  New  Y^ork? 

A.  There  is  one  in  Rochester,  and  one  on  the  lake  below  ; that  is, 
in  Oswego  and  other  places. 

(^.  Have  these  [)eoj)le  their  agents  in  New  York  ? 

A.  ddiey  have  their  commission  men  ; the  millers  as  a general 
thing  do  not  deal  in  this  illegitimate  trade. 

You  stated  something  in  relation  to  these  speculations  affect- 
ing the  milling  interest  injuriously  ; in  what  localities  are  the  mills 
located  which  ai  c so  affected  ? 


Ill 


A.  They  are  located  in  Albany,  Utica,  Syracuse,  Bald  win  ville, 
Fulton,  Oswego,  Auburn,  Rochester,  Lockport,  Niagara  Falls  and 
Buffalo. 

By  Senator  Boyd  : 

Q.  Flas  this  not  a tendency  to  concentrate  the  capital  of  the 
country  into  the  hands  of  a comparatively  few  persons  ? 

A.  It  has  at  the  expense  of  the  many. 

Q.  At  the  expense  of  the  masses  'i 

A.  Yes;  through  this  illegitimate  business  ; capitalists  combine 
together  without  any  consideration  of  the  consequences,  which  is 
vampirism  upon  the  life  of  our  people. 

Q.  By  these  illegitimate  speculations  ? 

A.  Yes;  by  fastening  the  expense  of  their  useless  lives  upon  the 
necessaries  of  life. 

Q.  Do  you  think  of  any  thing  else  ? 

A.  1 don’t  just  now,  sir. 

Q.  Will  you  think  over  a form  of  law  that  you  would  suggest? 

A.  I have  consulted  lawj^ers  here  about  a law  to  be  proposed  to 
Congress  in  connection  with  this  petition,  but  it  is  not  perfected 
yet ; I have  a paper  here  which  contains  a staiement  of  the 
quantity  of  wheat  in  the  different  markets  monthly,  from  Septem- 
ber, 1879,  to  April,  1882,  and  the  markets  in  New  York,  Boston, 
Philadelphia;  Chicago,  Milwaukee,  St.  Louis,  Indianapolis,  Buffalo, 
Toledo  and  other  places,  and  I offer  that  in  evidence. 


EXHIBIT  ^^E.”  1 

The  following  table  shows  the  qiuuitity  of  ivheat  at  domestic  markets 
for  three  years,  1879,  1880,  1881. 

Bushels. 


Totals  January  G,  1879 17,864,624 

“ February  3,  1879 20,095,509 

“ March  3,  1879 21,689,241 

“ April  7,  1879. 20,337,370 

“ May  5,  1879..... 16,299,250 

“ June  6,  1879 16,178,950 

“ .July  7,  1879 12,412,123 

“ August  4,  1879 14,358,856 

“ September  1,  1879 15,539,480 

October  6,  1879...*. % 19,710,656 

“ November  3,  1879 31,462,923 

“ December  1,  1879... 31,117*,732 


237,066,714 


112 


Totals  January  5,1880 .31,107,70(7 

“ P'ebruary  2,  1880 30,01 2, 1(J4 

“ March  1,  1880  28,205, .71)7 

“ April  5,  1880 25,518,82.'-^ 

“ May  3,  1880 23,755,510 

“ June  7,  1880 rj,807,2(t() 

“ July  5,  1880 03,402,007 

“ August  2,  1880 1:1,231,304 

“ September  G,  1880 15,520,410 

“ October  4,  1880  15,079.2.3.'' 

“ November  1,  1880 21,555,079 

“ December  G,  1880 30,307,047 


208,043,083 


Totals  January  8,  1881 30,200,004 

“ Februar}'-  7,  1881 28,734,730- 

“ March  7,  1881 2.5,1:32,711  ' 

“ April  4,  1881 23,209,709 

“ May  2,  1881  19,427,028 

“ .June  0,  1881 17,990,032 

“ July  4,  1881 17,044,000 

“ xVugust  1,  1881  17,290,775 

“ September  5,  1881 18,900,710 

“ , October  .3,  1881 20,385,741 

“ November  7,  1881 20,831,508 

“ December  5,  1881 18,839,518 


258,072,398 


Totals  .January  2,  1882 17,081,.338 

“ February  0,  1882 17,800,023 

“ March  .0,  1882 15,239,3:33 

“ April  3,  1822 12,008,348 

“ April  24,  1882 10,048,393 


73,738,035» 


EXHIBIT  “F.” 

uantiiy  of  ^ ^Vlicat  hi  diferent  Markets  Monthly  from  September^  1879,  to  Aprils  1882. 


113 


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MONTHS. 

Ijis 

jiia 

1880. 

January 

FehruaVy 

March 

April 

May 

June 

July 

Au<rust 

September 

October 

November 

December 

1881. 

January 

February 

March 

April 

May.- 

June. 

July 

August 

September 

October 

November 

December 

15 


114 


I want  to  offer  these  documents  as  a basis  for  my  statements,  and 
you  can  look  into  these  papers,  and  into  the  newspapers  and  official 
market  reports,  which  will  show^  you  that  1 am  correct,  and  which 
will  confirm  these  statements. 

Q.  Have  3mu  got  them  here  ? 

A.  .1  have  given  you  pa])ers  as  a basis  for  my  facts;  the  markets 
are  committed  to  them  because  they  are  their  own  reports,  and  the 
newspapers  took  these  reports  and  published  them  before  the  world  ; 
there  is  a paper  with  a table  which  shows  the  (jiiantity  of  wheat  — 
of  domestic  wheat  — for  the  years  1879,  1880  and  1881,  for  every 
month,  which  is  reported  to  be  in  the  markets. 

Adjourned  till  Saturday,  May  Y,  1882,  at  2 p.  m. 


New  York,  May  7,  1882. 

Present  — Senator  Boyd,  Chairman,  Senator  Browning. 

Charles  P artridge^  re-called  : 

Examined  by  Senator  Browning  : • 

Q.  Take  these  contracts  and  tell  us  what  they  are? 

New  York  Produce  Exchange,  Lard  contract. 

By  Senator  Boyd  : 

Q.  That  is  the  form  of  contract  used  by  the  Produce  Exchange? 
A.  It  is  their  form  — the  Produce  Exchange. 

EXHIBIT 

New  York  Produce  Exchange. 

Lard  Contract.  , 

Hew  York,  , 188  . 

In  consideration  of  one  dollar  in  hand  paid,  the  receipt  of  which 
is  hereby  acknowledged,  have  this  day  sold  to  two  hun- 
dred and  fifty  ti(n*ces  ])rinie  lard,  at  cents  per  pound,  delivera- 
ble at  seller’s  opiT)!!  . , 

This  contract  is  made  in  view  of,  aud  in  all  respects  subject  to 
the  by-laws  and  i-uh^s  established  by  the  New  York  Produce  Ex- 
change}, in  force  at  this  date. 


I 


115 


Here  is  another  form  ; — a Pork  contract. 

EXHIBIT  ‘‘H.” 

Hew  York  Produce  Exchange. 

Mess  Pork  Contract. 

New  York,  , 188  . 

In  consideration  of  one  dollar  in  hand  paid,  the  receipt  of  which 
is  hereby  acknowledged,  have  this  day  sold  to  two  hun- 
dred and  fifty  barrels  mess  pork,  at  dollars  per  barrel,  deliv- 

erable at  seller’s  option 

This  contract  is  made  in  view  of,  and  in  all  respects  subject  to  the 
by  laws  and  rules  established  by  the  New  York  Produce  Exchange, 
in  force  at  this  date. 

Here  is  a Grain  contract.  ^ 

EXHIBIT  ‘‘1? 

New  York  Produce  Exchange. 

Grain  Contract. 

New  York,  , 188  . 

In  consideration  of  one  dollar  in  hand  paid,  the  receipt  of  which 
is  liereby  acknowledged,  have  this  day  sold  to  bushels 

of  New  York  inspection,  at  cents  per  bushel,  de- 
liverable at  seller’s  option  during  , 188  . 

This  contract  is  made  in  view  of,  and  in  all  respects  subject  to  the 
by-laws  and  rules  established  by  the  New  York  Produce  Exchange, 
in  force  at  this  date.  i 

Here  is  a transferable  order. 

EXHIBIT  ‘‘J.” 

New  York  Produce  Exchange. 

Transferable  Order. 

New  York,  , 188  . 

M 

On  the  188  deliver  to  the  order  of  M in  fulfill- 

rnent  of  our  contract  sale  to  dated  188  , at  cents 

per  pound,  two  hundred  and  fifty  tierces  of  lard,  which  is  to  be 
received  by  the  last  indorser  hereon,  who  must  pay  us  for  the  same 
at  the  rate  of  cents  per  pound. 

[Accepted  by  .] 

New  York,  188  . 

In  consideration  of  one  dollar  paid  to  each  receiver  of  the  within 
order  by  , the  receipt  of  which  is  hereby  acknowledged,  we 

will,  before  1 p.  m.  on  the  188  ',  present  the  within  order  to 

, and  receive  from  specific  sampling  orders,  and  will 

receive  and  pay  for  the  lard  delivered  thereon,  at  the  rate  of 

cents  per  pound. 


116 


It  is  further  agreed  that  each  receiver  of  this  order  shall  continue 
his  or  their  liability  to  each  other  for  the  fulfillment  of  the  contracts 
referred  to,  until  the  lard  is  delivered  and  paid  for. 

New  Yoke,  , 18S  . 

accept  the  within  order  from  with  all  the  condition, 

and  obligations  thereof,  on  account  of  contract  purchase  from 
dated  , 188  , at  cents  per  pound,  paying  dollars, 

to  make  the  price  equal  to  cents  per  pound,  the  price  to  be 

paid  to 

Received 

Here  is  a notification  of  delivery. 

EXHIBIT  “ K.” 

New  York  Produce  Exchange. 

Notification  of  Delivery. 

^^EW  York,  , 188  . 

To  M.  . 

Please  take  notice  that  on  shall  deliver  you  two  hundred 

and  fifty  tierces  prime  lard,  in  accordance  with  the  terms  of  our 
contract  dated  , 188  . 


New  York,  , 188  . 

To  M . 

In  accordance  with  above,  shall  deliver  you  on  250 

tierces  prime  lard,  against  our  contract  dated  , 188  . 


Here  is  another  form  of  a transferable  order. 

EXHIBIT  “L.” 

New  Y^ork  Produce  Exchange. 

Transfer aljle  Order . 

New  York,  , 188  . 

M 

Heliver  to  the  order  of  M on  contract  sale  to 

dated  , 188  , at  cents  per  bushel,  bushels 

which  is  to  be  received  by  the  last  indorser  hereon,  who  must  pay 
for  the  same  at  the  rate  of  cents  per  bushel,  cash,  except 

as  provided  in  Rule  10  of  the  Grain  Rules. 


New  York,  , 188  . 

In  consideration  of  one  dollar  paid  by  the  drawer  of  the  above 
order  to  each  receiver  thereof,  the  receipt  of  which  is  hereby  ac- 
kuowdedged,  we  will,  l)ofore  4 u.  m.  this  day,  ]>rcscnt  the  said  order 


117 


to  the  party  issuing  the  same,  and  receive  therefor  a specific  order, 
and  pay  for  the  grain  delivered  thereon  at  the  rate  of  cents 

per  bushel. 

It  is  further  agreed  that  each  receiver  of  this  order  shall  continue 
his  or  their  liability  to  each  other  for  the  fulfilment  of  the  con- 
tracts referred  to,  until  the  above  grain  is  delivered  and  paid  for. 

Received  M. 

New  York,  , 158  . 

accept  the  within  Order  from  M with  all  the  con- 

ditions and  obligations  thereof,  on  account  of  contract  purchase 
from  , dated  ,188  , at  cents  per  bushel,  pay- 
ing dollars,  to  make  the  price  equal  to  cents  per  bushel, 

the  price  to  be  paid  to  the  party  issuing  the  order. 

Received  M.  • 

Q.  Where  did  you  obtain  these  forms  ? 

A.  From  the  New  York  Produce  Exchange  at  a desk  marked 
‘‘  margins,”  where  people  go  and  put  up  their  margins ; at  this 
desk  the  Produce  Exchange  attends  to  keeping  the  margins  of  these 
speculative  deals  good,  and  the  Exchange  is  the  gambler’s  stake- 
holder— they  are  sold  at  two  cents  a piece. 

By  Senator  Browning  : 

Q.  Two  cents  a piece? 

A.  That  is  what  they  told  me  the  price  was. 

Q.  Is  that  where  they  pay  the  percentage  on  the  sales  ? 

A.  Yes. 

By  Senator  Boyd  : 

Q.  You  stated  at  the  last  meeting  that  you  would  submit  a form 
of  an  act  which  you  thought  would  be  a proper  one  ? 

A.  Yes  ; here  is  a form  which  I desire  to  submit  to  you  for  your 
consideration: 

AN  ACT  to  prohibit  gambling  in  the  “ Food  Products  of  the 

United  States,  or  making  fictitious  sales  or  purchases  thereof 

by  means  of  what  is  known  and  commonly  called  ‘ Futures,’ 

‘Option,’  ‘Puts’  and  ‘Calls.’  ” 

The  People  of  the  State  of  j\ew  York,  represented  in  Senate  and 
Assembly^  do  enact  as  follows: 

Section  1.  It  shall  be  unlawful  for  any  person  or  persons  to  sell, 
buy,  purchase  or  deal  in  any  one  or  more  of  the  food  products  of 
the  United  States,  in  systems  which  -ire  technically  known  as  “fu- 


118 


lures,”  options,”  “puts,”  “calls,”  gambling,  bets  of  chance,  or  to 
buy  or  sell  any  privilege  or  right,  or  to  make  any  agreement  or  con- 
tract for  any  of  said  “ food  products,”  wliicli  contract  is  based  on, 
or  involves  the  value  or  price  of  said  product  at  a time  future,  or 
determine  the  price  to  l)e  paid  in  settlement  therefor,  or  to  make 
any  agreement  or  contract  to  sell  or  deliver  any  of  said  “ food  pro- 
ducts,” which  the  seller  is,  not  at  the  time  of  such  sale  in  actual 
possession  of,  either  as  owner,  assignee  or  agent,  and  having  the 
legal  right  and  ability  to  sell  and  to  deliver  the  article  or  ])roduct. 
But  this  act  shall  not  be  so  construed  as  to  prevent  farmers  and 
other  producers  from  sending  their  products  to  be  sold  by  com- 
mission men  or  agents. 

§ 2.  Any  one  or  more'persons  conspiring  to  buy  any  one  or  more  of 
the  “ food  products  ” of  the  United  States,  or  which  may  have  been 
imported  into  the  United  States,  which  product  he  or  she  is  not 
putting  to  its  natural  use  and  having  no  established  or  regular  trade 
for  the  said  product  and  who  holds  the  same  from  use  to  create  what 
is  called  a “corner”  or  “speculation,”  shall  on  conviction,  bead- 
judged  guilty  of  a misdemeanor. 

§ 3.  Any  agreement  or  contract  made  for  the  sale,  purchase  and 
delivery  or  otherwise  of  any  one  or  more  of  the  “ food  products  ” of 
the  United  States,  or  of  those  imported  into  the  United  States,  by 
count,  weight,  measure,  or  otherwise,  to  be  delivered  at  the  time  of 
making  the  contract,  or  subsequently,  shall  not  be  transferable  nor 
valid  in  the  possession  or  ownership  of  any  other  })erson  or  persons 
than  those  named  in  the  contract,  excepting  in  the  case  of  death,  in 
which  case  the  executor  or  administrator  may  carry  out  the  contract. 

§ f.  All  contracts  made  in  violation  of  the  provisions  of  this  act 
are  illegal,  and  any  person  who  shall  violate  any  of  the  provisions 
of  this  act  shall  be  deemed  guilty  of  a misdemeanor,  and  upon  con- 
viction thereof  shall  be  punished  by  a fine  of  not  less  than  ($250) 
two  hundred  and  fifty  dollars,  nor  more  than  ($5000),  five  thousand 
dollars,  or  by  imprisonment  in  the  county  jail  or  penitentiary  for  a 
period  not  less  than  sixty  days  (60  days),  nor  more  than  one  year 
(1  year),  or  by  both  such  fine  and  imprisonment,  at  the  discretion  of 
the  court. 

§ 5.  This  act  shall  take  effect  immediately. 


[EXHIBIT  M.] 

Exports  of  Flour  and  Wheat  from  JVew  York  froni  July  3,  1879,  to 

April  21,  1882. 


For  week  ending  .Inly 

1879 

Flour. 

34,861 

45,157 

Wheat. 

779,855 

il  U 

]0, 

1879 

659,723 

H iC 

18, 

1879 

67,801 

1,301,717 

it  (t 

25, 

1879 

44,805 

1,327,593 

“ Aug. 

1, 

187!) 

76,695 

1,963,289 

i ( u 

3, 

1879 

2,960,174 

((  ( ( 

15, 

1879 

40,083 

1,775,885 

119 


For  week  ending  Aug.  23,  1879 

“ ‘‘  27,  1879  

Flour. 

44,394 

Wheat 

1,860,357 

35,302 

2,440,352 

2,405,872 

Sept.  5,1879 

77,948 

52,581 

“ 

“ 13,1879 •.. 

2,247,364 

(4 

“ 19,  1879 

50,643 

2,329,279 

n 

“ 20,  1879 

Oct.  3,  1879 

43,366 

2,325, 740 

ll 

51,067 

1,771,127 

i i 

“ 11,1879 

40,048 

1,991,361 

U 

“ 17,  1879 

56,732 

2,050,216 

1 i 

“ 24,  1879 

“ 31,1879 

54,206 

1,701,199 

1,415,315 

.( 

56,586 

< ( 

Nov.  7,  1879 

1,271,337 

1 i 

“ 14,1879 

105,208 

1,146,362 

u 

“ 21,1879 

115,673 

1,012.786 

773,598 

IC 

“ 28,  1879 

59,810 

a 

Dec.  5,  1879 

108,745 

1,093,441 

i i 

“ 12,  1879 

39,971 

55,162 

618,602 

(4 

“ 19,1879..., 

800,956 

ll 

‘‘  26,1879 

42,908 

294,227 

ll 

Jan.  2,  1880 

49,905 

42, 659 

656,757 

ll 

“ 9,  1880 

434,388 

ll 

“ 16,  1880 

41,364 

30,119 

367,726 

1 1 

“ 23,1880.. 

473,226 

ll 

“ 30,  1880  

41,699 

698,509 

ll 

Feb.  6,1880 

26,531 

758,982 

1 1 

“ 13,  1880 

64,592 

437,265 

ll 

“ 20,  1880.. 

54,125 

799,467 

4 4 

“ 27,  1880  

41,931 

53,148 

374,795 

4 4 

Mar.  5,  1880 

784,200 

44 

“ 12,  1880 

61.269 

632,308 

44 

“ 19,  1880 

49,162 

964,623 

1,533,813 

ll 

“ 25,  1880 

72,444 

44 

April  2,  1880 

33,359 

947,556 

44 

“ 9,  1880  

1,109,993 

4 4 

“ 15,  1880 

. 40;821 

987,363 

44 

“ 23,  1880 

46,985 

1,219,613 

44 

“ 30,  1880 

37,534 

49,978 

1.166,302 

44 

May  7,  1880  

741,137 

ll 

“ 14,  1880 

37,238 

1,077,728 

4 4 

“ 21,  1880 

53,881 

1,559,196 

4 4 

“ 28,  1880 

41,321 

1,465,808 

ll 

June  4,  1880 

43,266 

1,213,609 

44 

11,  1880 

39,489 

2,093,270 

44 

“ 18,  1880 

65,010 

2,277,575 

4 4 

“ 25,  1880 

47,894 

1,632,349 

44 

“ 30,  1880 

29,913 

1,520,600 

4 4 

July  9,  1880 

77,397 

1,877,429 

44 

“ 16,  1880 

44,354 

1,775,603 

4 4 

“ 23,  1880 

55,906 

1,044,913 

44 

“ 30,  1880 

1,451,391 

1 4 

Aug.  6,  1880 

49,170 

1,783,100 

ll 

“ 13,  1880 

54,039 

1,992.155 

1 4 

“ 20,  1880 

57,823 

2,143,541 

4 4 

“ 27,  1880 

48,774 

1,567,037 

44 

“ 31,  1880 

61,930 

1,531,936 

44 

Sept.  10,  1880 

52,101 

1,243,257 

“ 17,  1880  

52,576 

1,081, 736 

4 4 

“ 24,  1880 

58,067 

1,492,225 

‘‘ 

Oct.  1,  1880 

65,389 

1,962,491 

« 


12U 


For  week  ending  Oct.  8,  1880 
“ “15,  1880 

“ “ 22,  1880 

“ “ 29,  1880 

“ Nov.  5,  1880 

“ “ 12,  1880, 

“ “ 19,  1880 

“ “ 2G,  1880 

“ Dec.  3,  1880, 

“ “ 10,  1880, 

“ 17,  1880 

“ “ 23,  1880, 

“ “ 30,  1880 


Jan.  7,  1881 
“ 14,  1881 

“ 21,  1881 
“ 28,  1881 
Feb.  4,  1881 
“ 11,  1881 
“ 18,  1881 
“ 25,  1881 
Mar.  4,  1881 
“ 11,  1881 
“ 18,  1881 
“ 25,  1881 
April  1,  1881 
“ 8,  1881 
“ 15,  1881 
“ 22,  1881 
“ 29,  1881 
May  4,  1881 
“ 13,  1881 
“ 20,  1881 
“ 27,  1881 
June  3,  1881 
“ 10,  1881 
“ 17,  1881 
“ 24,  1881 
“ 30,  1881 
July.  8,  1881 , 
“ 15,  1881 
“ 22,  1881 
“ 29,  1881 
Aug.  5,  1881 
“ 13,  1881 
“ 20,  1881 
“ 27,  1881 
Sept.  2,  1881 
“ 9,  1881 

“ 16,  1881 
“ 23,  1881 
“ 30,  1881 
Oct.  7,  1881 
“ 14,  1881 

“ 21,  1881 
“ 28,  1881 
Nov.  -1,  1881 
“ 11,  1881 


18,  1881 


Flour. 

Wheat. 

63,328 

1,449,088 

78,318 

2,165,905 

56,117 

1,678,9.50 

58,563 

1,368,182 

74,881 

1,184,003 

51,122 

780,192 

68,131 

828,046 

46,003 

714,640 

72,912 

056,383 

44,970 

444,727 

116,295 

752,239 

127,403 

831,739 

122,970 

826,734 

94,765 

547,701 

101,003 

716,165 

108,014 

561,430 

119,511 

763,235 

105,173 

8.53,1.52 

88,682 

651,642 

72,870 

779,640 

75,308 

296,474 

101,560 

968,667 

94,163 

1,132,063 

110,850 

972,747 

80,398 

796,939 

102,403 

829,207 

79,004 

982,900 

53,572 

824,974 

105,764 

971,517 

88,683 

1,021,029 

67,644 

926,991 

67,958 

776,123 

81,622 

649,662 

62,723 

782,580 

55,602 

1,502,255 

71,443 

896,571 

51,080 

1,051,471 

65, 105 

1,141,479 

52,395 

731,095 

52,099 

562,616 

59,804 

511,824 

63,394 

640,880 

63,497 

496,375 

71,314 

883,527 

58,891 

1,303,971 

62,889 

898,108 

64,490 

1,578,401 

80,804 

1,237,139 

51,532 

1,214,014 

83,567 

1,360,837 

50,990 

973,304 

79,209 

1,195,933 

54,939 

727,398 

29,148 

429,414 

50,861 

669,217 

49,543 

562,133 

33,069 

6.39,105 

44,694 

556,647 

72,173 

769,701_ 

For  week  ending  Nov.  25,  1881 

Flour. 

39,370 

Wheat. 

542,972 

n 

Dec.  3,  1881 

64,948 

630,091 

<( 

“ 10,  1881 

50,070 

542,976 

i i 

“ 17,  1881 

61,549 

407, 703 

u 

“ 24,  1881 

42,820 

461,762 

u 

“ 30,  1881 

70,456 

611,033 

1 ( 

Jan.  7,  1882 

28,271 

203,312 

i( 

“ 13,  1882 

58,882 

634,280 

(( 

“ 20,  1882 

69,424 

532^)48 

il 

“ 27,1882 

86,127 

497,346 

< 1 

Feb.  3,  1882  

59,338 

269,964 

il 

“ 10,  1882 

71,035 

242,134 

il 

“ 17,  1882 

65,930 

326,248 

il 

“ 24,  1882 

65,087 

460,565 

II 

Mar.  3,  1882 

57,635 

494,082 

li 

“ 10,  1882 

533,704 

il 

“ 17,  1882% 

68,133 

483,944 

il 

“ 24,  1882 

53,925 

443,922 

il 

“ 31,  1882 

56,.  73. 

486,461 

II 

April  G,  1882 

“ 14,  1882..’ 

36,614 

251,839 

59,100 

362,781 

1 1 

“ 21,  1882 

53,181 

407,189 

Consider  Parrish^  sworn : 

Examined  bj  Senator  Boyd  ; 

Q.  Where  do  you  reside  ? 

A.  In  Brooklyn. 

Q.  Where  do  you  do  business? 

A.  8 and  10  Water  street,  New  York. 

Q.  What  is  your  business  ? 

A.  Produce  and  commission  merchant. 

Q.  How  long  have  you  been  in  that  business? 

A I have  been  in  bnsiness^n  my  own  account  and  a member  of 
the  firm  since  1865 ; I have  been  with  the  firm  since  1852. 

Q.  Are  you  familiar  with  the  system  of  making  “corners”  and 
dealing  in  futures  ? . 

A.  Yes. 

Q.  Do  you  know  how  they  are  conducted  on  the  Produce  Ex- 
change, and  elsewhere,  by  speculators  in  this  city  and  in  other  cities 
of  the  Union  ? 

A.  Perhaps  not  so  much  familiar  as  some  others ; I have  only  in- 
formation which  I learn  in  the  natural  course  of  business. 

Q.  Will  you  state  to  the  committee  what  your  opinion  is  in  re- 
gard to  the  system  of  making  “ corners  ” and  dealing  in  “ futures,”  in 
reference  to  its  effect  upon  commerce,  and  its  influence  on  the  pub- 
lic welfare  ? 


16 


122 


A.  Dealing  in  “ futures  ” and  running  “ corners  ” are  not  the 
same  thing.  The  system  of  dealing  infutures  has  many  advantages, 
and  it  has  only  been  established  in  our  market  a tew  years.  Some 
six  or  eight  years  ago  we  found  in  the  trade  of  New  York  that  un- 
der the  system  of  dealing  in  futures,  at  Baltimore  particularly,  where 
it  had  been  established  earlier  than  it  was  in  New  York,  we  got  business 
— •I’egular  legitimate  business  — which  we  were  seeking,  on  com- 
mission. In  soliciting  business,  we  were  asked  why  we  did  not 
have  the  “grading”  system  established,  which  was  the  lirst 
step  of  dealing  in  futures — that  we  would  get  business  that 
we  were  not  having,  and  they  gave  us  the  reason  — these  par- 
ties who  were  buying  from  the  gro’^rs  produce  and  grain  — 
said  that  under  the  system  of  speculation  or  dealing  in  futures  they 
could  sell  against  their  purchases  on  any  day  at  any  liour  in  Balti 
more,  but  could  not  sell  under  our  old  system  of  doing  business  with 
any  certainty  on  any  day  in  New  York.  That  was,  perhaps,  nut 
altogether  the  reason  of  thus  establishing  or  starting  a system  that 
led  to  these  speculations.  It  was  not  practicable  to  do  this  busiiiess 
speculation  in  grain  in  our  market  prior  to  the  establishment  of  the 
grading  system  which  grades  the  grain  and  bulks  it,  and  then  there  is 
no  question  of  the  grade  for  practical  dealing ; before  that  system 
it  was  done  exclusively  by  sample  ; the  establishment  of  “ grading  ” 
did  away  with  all  speculative  dealings  in  the  trade  b}^  sample,  and 
it  came  to  trading  by  grades.  Dealings  in  futures  ” and  in  ‘‘  op- 
tions ” have  other  advantages,  they  enable  parties  who  Buy  from  the 
growers  to  sell  and  “ hedge  ” their  purchasers,  and  it  is  used  legiti- 
mately in  various  directions  for  the  same  purpose.  I have  known 
recently  a party  sell  his  future  in  ou^  market  and  hedge  against 
shipments  from  California  for  Europe  which  was  not  in  a position, 
available,  to  sell.  These  dealings  in  options  foster  speculation,  and 
a speculative  trade  in  our  market  has  been  steadily  increasing,  and 
wdiich  has  been  partly  diverted  from  other  markets  that  were  deal- 
ing in  options  earlier,  such  as  Chicago,  and  other  markets ; the 
speculative  trade  in  grain  has  steadily  increased,  and  those  dealings 
you  might,  perhaps,  term  “ speculative ” make  up  the  increase; 
the  legitimate  trade  in  futures  increases  somewhat  also.  There  has 
not  been  in  our  market  many  corners. 

(B  You  mean  in  New  York? 

A.  In  tlieNcw  York  market  there  was  a corner  in  wheat  two  or 
tliree  years  ago,  and  there  has  been  what  was  claimed,  in  a measure,  a • 


1:^3 


corner  in  corn  and  oats ; a partial  corner.  It  is  not  easy  to  say  what 
is,  or  what  is  not,  a corner  in  the  market  at  all  times. 

Q.  To  what  extent  has  the  system  of  speculations  increased  since 
the  method  of  making  corners  and  dealing  in  futures  has  been  in- 
augurated ? 

A.  Do  you  refer  to  our  market,  or  any  other  ? 

Q.  This  market  ? * 

A.  Well ; the  fact  of  corners  being  run  was  a fact  before  we 
were  dealing  in  options  in  this  market  at  all ; they  were  in  opera- 
tion in  Chicago  and  Milwaukee  earlier  than  our  speculative  deal- 
ings, and  buying  options  in  our  market ; we  have  only  been  dealing 
in  options  in  New  York  within  a few  years.  There  has  been  a 
steady,  marked  increase  in  these  speculative  dealings  and  dealings 
in  options. 

Q.  Do  you  consider  all  this  increase  of  speculations  as  legitimate 
or  illegitimate  ? 

A.  I would  like  to  understand  what  you  would  term  “legitimate  ” 
and  “ illegitimate  ” speculations  ? 

Q.  Does  this  speculation  arise  out  of  the  necessities  of  ordinary 
trade  ? 

A.  There  is  a certain  amount  of  tlje  trade  in  future,  as  I have 
said  before,  that  we  term  “ legitimate  ” that  is  not  speculative,  al- 
though much  of  it  may  be  speculative  on  the  one  hand  and  not  on 
the  other.  The  term ‘‘ legitimate  dealings”  is  where  there  is  an 
intimate  connection. between  the  trade  and  the  property  ; where  on 
one  side  or  the  other  a party  has  property  to  sell,  or  a party  buying 
it  wants  the  property.  Where  the  dealers  on  both  sides  did  not 
want  the  property,  but  wish  to  make  a profit  and  close  the  trade 
at  some  future  time  on  both  sides,  we  term  that  operation  a “ specu- 
lation.” 

Q.  What  proportion  of  these  speculations  concerning  which  you 
have  spoken  has  arisen  out  of  the  ordinary  laws  of  supply  and 
demand  ? 

A.  Well,  it  is  difficult  to  dissect  the  trade  and  say  what  portion 
of  it  is  purely  speculative ; it  is  impossible  to  do  that,  although  the- 
whole  volume  of  speculative  trade,  as  compared  with  business  in 
actual  property,  would  indicate  that  the  larger  share  was  purely 
speculative. 

Q.  What  effect  have  these  purely  speculative  transactions  upon 
commerce,  and  what  influence  have  they  upon  the  public  'welfare  C 

A.  The  influence  at  one  time  may  be  directly  opposite  to  the  in- 


124 


fluence  at  another  time.  Speculative  trade  at  one  time  may  promote 
legitimate  bueiiiess  and  at  another  time  it  will  restrict  it.  To  illus- 
trate a little  the  working  of  it : Before  we  had  a speculative  trade 
there  would  come  in  the  market  causes  having  a marked  effect  upon 
values,  and  we  would  have  a difficulty  in  promoting  or  making  an 
adjustment  of  values  to  meet  that  change  of  values:  For  instance 
there  comes  news  from  abroad  which  has  a natural  effect  of  causing 

serious  decline  in  values;  there  was  no  speculative  trade  in  this 
market  and  the  effect  was  paralysing,  that  information,  whilje  you  were 
mingling  the  speculative  trade  with  the  legitimate,  there  are  always 
parties  who  are  short  ” and  “ long  ” in  the  market,  that  are  read  y to 
trade  ; if  .the  market  breaks,”  as  we  term  it,  the  ‘‘  shorts  ” come  in 
and  cover  ; they  make  activity  during  the  decline,  and  there  are  sales 
all  along  during  the  adjustment  of  prices  from  the  higher  to  the  lower 
or  from  the  lower  to  the  higher  ; that  is  of  great  advantage  to  the 
legitimate  business.  If  I am  carrying  on  business  as  a commission 
merchant  I can  sell  it  out  before  my  margin  is  gone  on  the  decline ; 
or  if  I am  short  ” in  getting  something  sold  by  some  one  who  does 
not  deliver  it,  and  there  comes  a rise,  I can  buy  it  in. 

Q.  IIow  does  this  system  of  speculation  affect  ordinary  dealers  in 
breadstuffs  and  articles  of  produce  ? 

A.  Well,  in  one  way  they  are  able  to  get  at  the  market  very 
readily  to  see  what  it  is.  In  this  way  it  is  an  advantage  to  them 
— to  the  ordinary  dealer. 

Q.  Has  it  not  a tendency  to  cause  unnatural  fluctuations  in  prices 
in  the  markets  ? 

A.  It  has  a tendency  to  cause  some  fluctuations  that  otherwise 
would  not  occur;  but  I do  not  see  that  that  of  itself  is  injurious; 
to  illustrate  my  idea  about  that  a little  — we  have  now  the  salable 
value  of  the  next  crop  of  grain  for  the  year  in  the  market  for  four  or 
flve  months  and  the  growers  can  take  advantage  of  it ; if  there 
were  no  speculation  in  trade  there  would  be  very  little  doing  in  the 
distant  future,  and  when  there  is  expected  to  be  a great  change  in 
values  from  the  state  of  the  crops  in  this  country  the  speculative 
facilities  favor  the  change  from  one  basis  to  another  ; if  there  were 
no  s})eculation  one  could  not  trade  much  in  the  future  crop 
until  we  reached  it,  and  perhaps  then  there  would  be  a large 
break,  for  the  next  cro]),-  which  might  he  a larger  one,  as  is 
the  case  mnv;  tliat  state  of  tilings  would  be  moi*e  annoying 


125 


to  all  in  the  trade  than  the  present ; now  there  are  speculators  who 
trade  between  the  months ; this  speculation  works  well,  I think. 
The  difference  between  June  and  July  wheat  is  too  wide  or  too 
narrow ; it  will  be  one  thing  or  the  other,  so  that  it  makes  a bridge 
between  the  months.  Of  course  at  the  present  time  a speculator  has 
no  means  of  knowing  whether  the  crops  will  be  abundant  or  other- 
wise during  the  coming  summer ; there  is  no  certain  means  of 
knowing,  but  of  course  we  have  more  or  less  general  information. 

Q.  But  they  assume  a great  deal  of  risk  in  these  speculations  ? 

A.  Yes;  they  deal  in  distant  futures,  and  it  is  verv’  hazardous; 
any  one  familiar  with  the  trade  is  well  aware  that  a speculator  may 
be  ten  or  fifteen  cents  a bushel  out  of  the  way,  either  way,  in  the 
value  of  grain  after  the  harvest. 

Q.  Then  do  you  not  consider  such  a system  of  speculation  as  a 
species  of  gambling  ? 

A.  It  is  entirely  similar  to  speculations  in  stocks ; it  is  a very 
difficult  line  to  draw  between  speculation  and  gambling  for  a sum  of 
money. 

Q.  What  is  your  opinion  about  that  % 

A.  Well,  it  approaches  pretty  close  on  to  gambling;  some  people 
would  perhaps  term  it  ‘^gambling.*’ 

Q.  What  would  you  term  it  ? 

A.  Well,  some  deem  it  almost  equivalent  to  gambling;  I should 
say  that  — but  you  can  hardly  dissect  the  one  from  the  other  — the 
purely  speculative  dealing  from  the  one  that  is  not  purely  specula- 
tive. If  I was  a grower  and  the  country  promised  a large  crop  and 
I chose  to  avail  myself  of  an  opportunity  to  sell  in  the  markets, 
why  I leave  you  to  form  an  opinion  as  to  whether  that  would  be 

gambling  ” on  the  part  of  the  grower. 

Q.  Would  not  that  be  different  from  such  a trading  speculation 
you  have  described  as  going  on  among  the  merchants  in  the  city  of 
New  York  and  elsewhere? 

A.  I say  they  run  so  intimately  into  each  other  that  you  cannot 
separate  them  ; but  no  doubt  a large  portion  is  purely  speculative  ; 
probably  a very  small  portion  of  these  distant  futures  is  otherwise 
than  speculative.  There  is  a good  deal  of  trade  in  speculative  mar- 
kets that  is  termed  “ scalping.” 

Q.  What  does  that' mean  ? 

A.  You  wdll  make  a transaction  that  you  will  close  when  you 
get  a small  thing  out  of  it,  or  whether  you  do  or  do  not,  it  is  just  a 
temporary  transaction,^perhaps  done  by  brokers  or  local  parties  on 


126 


their  own  account  to  make  a trade  and  close  it  during  the  day  or 
next  day. 

Q.  Is  it  not  true  that  a large  amount  of  tliis  speculation  is  con- 
ducted by  persons  who  never  possess  a particle  of  the  grain  in  • 
which  they  speculate  ? 

A.  Yes  ; there  are  speculations  of  that  kind  — purely  speculative. 

Q.  The  system  among  such  speculators  is  to  buy  and  sell  what 
they  have  not  got? 

A.  Yes  ; a party  sells  wheat  he  has  nut  got  and  has  the  facility 
of  buying  at  any  hour  from  some  one. 

Q.  Then  he  takes  a risk  ? 

A.  He  takes  a risk  from  it ; he  sells  what  he  has  not  got  and  ex- 
pects to  buy  at  a lower  rate. 

Q.  Does  this  system  of  speculation  extend  to  any  other  articles  of 
produce  besides  grain  ? 

A.  It  extends  to  other  articles. 

Q.  Wdiat  are  the  other  articles? 

A.  I hardly  know  fully ; I hear  it  said  that  there  are  option  sales 
even  in  eggs. 

Q.  Do  you  know  whether  it  extends  to  pork  and  lard  ? 

A.  Yes;  and  it  might  to  beef,  but  in  the  hog  market  there  is 
quite  an  extensive  speculation. 

Senator  Browning  — In  petroleum  ? 

A.  Yes,  in  petroleum. 

Continued  by  Senator  Boyd  : 

Q.  Can  you  state  to  the  committee  to  what  extent  the  prices  of 
these  various  products  are  raised  beyond  their  natural  value  by  these 
speculations  ? 

A.  I should  say  that  the  result  of  these  speculations  is  at  times 
to  enhance  values  and  at  other  times  to  depress  values. 

Q.  By  what  jjrocess  are  values  enhanced  ? 

A.  Well,  if  under  certain  information  there  will  come  a buying 
fever  or  a selling  one  ; as  if  produce  is  likely  to  fall ; or  we  have 
information  in  regard  to  the  crop  which  is  unfavorable  ; or  that  the 
s])ring  wheat  crop  which  had  ])roinised  to  he  very  good  has  turned 
out  to  lie  unfavorable  in  consecpience  of  the  weather  at  harvest  time, 
and  that  impression  had  got  to  be  very  general  throughout  the  spec- 
ulative community  — that  there  was  going  to  be  an  advance  in 
prices  — then  the  speculation  would  run  largely  on  the  buying  side; 


127 


or  as  we  would  term  it,  the  crowd  are  “ bulls  ” and  the  sellers  are 
shy;  and  we  carry  values  too  high,  as  discovered  later. 

Q.  To  what  extent? 

A.  Well,  it  was  carried  by  that  speculative  fever  last  fall  ten  or 
fifteen  cents  a bushel  too  high. 

Q.  How  much  in  pork? 

A.  I am  not  so  familiar  with  the  pork  trade ; it  is  difiicult  to  de- 
termine ; I speak  conservatively. 

Q.  You  say  it  may  be  carried  higher  even  than  that  ? 

A.  Yes,  it  is  difficult  to  determine. 

Q.  Does  the  producer  derive  any  benefit  from  this  increase  of 
price  ? 

A.  Certainly. 

Q.  In  what  way  ? 

A.  The  price  that  the  producer  obtains  for  his  crop  when  he  sells 
is  governed  very  intimately  by  the  prices  in  the  central  markets 
and  the  price  of  the  actual  property  in  the  central  market  is  gov- 
erned very  closely  by  the  speculative  price. 

Q.  Then  who  bears  all  the  expenses  of  this  additional  price,  who 
pays  it  to  the  grower  ? 

A.  So  far  as  it  falls  upon  the  actual  property,  it  falls  upon  the 
consumer  at  home  or  abroad,  I might  say  here  that  we  found  — if 
I may  give  you  my  opinion  in  regard  fo  the  speculations  of  last  fall 
— that  the  speculators  found  that  we  did  not  govern  the  world  in 
the  values  and  prices  of  grain  ; and  later  on  we  became  so  much 
discouraged  by  the  action  of  foreign  merchants  in  finding  out  sources 
of  supply  in  other  quarters  of  the  globe  that  we  became  as  much 
depressed  as  we  had  been  inflated  by  our  own  situation  and  we 
dwindled  down  and  lost  all  the  advance  made  in  this  country  owing 
to  our  crop  because  of  the  situation  abroad. 

Q.  The  natural  supply  was  plentiful  ? 

A.  Yes  ; and  the  speculative  feeling  took  an  opposite  turn  by 
short  sales  ; ten  or  fifteen  cents  below  what  we  have  since  learned 
was  a fair  basis  of  prices. 

Q.  What  effect  has  this  speculation  upon  the  transportation  in- 
terests of  the  country? 

A.  I should  say  only  a temporary  effect. 

Q.  To  what  extent  ? 

A.  Well,  I think  to  a less  extent  than  public  rumor  attributes 
to  it. 


128 


Q.  Is  it  your  o])inion  that  evils  exist  in  connection  with  this  sys- 
tem of  illegitimate  speculation  in  grain  and  othei’  produce? 

A.  Yes,  to  some  extent ; it  has  its  evils  and  it  has  its  benefits. 

Q.  How  in  your  opinion  could  tliese  evils  be  i-emedied  ? 

A.  I think  as  far  as  it  is  possible  to  remedy  tliem,  tlie  power  lies 
in  the  Hoards  of  Trade. 

Q.  Would  you  favor  legislation  in  relation  to  it  ? 

A.  I think  not. 

Q.  You  are  familiar  with  the  Board  of  Ti-ade  and  its  o])eration  ? 
A.  No. 

Q.  Are  you  a member  of  the  Produce  Exchange? 

A.  Yes;  I might  say  in  explanation  of  rny  statement  that  I think 
there  is  ample  power  in  the  Boards  of  Trade,  and  their  government 
is  a popular  government,  and  an}’  practice  in  the  trade  that  is  deemed 
by  the  majority  of  the  Board  to  be  injurious  can  be  restricted  by 
their  own  rules. 

Q.  To  what  extent  are’ these  dealings  in  futures  carried  on  in  the 
Produce  Exchange  ? 

A.  I have  said  before,  it  is  on  the  increase;  it  is  getting  quite 
important. 

Q.  Becoming  a large  portion  of  the  means  by  which  they  trans- 
act business  ? 

A.  The  speculative  dealings  in  futures  are  several  times  the  ex- 
tent of  dealing  in  spot  property. 

(T  To  be  delivered  on  the  spot  ? 

A.  Yes  ; in  actual  property  and  actual  delivery. 

Q.  Then  would  legislation,  for  the  purpose  of  restricting  the 
increase  of  these  speculations,  have  an  injurious  effect  upon  the 
business  relations  of  the  Produce  Exchange  ? 

A.  It  would. 

Q.  In  what  way  ? 

A.  It  would  restrict  the  volume  of  business ; the  business  is  — so 
far  as  it  is  a commission  business,  is  a profitable  business. 

Q.  Profitable  to  the  speculator? 

A.  Prufi table  to  the  merchant. 

(,).  Are  the  commission  merchants  engaged  in  this  system  of 
dealing  in  futures'? 

A.  They  execute  these  orders  ; all  commission  merchants  take 
speculative,  orders — nearly  all  ; in  fact  very  often  they  cannot 
know  their  customers. 

(p  'riiese  commission  merclnmts  act  as  agents  for  the  speculators  ? 


129 


A.  Yes. 

Q.  And  from  that  business  derive  a considerable  share  of  their 
profit  ? 

A.  A considerable  share  of  their  business  is  of  that  nature. 

Q.  Do  you  think  that  it  is  in  accordance  with  good  public  ^ policy 
that  this  system  of  speculation  sliould  be  permitted  to  continue  to 
increase  'i 

A.  That  is  a pretty  broad  (piestion  ; I do  not  know  that  I could 
draw  any  distinction  in  that  respect  between  speculative  bnsiiiess  in 
the  produce  markets  and  speculative  business  in  the  stock  market. 
It  has  the  same  pernicious  influence  I think. 

Q.  Would  you  state  what  those  pernicious  influences  are  ? 

A.  Well,  they  are  about  the  same  as  the  pernicious  influences  of 
gambling;  with  this  difference  — that  speculation  in  the  grain  and 
stock  markets  is  “ respectable,  ” gambling  is  not. 

Q.  That  is  just  the  difference ; and  the  ordinary  gambling  is  for- 
bidden by  law  while  gambling  in  grain  is  not. 

A.  Well,  the  gambling  in  grain  is  so  interwoven  with  legitimate 
speculation  that  you  might  gamble  and  could  not  be  accused  of 
gambling. 

Q.  Another  evil  is,  I believe,  that  it  enhances  the  cost  of  living 
and  the  prices  of  the  necessaries  of  life,  docs  it  not  'i 

A.  At  times  it  does,  and  at  times  the  opposite ; I think  that  on 
the  whole  it  perhaps  does  not,  and  there  is  quite  as  much  temptation 
to  sell  fictitious  property  as  there  is  to  buy  it,  and  at  times  the  dispo- 
sition to  sell  short  ” breaks  the  market  and  speedily  brings  down 
prices,  so  that  legitimate  business  moves  ; were  it  not  for  the  “ short  ” 
speculator  the  legitimate  business  would  be  very  much  checked.  Now 
at  times  the  exporters  are  very  much  pleased  at  the  speculative  deal- 
ing in  the  market ; the  large  buyer  for  export  is  facilitated  greatly 
by  speculative  dealings;  before  we  dealt  in  options  in  New  York 
many  large  exporters  would  do  their  buying  in  Chicago,  because  by 
speculative  dealings  there,  they  could  buy  largely  without  (by  their 
purchases)  influencing  tlie  market  so  much,  while  if  there  was  no 
speculation  and  the  exporter  came  in  to  buy  he  makes  a large 
change  in  the  price  by  his  own  purchases,  and  the  volume  of  trade  is 
increased  largely  by  the  speculative  and  legitimate  business  to- 
gether ; an  exporter  goes  into  market  and  buys  options  largely  with- 
out influencing  the  values  perceptibly  ; then  he  trades  off  his 
options  for  the  actual  property. 

17 


130 


By  Senator  Browning  : 

Q.  Yon  said  tliat  syiecnlation  liad  a temporary  effect  on  transpor- 
tation, according  to  public  rumor — what  do  you  mean  by  pulilic 
rumor  ? 

A.  Perhaps,  I had  better  withdraw  the  remark  ; what  I meant  to 
say  was,  tliat  it  had  been  stated  that  the  mode  of  transporting  is  re- 
stricted by  manipulation,  by  these  corners. 

Q.  Is  that  tlie  fact  ? 

A.  You  establish  a higlier  price  by  manipulation  and  you  will 
increase  the  cost  of  transportation  at  that  point  to  the  seaport  and 
at  times  you  would  depress  the  cost  of  transportation  on  the  ocean  ; 
if  your  manipulation  was  at  Chicago  you  would  only  increase  the 
transportation  for  the  time  being  from  the  interior  to  Chicago,  and 
you  check  it  for  the  time  being  from  Chicago  to  the  seaboard  but 
the  capacity  that  any  market  can  hoard  grain  would  amount  to  eight 
or  sixteen  millions  of  bushels,  which  as  compared  with  the  crop  is  a 
mere  bagatelle. 

Q.  Does  the  Prorluce  Exchange  hold  any  margins  for  sales'^ 

A.  There  is  a system  of  margins  or  what  are  called  “ calling  mar- 
gins” in  all  future  transactions  regulated  by  the  Exchange  and  de- 
positories of  the  money  designated. 

Q.  Who  is  it  taken  from? 

A.  They  receive  it  on  call  from  both  parties  to  the  transaction. 

Q.  To  cover  sales  ? 

A.  To  protect  the  sales. 

Q.  To  what  amount  ? 

A.  The  rule  permits  a call  of  ten  cents  a bushel  on  wheat;  and 
five  cents  a bushel  on  corn  and  oats. 

Q.  Not  a percentage  value  of  so  much  on  the  bushel? 

A.  So  much  a bushel  — to  be  kept  good. 

Q.  Is  this  Exchange  sometimes  what  may  bo  called  a stakeholder 
in  these  tiaiusactions  ? 

A.  Well,  it  might  bo  so  termed;  the  clerk  of  the  Exchange  and 
the  oliicei-sof  the  Exchange  have  certain  duties  to  perform  in  regard 
to  these  funds  for  the  convenience  of  the  members. 

(2.  Does  the  committee  understand  that  most  of  the  transactions 
on  the  floor  of  the  Exchange  are  purely  in  option  business  and  deal- 
ings in  futures  ? — That  any  monew  resulting  from  these  transac- 
tions is  deposited  with  the  officers  of  the  Produce  Exchange,  so  that 
tljcy  become  a stakeholder  at  the  desk,  according  to  its  rules,  for 
botli  parties  to  the  transaction,  the  buyer  and  the  seller  ? 


131 


A.  If  the  committee  fully  understands  tlie  system  of  margins  — 
it  is  the  same  system  that  exists  in  the  stock  market ; the  parties  to 
this  traffic  are  on  the  Produce  Exchange  and  in  most  cases  “ carry  ” 
their  dealings  as  we  term  it;  they  are  not  speculators  at  all ; they  are 
commission  houses ; orders  come  to  them  from  speculators,  they 
will  carry  on  dealings  for  local  speculators  ; a local  speculator  makes 
a purchase  or  sells  a future  and  these  transactions  are  carried,  as  a 
rule,  by  the  commission  houses;  they  make  the  ti-ade and  permit  the 
houses  which  carry  these  rules,  and  who  form  a contract,  and  in 
whose  name  it  stands,  to  call  both  ways  for  tlie  margin  ; if  the  market 
fluctuates  they  keep  the  margin  good  so  as  to  protect  the  parties 
dealing;  if  the  margin  is  called  and  is  not  put  up,  these  rules  re- 
quire that  the  commission  houses  shall  so  deal  with  the  contract,  as 
that  they  can  buy  in  or  sell  out  the  contract. 

Q.  The  commission  houses,  so  called,  are  brokers  who  have  no  basis  ? 

A.  The  commission  houses  must  have  good  credit  and  standing 
in  the  trade,  some  of  the  brokers  merely  make  the  trades  and  give 
the  names  of  parties  they  are  acting  for,  as  a rule  the  trades  made 
prove  all  right  and  reliable. 

Q.  Is  itnot  the  fact  that  on  the  floor  of  the  Produce  Exchange  there 
are  a number  ot  men  who  are  option  brokers,  having  no  basis  upon 
Avhich  to  make  sales  — make  sales  from  day  to  day,  and  which  is 
known  as  “ scalping,  ” or  who  make  sales  each  day  or  two  or  three 
days  ? 

A.  There  are  certain  traders,  and  there  are  some  brokers  who 
will  do  a little  business  of  the  kind  you  refer  to  ; they  would  make 
sales  or  purchases,  and  we  And  sometimes  when  they  come  to  us 
late  in  the  day  they  will  say  we  have  bought  that”  or  “ we  have 
sold  that.”  At  another  hour  of  the  day  there  will  be  a little  differ- 
ence in  the  prices,  it  may  be  $10,  $20,  or  $30  higher  or  lower,  and 
they  may  say  “ I would  like  to  have  you  take  the  trade  that  I have 
made  and  I will  pay  you  the  difference,  ” that  is  reserve  what  I 
make.  ” 

Q.  That  is  bad  ; that  is  speculation  ? 

A.  Ilot  more  bad  than  a longer  trade ; this  speculation  may  be 
closed  within  five  minutes  and  it  might  run  all  day ; there  is  no 
certainty  in  this  dealing. 

Q.  Is  there  nothing  paid  to  the  Exchange  for  that  ? 

A.  1^0  margin  put  up. 

Q.  What  becomes  of  this  money  paid  to  the  Exchange ; these 
stakes  that  are  put  up  ? 


132 


A.  Whenever  a deal  is  carried  or  run  out,  whenever  deals  are  set- 
tled, and  there  is  no  default,  these  margins  go  back  with  interest  to- 
the  parties  who  put  them  up.  If  a party  fails  or  makes  default  in 
putting  up  more  margin,  it  is  sold  out  and  that  margin  is  held  to 
make  good  his  liability  to  the  party  to  the  contract ; wo  regard  the 
margin  as  merely  a security  for  carrying  out  the  transaction  ; and 
when  the  transaction  is  carried  out  as  agreed  the  money  is  returned 
with  interest ; these  margins  draw  inteMcst  with  the  depositories. 

By  Senator  Boyd  : 

Q.  This  is  a simple  mode  of  providing  for  any  changes  in  the 
market  between  the  time  of  the  purchase  and  the  time  of  delivery  ? 

A.  Yes,  it  is  very  useful  in  dealing  in  futures  ; and  it  is  a check 
to  over-speculation. 

Q.  Do  all  speculators  put  up  these  margins? 

A.  They  are  liable  to  be  called  upon  ; they  must  put  up  a margin 
if  they  are  called  upon,  but  they  are  not  always  called  on.  If  trans- 
actions are  between  parties  of  good  standing  there  is  no  margin 
called  for  until  there  is  a change  in  the  market ; in  case  of  parties 
of  good  standing  a margin  might  not  be  called  for  until  there  was 
a change  in  the  market,  although  some  houses  make  it  a rule  to  call 
for  a margin  ; there  is  a difference  in  different  houses  ; some  bouses 
are  very  exacting  in  calling  for  margins  invariably,  and  other  houses 
will  not  call  for  margins  from  the  parties;  that  is  all  right  because 
the  deal  might  run  against  them  ; other  houses  wait  until  an  im- 
portant change  takes  place  in  the  market  and  then  call  for  a mar- 
gin to  protect  the  dealing. 

By  Senator  Browning  : 

Q.  Then  you  can  call  the  Exchange  a stakeholder  of  that  kind  ? 

A.  No  ; I think  it  is  nothing  but  a very  wise  regulation  ; {\\Q  fa~ 
ture  requires  all  this  dealing;  there  is  no  distinction  between  deal- 
ings that  are  ])urely  speculative  and  , others  ; they  loill  ham  future 
dealings,  and  the  jiarties  making  them  must  be  prepared  to  put  up 
sufficient  to  cover  the  risk  of  the  transaation  ; they  can’t  come  in 
and  trade  and  then  if  there  is  a loss  not  pay  any  thing  ; this  is  evi- 
dent to  all  the  trade ; we  sell  flour  for  the  miller,  “ to  arrive,  ” and 
we  have  some  right  to  call  for  a margin  from  the  buyer,  and  he  has 
the  right  to  call  for  a margin  from  us;  if  the  market  advances  and 
we  do  not  fullill  our  contract,  there  is  a security  if  he  loses  in  the 
t I'ansaction. 


133 


Q,  How  do  these  speculations  affect  the  millers  ? 

A.  At  times  it  is  useful  to  them,  and  at  times  it  is  against 
them  ; 1 don’t  think  the  millers  as  a class  — at  times  they  complain 
when  there  is  a fictitious  value  caused  by  the  hoarding  of  wheat  — 
when  there  is  a corner  — that  it  is  against  their  legitimate  ])asin('ss  ; 
in  fact  there  is  a few  who  favor  running  corners  ; still  when  a corner 
is  run,  the  disappointments  are  ten  times  as  numerous  as  those  who 
have  the  benefit  of  it ; of  course  corners  are  run  up  by  a syndicate 
— ])y  a small  number  of  parties,  and  the  losers  who  have  sold 
short”  are  more  numerous.  All  the  members  of  the  Board  of 
Trade  have  the  power  to  make  all  the  rules  that  govern  dealings  in 
trade  ; of  course,  the  majority  all  make  the  rules  that  they  propose 
to  carry  through. 

Rohert  R.  Austin  sworn  : 

J^xamined  by  Senator  Boyd  : 

Q.  Where  do  you  reside'^ 

A.  Brooklyn. 

Q.  Do  you  do  business  in  the  city  of  New  York? 

A.  Yes. 

Q.  What  is  your  business?  ♦ 

A.  Wholesale  grocer. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  About  twenty  years. 

Q.  Are  you  familiar  with  the  system  of  making  ‘‘  corners  ” and 
dealing  in  ‘‘  futures  ? ” 

A.  No,  sir;  I am  not  personally  engaged  in  that  business,  nor  is 
our  firm. 

Q.  You  have  some  knowledge  of  the  manner  in  which  such  trans- 
actions are  carried  on  ? 

A.  Yes,  sir. 

Q.  Will  you  state  your  opinion  in  reference  to  the  system  of 
making  corners  and  dealing  in  futures,  in  reference  to  its  effect 
upon  commerce  and  its  influence  on  the  public  welfare  ? 

A.  I have  a general  opinion  on  the  question  ; I believe  that  it  is 
detrimental  to  the  public  welfare  and  not  necessary  for  carrying 
forward  the  legitimate  business  of  the  country.  I believe  that 
foi-  the  time  it  has  a tendency  to  unnaturally  inflate  values  and 
to  carry  them  above  any  proper  relations  they  may  bear  to  the 
question  of  supply  and  demand ; and  at  other  times  to  depress  them 


134 


«/ 


below  their  proper  ])lacc  in  thesanie  relations,  and  it  has  a tendency 
to  create  distrust  and  uncertainty  in  business  afiairs  ; it  creates 
hostile  interests  in  cotnniercial  affairs  without  regard  to  legitiiriate 
requirements  or  tliewantsof  the  ])ublic,  and  tliey  have  a government 
and  control  which  they  arc  not  entitled  to  ; that  is  about  my  gen- 
eral view  of  the  matter. 

Q.  Have  you  any  knowledge  of  the  extent  to  which  tliis  system 
is  carried  in  ]N  ew  Y ork  ? 

A.  ISTothing,  except  what  I get  in  the  course  of  business  infor- 
mation from  those  engaged  in  it.  I should  say  that  the  statement 
of  Mr.  Parrish  is  about  correct,  so  far  as  my  knowledge  goes, 
and  that  purely  speculative  transactions  are  on  the  increase 
here  and  in  other  markets.  To  explain  my  opinion  that  it  is  detri- 
mental to  the  public  welfare,  I will  state,  that  all  legitimate 
business  to  be  successful  must  be  based  upon  something  sfibstantial, 
and  especially  in  that  substance  which  is  the  result  and  production  of 
labor,  and  that  all  artificial  and  stimulating  processes  brought  to 
bear  which  do  not  recognize  this  are  a means  of  disturbance.  I 
will  say  that  as  a means  of  carrying  forward  speculative  operations 
the  selling  of  futures  ” is  a facility  by  which  speculative  values 
can  be  ascertained  — that  it  is  a favorable  position  for  that  sort  of 
business,  that  I don’t  denj^;  but  that  it  is  unfavorable  for  legiti- 
mate business  that  grows  out  of  the  industry,  toil  and  labor  of  the 
community  I don’t  think  admits  of  a doubt.  I think  another 
effect  of  it  is  that  it  unsettles  the  minds  of  a large  por- 
tion of  the  community  in  regard  to  the  regular  pursuits 
and  industries  of  the  country  creating  a gambling  tendency 
in  business  affairs  ; and  my  judgment  is  that  all  real  prosperity  that 
comes  to  any  country  comes  through  the  legitimate  results  of  the 
application  of  labor,  and  intelligence  applied  to  it ; and  we  find 
always,  so  far  as  my  experience  is  concerned,  and  I think  from  the 
experience  of  other  men,  that  when  commercial  disturbances 
come  upon  the  country  the  first  cause  is  always  in  illegitimate 
trading  and  speculation.  In  the  fall  of  1873  there  was  a 
])anic  in  Wall  street  ; that  came  from  the  fact  that  speculative 
influences  had  run  to  such  ,an  extreme  that  they  had  largely 
absorbed  the  money  capital  of  the  country  for  reckless  men  to  carry 
their  gambling  ventures  which  had  in  them  elements  of  great  gain 
(»n  the  one  hand  or  of  great  disaster  on  the  other  ; they  were  willing 
to  go  into  the  market  and  bid  for  money  at  higher  rates 
than  any  legitimate  business  in  the  country  could  afford  to 


( 


135 


pa3^  ; this  state  of  things  and  the  ciipidit)^  of  those  who  had  money 
to  lend  had  been  going  on  for  years  before,  until  the  volume  of 
money  had  become  centered  in  Wall  street  for  the  purpose  of  gamb- 
ling: in  stocks.  Hence  the  crash. 

The  result  was  that  all  our  legitimate  industries  were  im])erilled  ; 
the  farmer,  merchant,  ship-owner,  and  manufacturer  who 
were  engaged  in  the  regular  pursuits  of  business,  not 
based  on  speculation,  were  exposed  to  a severe  strain  in  their 
lines  of  business.  When  you  take  the  trader’s  investments  which 
he  is  obliged  vto  carr\^  permanently  either  in  ships  or  merchandise 
or  factories,  and  you  take  the  investments  which  the  speculator  is 
not  obliged  to  have,  then  you  put  the  business  man  in  a position  that 
he  has  got  to  be  the  competitor  with  gambling  which  is  disastrous  to 
the  community  and  which  aids  the  cupidity  of  the  money 
lender  of  the  result,  has  a bad  effect  upon  the  legitimate 
industry  of  any  country.  In  1873  the  balance  of  trade  was  largely  in 
our  favor  ; the  demand  for  grain  and  all  the  products  of  this  countr}^ 
which  came  from  the  soil,  from  Europe  and  especially  from  Eng- 
land, was  active,  but  right  in  the  face  of  that  favorable  state 
ot  things  there  were  plain  indications  of  commercial  adversitj^ ; so 
far  as  the  labor  of  tliecountiy  was  concerned  we  had  the  tramp  ” ; 
and  that  was  during  the  times  of  dealing  in  “ futures”  and  of  making 
‘‘  corners  ” on  the  Produce  Exchange  and  in  Wall  street  stock  specu- 
lation. This  state  of  things  is  simply  a disturbing  element  against 
all  the  legitimate  industries  of  the  people.  It  has  been  stated 
here  that  if  a man  had  a transaction  in  grain  whereby  he  had  gone 
“ short  ” in  the  market  and  he  saw  there  was  a chance  by  which  h.e 
could  cover  it  and  if  he  wanted  to  take  a reverse  position  he 
could  do  so  and  the  speculative  interests  of  the  country  would  be 
facilitated,  but  after  going  through  these  ‘^ups”  and  downs,  ” the 
argument  is  that  he  generally  gets  in  one  side  or  the  other;  but  is  it 
not  for  the  interests  of  the  community  that  the  property  should  pass 
only  through  legitimate  channels  to  the  consumer,  and  that  legiti- 
mate processes  only  should  be  used  in  getting  it  there? 

Q.  Then  these  speculations  you  speak  of  do  not  arise  from  the 
necessities  of  supply  and  demand  ? 

A.  Hot  at  all. 

Q.  Do  you  know  to  what  extent  these  illegitimate  speculations 
are  carried  on  in  the  city  of  Hew  York  in  grain  or  other  products? 

A.  I have  no  statistical  information  in  regard  to  it ; my  business  is 
this  — we  buy  and  have  property  delivered  to  us,  and  we  sell  and 


deliver.  Of  course  vve  have  ti-aiisactions  in  ai'ticles  of  produce  on  the 
Produce  Exchange,  and  ve  hear  more  or  less  of  operations  that  are 
going  on,  but  we  are  apart  from  all  speculative  dealings  and  organ- 
izations and  from  all  pui’chases  on  a gambling  basis.  For  instance 
we  had  for  years  immense  transactions  in  the  United  States  in 
coffee  ; now  that  article  amounts  to  a great  deal  of  money  and  has 
been  generally  sold  here  upon  the  fair  princi])le  of  isnpply  and  demand, 
unless  a combination  of  certain  buyers  should  buy  it  up  and  hold  it 
against  the  market ; but  so  far  as  having  an  organized  ])lan  of  sell- 
ing futures  and  making  corners  we  never  had  it  until  the  past  year  ; 
now  we  have  in  the  city  of  New  York  a regular  call  on  the  article. 
The  Putter  and  Cheese  PPxchange  was  organized  here  a short  time 
ago,  and  those  articles,  heretofore,  have  always  taken  their  ordinary 
legitimate  chances  in  the  trade.  Now,  with  the  organization  hereof  a 
Butter  and  (hieese  Exchange,  there  is  a large  party  who  want  these 
articles  even,  and  the  trade  in  eggs  made  a speculation  so  far  as  i\\Q  fu- 
ture concernecband  perhaps  “corners”  if  they  can  make  them. 
Now,  all  that  violently  enhances  the  price  at  times,  and  at  other  times 
unduly  depresses  it;  my  experience  of  thirty  years  is  that  you 
can’t  override  the  cpiestion  of  supply  and  demand;  you  can  stimu- 
late v^alues  artificially  for  the  time  being  on  a speculative  basis ; 
but  if  the  supply  is  sufficient  to  give  a full  supply  of  the  property 
to  the  market,  a reaction  will  take  place  and  your  pendulum  will 
spring  back  the  other  way;'  speculation,  therefore,  becomes  a dis- 
turbing element ; if  butter  is  scarce  and  there  is  a demand  for 
it,  it  is  wanted  and  the  price  naturally  goes  up  to  a certain  point,  and 
vica  mrsa^  to  artificially  stimulate  prices  is  unnecessary  and  has  no 
proper  place  in  the  commerce  of  the  country. 

Q.  It  is  unnecessary  for  the  purpose  of  carrying  on  the  legitimate 
])rocesses  of  trade  ? 

A.  Yes,  I think  it  is  an  unnecessary  thing  and  detrimental  to 
trade  ; it  creates  an  undue  excitement  in  trade  and  an  uncertainty, 
because  it  is  not  based  upon  any  sul>stantial  foundation.  I will 
take  the  case  of  a miller  in  Buffalo  as  an  example.  ITe  is  a man 
with  an  investment  in  mills,  machinery,  etc.,  we  will  suppose 
of  $50,000  ; a tax  ])ayer,  and  to  all  intents  and  purposes  a fixed 
j-csident  employing  labor  and  of  course  a useful  member  of  the 
community.  Now  we  will  snp])Ose  that  while  they  are  running 
a corner  in  wheat  in  Chicago,  this  miller  finds  himself  short  of 
grain,  thereby  preventing  him  from  sup])lying  his  customers,  on 


13T 


TV'hoin  he  depends  for  liis  business,  with  flour.  He  is  aware  that 
the  price  through  speculative  inlluence'is  quite  above  tiie  com- 
mercial value  of  the  comniodit}',  and  that  as  soon  as  a settlement  is 
reached  among  the  grain  gamblers  tlie  price  will  decline  to  its 
normal  condition,  but  tlie  speculation  goes  on  and  he  can  wait  no 
longer  and  lie  is  obliged  to  purchase  in  order  to  keep  his  customers. 
Now  after  having  gotten  himself  loaded  up  with  grain  at  high 
prices,  the  corner  in  Chicago  breaks,  the  price  goes  down  and  the 
miller  is  saddled  with  a big  lot  of  grain  at  a high  price.  This  is 
where  the  damage  to  legitimate  industries  comes  in,  in  this  as  well 
as  other  avocations.  The  gamblers  carry  their  point,  pocket  the 
gains,  derange  the  regular  industries  of  the  country,  employ  no 
labor,  grind  no  wheat,  supply  no  legitimate  demand,  but  simply  in- 
jure those  that  do. 

Q.  What  effect  has  such  speculation  upon  your  business  and  the 
grocers’  business  generally  ? 

A.  Our  business  has  not  been,  as  a rule,  greatly  affected  by  these 
speculations.  The  articles  in  which  we  deal  as  grocers  have  usually 
been  placed  on  the  market  fairly  for  a purchaser  to  be  able  to  judge 
without  the  intervention  of  anybody  ; of  course  there  are  individuals 
who  undertake  to  make  money  out  of  the  movements  of  property. 

Q.  Have  these  illegitimate  speculations  of  which  you  have  spoken, 
a tendency  to  enhance  the  price  of  breadstuffs  and  other  necessaries 
of  life  beyond  their  natural  value  ? 

A.  I will  say  this  they  either  enchance  the  value  beyond  a 
legitimate  and  proper  limit,  or  they  act  in  a reverse  way,  or  act  upon 
the  producer  in  times  of  disaster  so  that  he  is  injured  the  other  way 
they  either  put  the  commodity  at  too  high  a. price  so  that  it  is  inju- 
idous  to  the  consumer,  or  there  will  be  by  the  influence  of  specula- 
tion a reaction  upon  it  which  will  be  injurious  to  the  producer. 

Q.  Then  both  producer  and  consumer  are  alike  injured  by  this 
undue  speculation  ? 

A.  I think  they  are. 

Q.  Do  you  know  to  what  extent  the  prices  of  the  necessaries  of 
life  are  enhanced  beyond  their  natural  value  by  such  speculation  ? 

A.  Well  I think  on  the  average  the  products  of  the  grower  on 
the  soil  are  enhanced  to  tlie  consumer,  without  beneflt  to  the  pro- 
ducer, fully  ten  per  cent. 

Q.  When  the  necessaries  of  life  are  thus  enhanced  in  price  be- 
yond their  natural  value,  do  the  wages  paid  to  employees  keep  pace 
with  the  prices;  that  is  to  say  are  they  increased  to  a similar  extent  ? 

18 


138 


A.  If  those  enliaiiced  prices  run  over  a certain  period  of  time  the 
wages  of  the  workman  will  gradually  assimilate  to  the  extra  de- 
mand ; but  if  they  last  only  foi*  a jieriod  of  say  of  six  months,  they 
won’t  have  a perce])til)le  effect  upon  labor;  the  laborer  simply  ])ur- 
chasea  for  his  consumption;  tor  that  reason  the  S])eculati  vc*  princi- 
ple concentrates  itself  so  powerfully  as  to  make  itself  felt  (piickly 
and  for  some  time  the  laborer  can’t  make  his  demand  for  increased 
wages  effective,  and  is  often  at  a disadvantage  in  this  regard, 

Q.  AVhat  tendency  have  these  S|)ecuIations  in  reference  to  the 
concentration  of  wealth  in  the  hands  of  a few  individuals? 

A.  The  selling  of  futures”  and  ‘‘  options”  naturally  has  a tetid- 
ency  to  give  a combination  of  capitalists  power  to  inflict  great 
injury  upon  the  public.  If  a certain  number  of  men  make 
up  their  minds  that  an  article,  whether  it  is  wheat  or  j)ork,  or 
any  commodity  of  universal  consumption  can  be  ‘^cornered’’  or  a 
sufficient  cpiaiitity  be  taken  out  of  the  market,  and  they  can  sell  it  fur 
a future  delivery,  there  is  an  excitement  created  ; a short  party  is 
organized  who  will  undertake  to  ‘M^ear  ” the  price,  and  it  becomes 
a question,  what  is  the  gambling  price  ? it  does  not  become  a ques- 
tion who  has  got  the  most  wheat  or  pork,  for  they  don’t  expect  to 
deliver  it,  but  who  can  be  made  to  yield  and  ]:>ay  differences;  my 
opinion  is  that  the  forces  which  undertook  to  control  the  market 
for  ; rise  within  the  last  three  years  have  been  able  to  inflict  serious 
injury  upon  their  opponents  and  the  public,  and  have  made  an  en- 
ormous amount  of  money. 

Q.  Does  that  concentration  of  the  wealth  of  a country  in  the  hands 
of  a comparatively  few  individuals  have  a tendency  to  ]')aralyze  the 
legitimate  business  interests  of  the  country  generally  ? 

A.  I think  there  is  a large  accumulation  of  money  in  a few 
liands;  I think  there  is  a tendency  towards  a continual  absorp- 
tion of  the  great  industries  of  the  country  into  a few  hands;  I think 
it  comes  from  the  power  given  to  these  men  of  great  wealth  on  the 
one  liand,  and  on  the  other  to  their  force  in  the  Legislatures  to  de- 
mand at  the  hands  of  the  government  special  advantages  and  privi- 
l(,^ges  that  ai’e  not  accorded  to  the  masses  of  the  people,  and  their 
power  lies  chieily  in  that  direction.  The  owncrshi[)  of  a liundred 
millions  of  dollars  by  a few  men  of  wealth  loaning  it  ata  reasonable 
niUt  of  interest  to  the  ])ublic — would  l)e  no  more  hurtful  to  the 
])ublic  than  if  it  was  loaned  by  five  hundred  individuals  so  that  they 
loaned  it  lor  the  uses  of  legitimate  business;  but  if  that  money  was 
concentrated  in  the  hands  of  three  or  four  individuals — talented^ 


139 


ambitious  and  aggressive  men  who  have  power  in  the  halls  of  the 
State  Legislatures  and  the  Congress  of  the  United  States — every- 
where— asking  the  government  to  give  them  certain  special  privi- 
leges that  the  masses  of  the  community  cannot  and  do  not  ask,  and 
which  I hold  it  is  beyond  the  province  of  the  government  to  grant, 
then  it  becomes  difficult  for  private  enterprise,  which  is  brought  into 
direct  competition  with  this  power  to  contend  against  it,  and  the 
power  of  capital,  places  the  average  citizen  at  a great  disadvantage. 

Q.  Then  the  concentration  of  a large  amount  of  wealth  in  the 
hands  of  these  illegitimate  speculators  gives  them  a greater  facility 
to  arbiti*arily  dictate  the  prices  of  the  various  commodities  than  they 
would  otherwise  have  — does  it  not  ? 

A.  At  times;  when  they  can’t  do  that  they  rest  in  the  possession 
of  their  wealth,  as  they  are  not  obliged  to  go  into  business  for  a liv- 
ing, whereas  the  poorer  men  of  the  community  have  to  pursue  their 
business  for  a livelihood. 

Q.  Do  yon  think  that  the  continuance  or  increase  of  these  illegit- 
imate speculations  is  in  accordance  with  sound  public  policy  ? 

A.  I think  they  are  inimical  to  public  policy.  My 
remedy  would  be  this — that  all  these  things  should  be  regulated 
so  as  to  compel  the  speculators  in  wheat  and  corn  and  pork  or  other 
property,  to  deliver  his  property  on  every  transaction.  I hold  that  it 
is  not  a delivery  ” of  an  article  sold  unless  delivered  actually  as  sold, 
and  has  a tendency  to  deceive  the  public  as  to  the  true  posi- 
tion of  affairs.  If  we  report  100,000  bushels  of  wheat  sold  and 
there  have  not  been  30,000  delivered,  nor  intended  to  be — then 
there  is  simply  no  such  transaction,  and  the  idea  goes  abroad  all  over 
the  country  that  there  is  a great  demand  for  wheat,  v/hen  there  has 
not  been  an  absolute  delivery  of  over  30,000  bushels  on  a reported 
sale  of  100,000  bushels;  a false  impression  is  created  and  honest 
men  do  not  get  the  benefit  that  grows  out  of  that  sort  of  quotation  - - 
let  the  quotation  be  a protection  to  the  public,  and  not  a deception. 

By  Senator  Browning  : 

Q.  Do  you  believe  that  those  evils  which  do  really  exist  can  be 
remedied  by  legislation  ? 

A.  I think  they  can,  if  the  public  mind  can  be  concentrated  upon 
the  fact  that  these  evils  do  exist. 

I think  a remedy  might  be  found  ; you  cannot  take  a small  and 
wealthy  minority  of  fifty  millions  of  jieople  ; and  give  this  force  leg- 
islative direction  in  aid  of  capital  (which  is  always  taking  care  of  it- 


140 


self),  and  withdraw  the  benefit  of  legislation  from  the  general 
comm  unity  ; before  you  have  made  a difference  so  wide,  tliat 
tlie  mass  of  the  people  are  suffering.  Jt  must  be  so;  you 
cannot  pour  millions  and  millioTis  of  dollars  into  the  jjock- 
ets  of  a few  men  unless  it  has  to  be  taken  from  the  larger  mass 
of  men  ; if  you  let  things  go  on  with  the  government  aiding  it,  the 
first  thing  you  know  you  will  have  great  misery  on  the  one  hand 
and  enormous  wealth  on  the  other;  and  when  the  people  ascertain 
that  they  are  not  honestly  dealt  by,  the  j’emedy  will  come ; it  may 
not  be  the  remedy  we  desire,  but  it  will  come  as  it  has  come  in 
other  countries  before  to-day.  Will  it  be  in  the  end  wise  for  us  to  al- 
low the  accumulated  wealth  of  the  country  to  clutch  all  these  advan- 
tages which  it  has  enjoyed  for  the  last  twenty  years  through  special 
legislative  combination  and  speculation  ? If  you  do  you  may  have  rev- 
olution. The  people  of  the  United  States  are  a forcible  set  of 
people ; tiiey  have  not  had  fair  play  at  the  hands  of  the  govern- 
ment or  in  the  legislative  halls  ; these  bodies  as  now  constituted  are 
simple  instruments  to  cari'y  out  the  wishes  and  designs  of  the  capital- 
ists of  the  country,  but  the  people  will  ere  long  feel  the  iron  enter 
their  souls,  and  then  agitation  is  going  to  come.  It  is  plain  that  there 
is  evil  accruing  to  the  masses  of  the  people  ; our  political  influences 
are  entirely  in  favor  of  capital  ; and  there  is  a sentiment  in  the  country 
that  the  average  citizen  is  not  allowed  to  have  the  influence  he 
ought  to  have  ; and  fair-minded  middle  class  men  arc  seeking  that  one 
thing,  an  equal  chance.  There  is  no  question  in  my  mind  but  that 
we  iiave  got  to  have  a radical  change  in  the  tendency  of  our  laws  and 
less  special  legislation. 

Q.  Then  the  changes  you  would  suggest  would  be  the  passage  of 
such  laws  that  would  protect  the  mass  of  consumers  and  the  legiti- 
mate dealer  from  being  made  the  victim  of  this  illegitimate  specu- 
lation and  combination  ? 

A.  Exactly;  when  we  come  to  remedies,  or  what  we  call  the  ex- 
ercise of  doubtful  powers,”  any  man  who  will  go  back  and  look 
carefully  over  the  records  of  legislation  for  the  last  twenty  years 
will  see  that  the  exercise  of  “ doubtful  powers  ” which  favor  the 
'•a])italist  liave  been  numerous  ; but  when  the  question  conies  up, 
“how  shall  you  exercise  powers  in  behalf  of  the  masses  of  the 
])eoi)leU’  then  the  argument  always  is  “you  must  not  trench  upon 
vested  ilglits  or  enter  iijion  doubtful  legislation.  ’’  Doubtful  powei’s 
are  \'ery  well  foi’  (‘apital,  but  not  lor  laboi*. 

It  was  not  considered  to  be  doubtful  legislation  to  give  away  the 


141 


public  lands  of  the  United  States  to  the  extent  of  200,000,000  of  acres 
to  railroads  ; it  was  not  considered  the  exorcise  of  a “ doubtful 
power”  when  capitalists  went  to  the  Congress  of  the  United  States 
and  bought  up  a class  of  men  who  are  there  for  the  purposes  ot 
pecuniary  gain  to  accomplish  this,  but  the  very  moment  the  question 
is  brought  up,  how  you  shall  protect  the  people  from  a telegrapli 
monopoly  or  a raili’oad  monopoly,  then  there  is  a cry  about  ‘‘  the 
protection  of  vested  rights.”  Have  they  not  bought  and  paid 
for  them?”  Let  the  government  protect  the  people,  and  let 
it  make  every  post-office  a telegraph  office,  so  that  we  can 
get  a telegraphic  message  sent  from  here  to  Chicago  or  any  other 
place,  the  same  as  letters  are  sent  at  a fair  rate.  VVe  get  a letter 
sent  for  three  cents,  but  a telegraph  message  to  Chicago  costs 
seventy-live  cents.  I only  want  to  show  that  it  is  a question  of 
the  picrely  cujgressim  force  of  loealth  broiigld  to  hear  against  the 
common  interest  of  the  jjeople.  In  railroad  and  telegraph  monopolies 
there  is  an  aggressive  and  dangerous  force,  and  a remedy  will  have  to 
be  applied.  For  example  : They  water  their  stocks  and  tax  the 
public  on  the  w’ater  ; I can’t  take  sugar  into  my  store  and  mix  it 
whth  water  and  get  eighteen  cents  a pound  for  it,  when  the  ])rice  is 
nine,  but  railroad  and  telegrapih  men  can  do  that  sort  of  thing. 
These  unfair  advantages  are  gained  by  the  capitalists  not  in  a fair 
and  honest  way,  but  they  come  up  and  ask  the  Legislature  of  the 
country  to  make  laws  hostile  to  the  interests  of  the  people  for 
their  benefit,  and  often  by  corrupt  means  which  should  consign  them 
to  the  State  prison.  All  this  is  illegitimate,  audit  is  high  time  that 
the  legislative  forces  of  the  government  should  he  invoked  to  aid  the 
jpeojyle.  I have,  together  with  many  others,  been  engaged  in  legiri- 
mately  supplying  the  demands  of  the  country  in  my  line  of  business, 
and  we  have  never  asked  ari}'  favors  from  Legislatures  ; every  fair 
minded  man  would  revolt  at  it.  A very  small  minority  of  men 
possess  the  capital  of  the  country,  and  they  obtain  these  grants  and 
privileges,  and  the  people  can’t  compete  wfith  them  ; they  bring  their 
forces  to  bear  and  obtain  government  aid  at  the  expiense  of  other  men 
whose  hours  are  longer  and  whose  business  is  to  them  an  absolute 
necessity.  I believe  that  consumers  have  rights,  and  I believe 
that  the  producers  have  rights  which  ought  to  be  protected.  I don’t 
think  any  fair-minded  man  can  say  that  for  the  past  twenty 
years  the  tendency  of  legislation  has  not  been  to  advance  the  inter- 
ests of  capital  at  a very  unequal  rate.  Capital  is  a great  powder  in 
itself  and  in  a tl.ousand  ways  can  take  care  of  itself  and  increases 


142 


its  power  without  aid  from  govornrncTit.  T tliou^lit  our  i^ovcrn- 
iiient  was  organized  to  protect  tliose  wlio  are  weak,  ])nt  it  seerns  that 
its  whole  tendency  is  to  protect  tliose  wlio  are  strong? 

But  in  all  this  “corner”  liusiness  it  is  ])lain  that  it  is  not  a 
question  for  the  producer  and  the  consumer,  their  interests  are 
not  intended  to  be  consulted  at  all  ; it  has  been  reduced  to  the 
question  of  “how  much  money  can  be  made  by  an  illegitimate 
practice  which  produces  nothing.” 

A.  Yes;  that  is  it. 

Q.  Are  you  familiar  with  the  influence  which  is  exerted  upon  the 
transportation  interests  by  these  speculations? 

A.  I think  this  influence  is  as  a former  authority  has  stated  k to 
be;  I think  it  has  only  been  temporary. 

Q.  But  it  has  a tendency  to  disturb  the  equilibrium  of  the  trans- 
por tati  on  business? 

A.  Yes. 

Q.  Is  there  any  thing  else  you  think  of  that  you  would  like  to 
state  to  the  committee  ? 

A.  lYothing  ]uirticular  ; I believe  it  to  be  a matter  of  the  highest 
importance  to  the  whole  community  and  that  the  remedy  must 
come  from  Federal  legislation. 

By  Senator  Browning  : 

Q.  Why  ? 

A.  Because  influences  of  that  sort  are  widely  spread  and  any  rem- 
edy would  have  to  be  applied  with  a strong  hand.  While  the  State 
Legislature  could  do  much  to  remedy  these  evils  the  greater  remedy 
would  have  to  be  applied  at  all  commercial  centres  through  the  gen- 
eral government. 

By  Senator  Boyd: 

Q.  You  have  been  a member  of  the  State  Legislature  ? 

A.  Yes,  in  1858. 

Q.  And  are,  therefore,  familiar  with  the  Science  of  Legislation? 

A.  Yes ; I think  the  legislation  at  that  time  had  not  been  re- 
duced to  such  a state  as  it  is  now,  still  there  were  some  unfavorable 
inlliKuifM^s  in  tlu^  l><‘gishiture  at  that  time. 


By  Senator  Browning: 

CL  ILiw  would  you  ])i*oj)ose  to  pinvent  me  from  successfully  buy- 
ing uj)  throughout  the  west  the  great  bulk  of  the  grain  produce  this 


143 


year  and  then  sellin»it  for  a future  delivery  in  this  market ; that  is 
a legitimate  transaction  ; now  1 could  make  a legitimate  transac- 
tion and  it  would  not  appear  on  the  surface  that  it  was  illegitimate ; 
I am  trying  to  get  the  difference  between  a legitimate  and  an  illegiti- 
mate transaction  of  that  nature'^ 

A.  If  you  undertake  to  buy  all  the  grain  in  the  country,  I would 
have  a law  to  compel  you  to  actually  receive  or  take  it. 

Q.  With  a prospect  of  possession,  I sell  for  a future  delivery  ; can 
you  prevent  me  purchasing,  if  I have  the  means  to  buy  the  great 
bulk  of  the  grain  product? 

A.  No,  I cannot. 

Q.  How  can  you  prevent  me  from  selling  for  a future  delivery  ? 

A.  I would  compel  you  to  receive  what  you  bought  and  to  deliver 
what  you  sold ; 1 would  not  allow  you  to  pay  the  difference  and 
not  deliver  the  property. 

By  Senator  Boyd  : 

Q.  There  can  be  nothing  done  to  prevent  any  sales  of  property 
which  is  actually  in  the  possession  of  a party  ? 

A.  No. 

Q.  But  there  may  be  a restriction  placed  upon  men  who  assume 
to  sell  property  which  they  have  not  got  and  which  they  never  ex- 
pect to  have  the  possession  of? 

A.  Yes  ; that  is  contrary  to  public  policy  ; it  is  an  illegitimate  act 
to  be  restrained. 

By  Senator  Browning  : 

Q.  This  committee  would  like  to  report  some  bill  and  have  it 
passed,  restricting,  within  certain  limits,  persons  on  the  Produce 
Exchange  dealing  in  ‘‘ futures”  and  of  making  calls”  and  dis- 
turbing values,  as  you  say  that  it  is  detrimental  to  the  people,  either 
consumers  or  producers  '? 

A.  Federal  legislation  would  be  necessary;  if  you  made  men  on 
the  New  York  Produce  Exchange  actually  receive  and  deliver  every 
thing  they  bought,  they  could  go  to  Chicago  or  some  other  city 
where  they  could  deal  in  futures  and  then  there  would  be  a large 
amount  of  capital  taken  from  this  city ; they  could  deal  in  both 
places.  As  these  speculations  are  contrary  to  public  policy  the  Con- 
gress of  the  United  States  should  pass  an  act  that  parties  purchasing 
should  receive,  and  parties  selling  should  deliver,  throughout  the 


144 


United  States,  the  article  tliey  dealt  in  ; then  yon  would  he  placing- 
each  locality  in  a lair  ])osition. 

Q.  Then  you  would  not  allow  sales  of  that  which  a party  did  not 
have  in  his  possession  ? 

A.  Not  so  tar  as  the  food  products  of  the  world  are  concerned ; when 
I take  the  products  of  the  world,  grown  for  subsistence  of  the  ])eople, 
I am  gambling  with  the  necessaries  of  life,  and  I am  an  enemy  to 
every  man  who  earns  his  bread  by  the  sweat  of  his  face. 

By  Senator  Browning: 

Q.  Are  you  a member  of  the  Cheese  and  Butter  Exchange  ? 

A.  We  are  represented  there;  we  have  no  “ options”  there. 

William  II.  Trqftoii^  sworn  : 

Examination  by  Senator  Boyd: 

Q.  What  is  your  business? 

A.  Commercial  Editor. 

Q.  Of  what  periodical  ? 

A.  The  Produce  Exchange  Beporter. 

Q.  How  long  have  you  been  on  that  paper  ? 

• A.  Nearly  twenty-eight  years. 

Q.  You  are  familiar  with  the  making  of ‘‘ corners  ” and  dealing 
in  ‘‘ tutures?  ” 

A.  Yes,  very  well. 

Q.  Will  you  please  state  your  opinion  as  to  the  systems  of  making 
“corners”  and  dealing  in  “ futures ” and  their  effects  upon  com- 
merce, and  their  inlluence  upon  the  public  welfare  ? 

A.  I think  it  is  exceedingly  detrimental  to  the  public  good  and 
very  demoralizing  and  injurious  to  the  rising  generation.  Any 
thing  that  creates  an  artificial  ^^alue  of  an  exportable  article  is  disas- 
trous to  the  commerce  of  the  country  ; we  should  do  every  thing 
to  increase  our  volume  of  exports,  and  if  we  create  an  artificial 
value  of  wheat — twenty-five  or  thirt}^  cents  a bushel  — over  its  real 
value  we  injure  our  export  trade  very  seriously.  We  had  corners 
here  some  five  or  six  years  ago  and  we  drove  the  trade  from  us  ; w-e 
get  up  prices  to  an  artificial  height,  then  foreigners  leave  us  to  go 
elsewhere  to  supply  their  market,  and  finally  we  have  to  sell  pro- 
duce at  a lower  rate,  whereby  we  lose  very  much  ultimately.  Take 
the  ca‘^e  of  the  syndicate  formed  bv  Mr.  Keene  in  1879,  when  ^ve 
had  a very  fine  (;rop : tlie  crop  of  187i)  amounted  to  448,000,000 
butsluds.  'fhe  supposition  was  France,  England  and  Germany,  and 


145 


portions  of  Austria  and  Russia  had  lost  their  fall  crops,  and  that 
this  syndicate  could  control  the  markets  of  the  world  — by  a combina- 
ation  of  twenty  or  thirty  wealthy  men,  representing  from  $40,000,- 
000  to  $50,000,000.  This  great  syndicate,  this  great  undertaking 
was  commenced,  1 think,  some  time  in  October,  and  they  ran  up  the 
juice  from  its  natural  and  legitimate  level  till  it  finally  reached 
$1.63  cash  price,  for  future  delivery  $1.65;  finally  they  found  that 
the  crops  of  the  world  were  much  larger  than  they  had  anticipated, 
so  much  wheat  came  in  from  all  points  that  the  markets  of  Western 
Europe  were  likely  to  be  flooded,  and  the  result  was  that  on  the 
opening  of  the  spring  the  supply  was  immense,  there  did  not  seem 
to  be  an  outlet  for  this  immense  bulk  ; the  great  movement  was  in 
the  summer  and  there  was  little  in  the  hands  of  the  farmer  in  the 
shape  of  reserve ; but  when  this  combination  was  formed  the  belief 
was  that  fully  thirty  millions  bushels  which  had  been  accumulated 
from  time  to  time  was  held.  The  result  was  that  wdien  the  warm 
weather  came  every  thing  began  to  move,  and  tlie  crops  in  other 
countries  were  produced  meanwhile  — for  instance,  Australia,  New 
Zealand  and  Chili  poured  in  their  products;  in  January  and  Febru- 
ary these  crops  are  cut,  and  they  all  came  upon  them  unexpectedly  ; 
but  they  overlooked  the  price  influence. 

You  run  up  the  price  of  wheat  to  $1.50 ; in  Ohio  a farmer  raisi^^g 
twenty-five  bushels  for  his  own  use  will  sell  that,  reserving  a few 
bushels,  so  that  jper  capita  consumption  would  fall  off.  For  in- 
stance if  we  assume  the  pei'  capita  consumption  to  be  five  bushels 
a head  with  a population  of  fifty-two  millions,  you  could  say  about 
200,000,000  and  the  requirements  for  seed  about  45,000,000,  and  the 
requirements  of  the  tropical  and  provincial  trade  is  about  30,000,- 
000  more,  so  that  amount  would  be  recjuired  to  meet  the  consump- 
tion ; if  you  take  away  from  the  consumption  fifteen  per  cent  of 
what  the  farmers  held  it  adds  to  your  available  supply ; that 
amount  you  have  not  calculated  upon,  therefore  adding  to  your  bulk 
or  to  the  visible  supply  largeljq  and  the  result  was  that  when 
June  came  wheat  went  down  sixty  cents  a bushel  from  its  highest 
point,  resulting  in  a very  great  loss  to  the  milling  and  farming  in- 
terests, because  nineteen  farmers  out  of  twenty  will  not  sell  wheat 
on  a rising  market;  they  held  it  for  still  higher  prices,  and  got  left 
with  a large  reserve  on  hand,  the  result  was  a gi‘eat  loss  ; an  aver- 
age loss  of  thirty  cents,  a bushel  to  those  who  held  ; the  loss  of 
the  milling  interest  was  very  great,  because  the  price  was  so  unduly 
stimulated  and  worked  up  bv  artificial  causes,  that  the  millers  when 
19 


146 


they  came  into  the  market  found  there  was  a large  surplus  of 
hour  on  hand  — and  a loss  of  three  dollars  a barrel  Avas  submitted 
to,  after  it  was  found  that  the  surplus  of  the  world  was  more  than 
adequate  to  its  wants.  1 maintained  in  an  article  jmblished  in 
September,  that  the  existing  surplus  of  the  world  was  60,000,000  of 
bushels,  and  the  result  showed  that  it  was  correct.  There  was  an 
excess  that  season  ; on  the  31st  of  August  we  found  that  there  was 
a surplus  in  the  world.  During  the  year  the  syndicate  made  large 
sums  of  money  on  grain,  because  the  value  Avas  fictitiously  increased 
and  therefore  the  public  Avas  injured,  and  the  farmer  Avho  held  on 
Avas  greatly  injured. 

Q.  What  proportion  do  legitimate  sales  bear  to  those  Avhich  may 
be  called  illegitimate  sales  ? 

A.  They  fluctuate  very  much;  you  have  them  here  in  this  table 
Avdiich  1 hold.  As  a rule  ten  to  one  ; but  Avhat  Ave  collect  together 
and  compile  does  not  shoAV  the  extent  of  the  business  ; in  addition 
to  Avhat  AA^e  collect  together  there  are  large  quantities  of  Avheat  sold, 
Avhich  do  not  come  under  our  observation.  In  Chicago  it  is  Avorse 
than  in  'New  York  ; it  is  not  uncommon  there  to  sell  ten  or  twelve 
millions  of  bushels  in  a single  day. 

Q.  What  other  cities  are  there  in  Avhich  these  illegitimate  specu- 
lations are  carried  on  ? 

A.  Mihvaukee,  Toledo,  St.  Louis,  and  in  Detroit  to  some  extent, 
but  very  limited,  in  Buffalo  it  is  very  minute ; it  sometimes  happened 
that  a syndicate  Avill  be  formed  Avhen  there  is  a good  basis  for  it,  as 
the  failure  of  our  crops  last  year;  they  failed  us  to  the  extent  of  130,- 
000,000  bushels;  there  Avas  some  chance  in  their  succeeding  in  con- 
troling  them,  because  there  AA^as  a serious  deficiency  in  all  the  crops. 

Q.  Look  oA^er  that  table  and  see  if  the  proportion  of  future  legiti- 
mate sales  are  correct  as  there  set  forth  ? 

A.  Yes,  as  nearly  as  Ave  can  get  these  sales  ; as  a rule  we  can- 
not get  half  of  them  some  days;  the  excitement  is  so  great  after  a 
change  that  they  don’t  represent  all  the  dealings  ; this  does  not 
represent  matters  fully,  but  it  is  as  Ave  get  them  ; this  is  very  correct 
so  far.  I think  exhibit  “ A,”  tiled  by  Mr.  Partridge,  is  a \wy  fair 
rej)resentation  of  the  matter.' 

C^.  That  is  an  exhibit  of  the  sales  for  future  delivery  Avhich  have 
taken  ]>lace  in  the  Produce  Exchange? 

A.  Yes. 

Put  you  state  that  this  business  is  carried  on  to  a A^ery  great 
extent  in  New  York  ? 


147 


A.  And  outside  of  the  Exchange  in  New  York;  on  the  streets 
and  in  other  divers  places,  and  more  so  during  the  excitement  I 
have  spoken  of  — when  the  excitement  was  so  great ; when  the 
syndicate  thought  the  price  would  go  up  to  two  dollars  and  two 
dollars  and  twenty-five  cents,  they  believed  the  supply  of  the  world 
to  be  very  short. 

Q.  Do  these  transactions  and  speculations  extend  to  dealing  in 
other  commodities  as  well  as  grain  ? 

A.  Corn  and  oats  and  lard  especially  ; lard  is  a very  favorite  article 
and  so  is  pork,  but  not  so  much  so  ; there  is  nothing  doing  in  pork 
now  ; but  there  is  always  something  doing  in  lard. 

Q.  How  much  above  the  natural  price  of  the  necessaries  of  life 
do  these  speculations  tend  to  enhance  the  cost  of  such  necessaries  ? 

A.  That  would  depend  on  the  amount  the  syndicate  undertook  to 
control,  when  they  undertake  to  grasp  all,  as  they  did  in  1879,  they 
undertook  to  control  the  crop  of  the  world,  hence  a great  amount  of 
capital  was  invested  in  the  business  by  “men  supposed  to  be  worth 
from  five  to  ten  millions  each,  and  about  twenty  of  them  undertook 
to  control  it. 

Q.  Did  the  producers  receive  any  share  of  the  increased  price 
which  these  speculations  added  to  the  necessaries  of  life  ? 

A.  Not  unless  they  sold  when  prices  ’^yere  rising,  but  only  a very 
small  proportion  of  the  farmers  will  sell  on  a rising  market ; that  is 
the  misfortune,  they  will  hold  to  the  last  cent ; they  become  specula- 
tors. 

Q.  Then  the  profits  of  these  speculations  go  into  the  possession 
of  the  speculators  alone  ? 

A.  If  they  carry  their  point  successfully  ; but  to  a great  many  in 
the  speculation  I spoke  of,  it  was  a serious  loss. 

By  Senator  Browning  : 

Q.  Who  was  in  the  syndicate  ? 

A.  Mr.  Keene — James  Keene  and  others. 

By  Senator  Boyd  : 

Q.  This  system  of  speculation  was  designated  by  some  of  the 
witnesses  as  a species  of  gambling;  do  you  think  it  gambling? 

A.  It  is  solely  a bet  on  the  future ; it  is  a species  of  gambling , it 
is  very  demoralizing;  young  men  want  to  get  a living  without  labor 
and  I regard  that  as  very  hurtful. 

Q.  What  remedy  would  you  suggest  for  the  evils  resulting  from 
such  illegitimate  speculations  ? 


148 


A.  I am  not  sure  that  the  law  could  prevent  it,  unless  you  could 
compel  them  to  deliver  every  thing  they  bought  and  in  selling  com- 
pel them  to  deliver  what  they  sold  you  ; unless  you  could  pass  a 
stringent  law  to  that  efiect;  but,  perhaps,  suggestions  could  be  made 
that  would  meet  the  difficulty. 

By  Senator  Browning  : 

Q.  In  connection  with  that  — you  mean  deliver  what  you  sell 

— I will  buy  grain  on  April  6,  and  on  the  8th  demand  its  delivery  ? 
A.  Yes,  I have  known  one  load  of  corn  to  settle  sixty -five  contracts, 

sometimes  a load  of  corn  has  settled  sixty-hve  contracts. 

Q.  You  mean  that  this  one  load  would  settle  sixty-hve  contracts 

— that  they  required  one  load  ? 

A.  It  passed  through  sixty-five  hands,  each  contract  called  for  a 
single  load  for  delivery  ; it  passed  through  sixty-five  hands  and  the 
parties  had  no  intention  to  deliver  or  to  receive  ; it  passed  along 
and  they  handed  it  from  one  to  the  other, 

Q.  Each  to  make,  or  lose  something  on  it  ? 

A.  Yes,  sir  ; it  is  a common  thing  for  a single  contract  to  pass 
through  a great  many  hands  — a great  number  of  hands. 

By  Senator  Boyd  : 

Q.  Then  you  think  the  continuance  of  such  a system  of  specula-  ' 
tion  is  detrimental  to  the  public  interest  ? 

A.  Undoubtedly  — unquestionably  so,  sir. 

Q.  Would  you  state  particularly  in  what  respects  it  is  detrimental  ? 
A.  In  the  first  place  it  is  disastrous  to  the  export  trade  ; that  is 
a thing  that  above  all  things  should  be  encouraged.  For  instance, 
take  the  previous  season’s  business ; we  had  a great  excitement ; we 
had  orders  for  wheat  and  we  had  a fleet  of  steamers  to  take  it  away 
and  the  market  was  so  excited  that  it  rose  from  $1.20  to  $1.58  ; the 
steamers  here  were  prepared  to  load  a large  amount  of  grain  and 
take  it  away,  but  they  could  not  get  any  thing  ; the  English  and 
French  buyers  found  it  more  advantageous  to  go  to  Bombay,  Cal- 
cutta, Odessa  and  other  places  to  fill  their  orders  at  a lower  rate  ; 
the  result  was  that  about  three  hundred  steamers  were  driven  from 
this  ]>ort  to  find  cargoes  elsewhere ; they  succeeded  in  getting 
good  cargoes  elsewhere  — most  of  them.  Ilundreds  having  had  the 
bitter  ex])erience  in  the  winter  of  1879  they  will  not  come  to  this  port 
again.  During  the  winter  of  1879  and  1880,  four  hundred  sail  of 
vessels  lay  here  for  four  months,  many  of  them  rnn  into  debt  and 


149 


the  majority  of  vessels  which  could  pay  their  debts  finally  had  to 
leave  here  and  seek  cargoes  somewhere  else.  Such  a state  of 
things  destroys  us  as  a commercial  people  in  the  eyes  of  the  world  ; 
its  infiuence  is  very  far-reaching.  Last  season  was  not  so  bad  as 
that,  as  buyers  could  go  to  California  and  other  places  where  they 
had  a large  surplus. 

By  Senator  Browning  : 

Q.  Do  you  think  the  change  from  selling  by  sample  to  selling 
by  grade  w’as  the  cause  of  this  increase  in  future  sales  ? 

A.  No,  sir;  the  increase  in  future  sales,  all  these  future  sales  are  of 
a particular  grade  No.  2 red,  the  wdiole  crop  has  been  sold  over  and 
over,  and  the  crop  in  the  groud  this  present  season  has  been  sold  two 
or  three  times  over;  it  is  all  confined  to  “ ,No.  2,”  and  only  a small 
proportion  was  of  ‘‘No.  2”  spring  wheat,  but  of  winter  wheat 
there  is  a large  proportion. 

Q.  Was  there  not  a time  before  the  grading  when  they  dealt  in 
“No  2.” 

A.  They  commenced  to  grade  shortly  after  ; about  seven  years 
ago. 

Q.  Before  they  sold  by  sample  ? 

A.  They  sold  by  sample  ; think  “ grading  ” is  an  advantage  to  the 
trade,  because  in  No.  2,  if  the  inspectioi]  is  careful  to  keep  up  to  the 
standard,  it  is  useful ; they  can  telegraph  for  a certain  grade.  When 
speculation  comes jn  “ No.  2 ” crop  has  been  sold  over  probably  four 
or  five  times;  it  is  so  in  Chicago,  for  instance  there  are  10,000,000 
bushels  No.  2 spring  wheat  sold  in  one  day. 

Q.  A “corner”  in  No.  2? 

A.  Yes  ; and  at  eight  or  ten  cents  higher  than  it  would  have  been. 

Q.  Has  there  been  an  attempt  to  make  a corner  in  wheat  the  last 
moiitli  ? 

A.  No,  not  much  ; the  syndicate  has  bought  quite  freely  at  times, 
the  clique  I should  have  said,  perhaps. 

By  Senator  Boyd  : 

Q.  Who  is  it  composed  of? 

A.  A combination  of  members  of  the  Exchange  ; I don’t  know 
that  I can  give  you  their  names. 

Q.  Is  there  any  institution  of  that  sort  of  which  they  are  mem- 
bers ? 

A.  No,  sir. 


150 


Q.  Is  it  not  true  that  they  purchased  from  themselves  as  it  were, 
in  order  to  affect  the  market  ? 

A.  No,  sir,  they  buy  to  keep  the  market  up;  they  have  to  do 
that  when  the  market  is  weak. 

Q.  Then  they  were  not  transactions  made  by  certain  members  of 
this  syndicate  among  themselves  in  order  to  affect  the  market  ? 

A.  No ; I think  the  ^parties  selling  the  wheat  were  not  in  any 
clique  at  all. 

Q.  Should  any  legislation  that  might  be  attempted  on  this  subject 
be  State  or  Federal  ? 

A.  I think  Federal. 

Q.  State  your  reason  ? 

A.  Because  it  should  be  of  a general  character ; because  a State 
law  would  be  detrimental  to  New  York  and  other  cities  carrying  on 
business  ; this  business  draws  a large  amount  of  capital  here,  and  the 
trade  of  this  port  has  increased  immensely  since  tlie  organization  of 
this  trade  ; it  was  a small  matter  before  that. 

By  Senator  Browning  : 

Q.  Do  you  mean  illegitimate  or  legitimate  trade  ? 

A.  Illegitimate. 

Q.  Do  you  think  that  is  for  the  good  of  the  country  ? 

A.  No. 

Q.  But  it  has  been  drawn  here  ? 

A.  It  has  been  drawn  here. 

By  Senator  Boyd  : 

Q.  What  you  mean  to  imply  is,  that,  if  restrictions  were  placed  on 
legitimate  trade,  it  would  have  the  effect  of  driving  it  away  ? 

A.  It  would  take  away  the  trade  ; it  would  drive  away  capital, 
it  would  go  elsewhere. 

By  Senator  Browning  : 

Q.  You  mean  they  have  brought  their  capital  here  from  other 
places  ? 

A.  Yes,  sir. 

By  Senator  Boyd  : 

Q.  They  have  lirought  their  capital  with  them  here  1 
A.  d'hey  have  brought  there  capital  here. 

Q.  Do  you  think  of  any  thing  else? 


151 


A.  It  is  very  essential  to  distinguish  between  illegitimate  and 
legitimate  trade  ; it  is  very  important  to  do  so,  because  a great 
many  men  will  buy  to  fulbll  an  order  tor  a certain  montb  ; for  in- 
stance — there  is  a demand  for  flour  for  South  America  ; there  is  a 
large  trade  with  Hio  Janeiro,  and  we  have  sometimes  large  orders 
and  will  buy  on  the  chance  dour,  and  sometimes  wheat,  on  the 
chance. 

By  Senator  Browning  : 

Q.  flow  would  you  discriminate  between  proper  sales  of  that 
kind  and  illegitimate  ‘^futures?” 

A.  Unless  it  was  stated  at  the  time,  you  could  not,  unless  they 
stated  they  were  going  to  deliver  it  for  a specidc  purpose. 

Q But  if  the  contract  does  not  specify  that  it  is  to  be  delivered  ? 

A.  I am  not  familiar  with  these  contracts.  Men  who  buy  for 
a certain  steamer  would  name  the  day.  There  are  a great  many 
purchases  for  a specidc  time — of  produce  for  a certain  steamer; 
they  are  something  of  the  character  of  a speculation,  but  then  they 
intend  to  use  it.  1 hear  from  merchants  to-day  that  in  London 
they  have  taken  their  cue  from  us  and  that  they  are  selling  our  crops 
on  the  London  Exchange  ; they  sell  wheat  to  be  shipped  hence  in 
August  or  July,  at  a certain  rate];  they  gamble  in  the  same  way. 
Now  suppose  a party  buying  wants  the  wheat  at  a certain  day  and 
insists  upon  having  it  in  London  ; it  must  be  shipped  hence  by  a 
certain  steamer ; these  sales  oftentimes  put  the  market  here  up 
very  much  — they  have  a stimulating  effect ; it  turns  out  that  these 
purchases  are  [to  cover  forward  delivery  sales  made  on  the  other 
side. 

By  Senator  Boyd  : 

Q.  Then  the  same  system  of  dealing  in  futures  ” exists  in  Eng- 
land ? 

A.  Only  not  so  dagrant  as  compared  with  this  country  ; it  is  a 
species  of  gambling ; there  they  contemplate  the  delivery  of  the 
wheat ; it  may  be  shipped  hence  for  instance,  to  sell  in  London  to- 
day— 4,000  quarters  of  No.  2,  red  — August  shipment  at  $1.20. 
I think  there  was  a sale  like  that,  and  assuming  it  would  be  under 
that,  they  buy  it  low  to  dll  that  sale  ; there  is  a great  deal  of  that 
business  carried  on. 

Q.  How  are  the  natural  prices  regulated  ? 

A.  By  supply  and  demand.  All  this  will  ultimately  lead  but  to 


152 


one  result;  capital  coiilincd  within  the  hounds  of  legitimate  trade 
will  exercise  its  proper  influence;  perisha1)le  articles  must  come 
down  to  supply  the  actual  wants  of  the  people.  I opj>osed  that 
syndicate  of  1879  and  they  said  I was  bribed  with  British  gold  to 
write  it  down.  I persisted  in  my  arguments  and  they  took  me  to 
task  — some  fellow  in  Chicago,  in  the  Inter-Ocean  ” paper  particu- 
larly— but  I followed  up  the  position  I had  taken,  and  urged  my 
views  from  my  standpoint  and  I had  a great  victory. 

Adjourned  to  meet  at  the  Vail  of  the  chairman. 


153 


Kew  York,  May  2T,  1882c 

Present — Senator  Boyd,  Chairman^  Senator  Pitts. 

Harlan  A.  Pierce^  sworn  : 

Examined  by  Senator  Boyd  : 

Q.  Where  do  you  reside? 

A.  In  Brooklyn. 

Q.  What  is  your  business  ? 

A.  Commercial  editor. 

Q.  With  what  journal  are  you  connected, 

A.  The  ‘‘Commercial  Advertiser.” 

Q.  In  the  city  of  Hew  York  ? 

A.  Yes,  sir. 

Q.  How  long  have  you  been  connected  with  that  journal  ? 

A.  I have  been  connected  with  it  something  over  a year,  and 
with  the  “ Commercial  Bulletin  ” eleven  years  in  the  same  busi- 
ness. 

Q.  The  “ Commercial  Bulletin  ’’  is  a commercial  paper  published 
in  the  city  of  Hew  York  ? 

A.  Yes. 

Q.  Are  you  familiar  with  the  system  of  making  “ corners  ” and 
dealing  in  “ futures  ? ” 

A.  Quite  so. 

Q.  Please  state  your  views  and  your  opinion  in  reference  to  the 
whole  system  of  making  “ corners  ” and  dealing  in  “futures,” 
with  reference  to  its  effects  upon  commerce  and  its  influence  upon 
the  public  welfare  ? 

A.  It  is  certainly  detrimental  to  legitimate  business,  because  it 
interrupts  it ; it  is  the  same  with  the  transportation  interests,  be- 
cause it  does  the  same  thing;  with  the  shipping  interests  alike  ; and 
even  speculative  business  is  completely  demoralized  by  it  at  times, 
and  business  brouo^ht  to  a standstill  as  well  as  les^itimate  trade  and 
transportation.  While  these  “corners”  are  being  run  they  neither 
benefit  the  producer  nor  the  consumer,  because  they  are  accompa- 
nied with  a depression  of  prices  by  cliques  to  secure  a large  supply 
of  stuff  at  low  prices,  and  when  once  secured  out  of  the  producer’s 
hands,  they  advance  prices  by  manipulation  and  put  up  prices  above 
20 


154 


legitimate  value  as  miicli  as  tliey  were  below  it,  and  neither  the 
producer  nor  consumer  derive  any  benefit. 

Q.  As  to  the  manner  of  running  them  ? 

A.  I cannot  explain  that  in  one  word,  further  than  in  a general 
way  in  reply  to  any  questions  you  may  ask  me. 

Q.  Have  you  been  connected  with  the  Produce  Exchange  in  the 
city  of  Hew  York? 

A.  I have  been  there  eleven  years,  with  the  exception  of  one 
year  in  Philadelphia. 

Q.  Ho  you  understand  the  methods  of  operation  by  which  busi- 
ness is  carried  on  on  the  Produce  Exchange  ? 

A.  Yes,  sir,  pretty  thoroughly. 

Q.  In  what  capacity  have  you  been  connected  with  it  ? 

A.  Commercial  editor  all  of  this  time. 

Q.  You  are  familiar  with  the  technical  terms  used  by  nersons 
transacting  business  on  the  Exchange  ? 

A,  Yes. 

Q.  Please  define  a corner?” 

A.  There  is  more  than  one  kind  of  a “ corner,”  there  are  natural 
corners,  where  the  supply  and  receipts  have  fallen  off  unexpectedly 
or  the  demand  has  unexpectedly  increased  and  left  supplies  largely 
deficient,  and  there  is  an  excess  of  short  sales  unprovided  for,  which 
is  termed  a legitimate  corner,  and  is  without  manipulation ; then 
there  is  a corner  ” resulting  from  a conspiracy  of  a party  of  ope- 
rators, or  a clique  of  operators  who  go  to  work  to  depress  the  mar- 
ket by  short  sales  themselves,  or  by  throwing  long  stuff  ” upon  the 
market  and  shaking  out  the  weak  ones  who  cannot  margin  up,  until 
they  have  secured  a large  number  of  short  contracts  from  the  spec- 
ulative public  in  excess  of  the  actual  stock  of  the  stuff  or  article  to 
be  cornered. 

Tlien  they  go  to  work  and  buy  up  the  cash  stuff,  available  for 
delivery  on  these  contracts  within  a specified  time,  and  then  the 
corner  will  be  run  for  a certain  month  ; sometimes  this  cash  stuff  is 
bought  first  and  then  options  afterward,  but  not  so  generally,  as 
o])tions  first  and  cash  afterward.  After  securing  a large  line  of 
options  or  shorts,”  two,  three,  four  or  five  times  the  amount  of  the 
available  cash  stuff,  then  they  liold  the  cash  stuff  so  that  tliose  who 
have  sold  it  cannot  deliver  it  within  the  time  specified,  without 
buying  of  tliem,  and  then  they  hoist  the  price.  That  is  the  usual 
corner.  Th,at  is  the  corner  that  demoralizes  trade  and  upsets  busi- 
jiCHS  and  is  the  I’csult  of  a cone])lracy  started  for  the  purpose. 


155 


Then  there  are  sometimes  some  of  both,  a little  of  one  and  a little 
of  the  other.  There  may  be  a corner  this  year  on  the  short  crops  of 
last  year,  but  these  corners  cannot  be  stopped  as  they  are  the  result 
of  natural  causes.  It  is  the  corner  where  the  cliques  are  formed,  or 
where  single  operators  go  into  this  business  for  the  express  purpose 
of  making  a corner  in  the  market,  that  should  be  dealt  with. 

Q.  Is  such  a system  of  cornering  as  you  have  described,  ever  re- 
sorted to  on  the  Produce  Exchange  ? 

A.  It  is.  There  is  scarcely  a month  without  a ‘‘  squeeze,  ” 
corner,  or  a deal  of  greater  or  less  magnitude,  not  generally  on  a 
large  seale  as  in  Chicago,  because  this  market  has  not  been  a specu- 
lative market  in  the  article  of  grain  until  1877,  and  the  trade  has 
come  slowly  ; until  lately  it  was  comparatively  secondary  to  Chicago. 

Q.  You  have  to  some  extent  described  the  effect  of  corners  as 
an  operation  upon  legitimate  trade ; can  you  state  what  their  effects 
are  more  particularly  upon  the  trade  in  the  staples  of  commerce  ? 

A.  They  affect  the  movement  of  stuff  out  of  the  ordinary  chan- 
nels, they  take  it  out  of  the  hands  of  the  ordinary  receivers  wha 
are  bringing  the  stuff  forward  from  the  west  to  the  sea-board,  and 
exports  are  impeded  while  “ corners  ” are  being  run,  and  are  stopped 
until  the  corner  culminates,  and  during  the  time  these  corners  exist, 
which  generally  runs  from  one  to  three  months  ahead — during 
that  time  every  body  suffers.  The  transportation  interests  are  lying 
idle  while  this  stuff  is  held  back,  and  then  after  the  corners  are 
over  the  railroads  and  boats  are  overtaxed  and  have  to  employ  an 
extra  force,  and  to  carry  the  stuff  at  an  extra  expense,  but  it  takes 
business  completely  out  of  the  hands  of  the  ordinary  receiver  and 
concentrates  it  all  in  a few  men’s  hands,  and  since  this  system  be- 
gan there  is  a large  proportion  of  merchants  who  had  a good  re- 
ceiving business  who  are  now  simply  brokers  in  options  and  get 
their  business  from  the  cliques.  At  the  time  I went  on  the  Ex- 
change there  was  not  a broker  in  the  grain  trade  except  those  who 
buy  and  sell  actual  stuff  for  export,  now  there  are  few  of  these, 
and  I should  judge  over  one-half  or  three-fourths  of  the  members 
engaged  in  the  grain  trade  are  brokers  in  these  options  and  are 
largely  composed  of  men  who  were  once  engaged  in  legitimate  busi- 
ness, out  of  which  they  have  been  driven  by  “ corner  ” operations. 

Q.  That  is  the  effect  produced  by  the  illegitimate  dealing  you  have 
been  describing  ? 

A.  Yes. 

Q.  What  effect  has  it  upon  inland  transportation  by  railroad  and 
canal  ? 


156 


A.  I can  illustrate  that  to  you,  in  the  operation  of  Mr.  Keene,  in 
this  way.  Two  years  ago  there  was  a large  crop  here  with  a large 
deficiency  abroad,  and  ^there  was  enough  grain  in  the  country  to 
keep  the  railroads  at  work  the  year  round  ; he  ran  that  deal  chiefly 
in  Chicago  and  locked  up  the  wheat  there  and  shut  it  off  from  the 
exporter  ; during  the  winter  of  that  year  scarcely  any  wheat  came 
to  this  market ; the  railroads  applied  to  him  for  it  and  he  told  them, 
^‘at  a certain  rate  I will  give  you  so  many  millions  of  bushels,  if 
you  don’t  take  it  I will  ship  it  all  by  the  lake  in  the  spring;”  and 
the  bulk  of  it  was  held  there  until  the  railroads  came  down  to  that 
rate  (by  which  they  lost  money)  for  shipping  it  by  lake  or  by  canal. 
Then  as  to  the  effect  upon  the  transportation  interests  abroad,  cer- 
tainly our  ocean  transporting  interests  are  but  a bagatelle  to  our 
inland  interests ; but  this  year,  although  the  crops  have  been  largely 
short,  there  was  enough  to  go  forward  and  keep  the  steamship  com- 
panies in  grain  in  bulk ; they  have  been  compelled  several  times 
within  the  last  two  months  to  pay  the  shippers  a premium  to  give 
them  wheat  to  save  them  the  expense  of  buying  ballast. 

Q.  Please  describe  “ futures  ? ” 

A.  A future  and  an  option  are  the  same  thing,  but  of  two  kinds, 
seller’s  and  buyer’s  option ; you  sell  and  contract  to  deliver  at  any 
time,  at  the  buyer’s  pleasure  during  a future  month  (for  instance, 
you  sell  an  option  to  deliver  in  June  from  the  first  to  the  last  day 
of  the  month),  that  is  a buyer’s  option  ; the  buyer  will  be  entitled  to 
call  for  it  from  the  seller  after  the  first  day  of  the  month,  but  that 
is  a very  unusual  option,  because  it  sells  for  a much  higher  price  and 
generally  is  for  a special  shipment  and  for  legitimate  business  which 
forms  a small  proportion  of  option  dealing.  A seller’s  option  is 
where  the  seller  has  the  option  of  delivering  during  the  specified 
month. 

Q.  What  is  the  effect  of  dealing  in  futures  upon  the  commercial 
interests  of  the  country  and  other  legitimate  business  ? 

A.  Within  limits  these  operations  tend  no  doubt  to  stimulate  and 
lieli)  trade  because  they  bring  the  stuff  forward  which  is  held  at  dif- 
ferent points,  and  they  stimulate  the  handling  and  transportation 
interests,  and  they  give  a steady  movement  to  produce  during  the 
wliole  year  when  not  interfered  v,dth  by  these  corners,  and  in  that 
way  tliey  ])robalJy  do  no  injury  to  trade  if  they  do  not  assist  it, 
wliile  tlicy  make  a great  deal  of  business  for  the  exchanges. 

Q.  AVhat  effect  lias  the  system  of  dealing  in  “corners”  and 
“ futures”  upon  tlie  Ih’odnce  Exchange  as  an  institution? 


157 


A.  It  has  the  effect  of  driving  half  the  men  engaged  in  the  legiti- 
mate trade  into  brokers  for  these  cliques,  and  the  effect  upon  the 
trade  can  perhaps  be  best  told  by  observing  the  different  articles 
which  have  been  dealt  in  ; pork  and  lard  were  dealt  in,  in  futures, 
before  grain  ; and  pork  was  one  of  the  favorite  articles ; this  was  a 
large  market  for  it  at  one  time,  but  after  a series  of  years  the  trade 
in  it  went  out  of  it  after  it  got  concentrated  in  a few  hands  and  dan- 
gerous to  the  speculative  public;  dealing  in  option  in  pork  has  now 
almost  ceased  and  there  is  nothing  left  but  our  legitimate  export 
trade. 

This  winter  there  have  been  some  movements  in  relation  to  re- 
viving the  speculation  in  pork  ; but  whether  that  was  the  object  or 
not,  the  pork  trade  opposed  it,  an-d  showed  that  the  legitimate  ex- 
port  trade  in  pork  had  increased  since  option  trading  had  decreased 
and  they  were  opposed  to  it  on  that  ground. 

The  trade  went  into  lard  and  it  was  stored  up  in  volume  here,  al- 
though I don’t  think  it  is  so  large  as  at  first,  as  it  got  concen- 
trated in  the  big  operators’  and  packers’  hands  who  had  control  of  it 
to  a great  extent,  which  makes  it  dangerous,  but  that  is  an  article 
that  is  produced  the  year  round,  and  it  is  more  difficult  to  corner  or 
control  it  on  account  of  its  being  the  largest  in  value  of  the  hog 
products.  Then  our  w^heat  trade  was  extended  in  that  way  and  it  in- 
creased the  business  on  the  Produce  Exchange ; where  we  used  to 
get  an  export  trade  and  a milling  demand  which  on  a good  or  bad 
crop  would  run  from  100,000  bushels  a day  to  500,000  (that  would 
be  an  extreme  average  about  200,000  bushels),  we  now  have  a trade 
there  of  two  or  three  millions  of  bushels  a day  in  futures  which 
brings  a commission  to  the  members  of  the  Exchange  and  brings  a 
great  deal  of  trade  to  this  city  which  formerly  went  to  Chicago,  and 
in  that  respect  it  benefits  the  Exchange  by  keeping  the  trade  here 
at  home  and  keeping  the  money  in  the  hands  of  our  banks  at  the 
same  timoo  It  brings  stock  here,  for  it  is  a rule  of  speculation  that  the 
greater  the  speculation  the  greater  tho  stock  must  be  at  the  point 
where  the  speculation  goes  on,  in  order  to  make  it  safe,  because  peo- 
ple will  not  sell  it  short  for  fear  of  being  cornered ; it  tends  to  bring 
the  stuff  here  to  be  sold  and  that  stuff  gives  business  to  insurance 
companies,  bankers,  and  members  of  the  Produce  Exchange,  and  no  . 
doubt  benefits  the  Exchange  and  the  port  of  New  York. 

Q.  Is  that  benefit  perpetuated  to  the  consumer  of  the  products  ? 

A.  When  there  is  no  cornering  operation ; it  does  not  affect  the 
price  of  spot  stuff  materially,  because  there  are  compensating  ad- 


15S 


/ 


vantages  in  speculation  ; tliere  is  as  iniicli  ‘‘  short  ” as  “ long  ” interest 
and  when  the  market  is  controlled  by  speculation,  the  stuff  is  over 
or  under  its  legitimate  values  ; when  in  excess  of  it,  it  benefits  the 
producer  ; and  when  there  is  a deficit,  it  benefits  the  consumer. 

Q.  Is  it  not  so  that  by  reason  of  the  operation  of  the  system  of 
dealing  in  futures  ” and  ‘‘  corners  ” the  tendency  is  to  increase  the 
prices  of  the  various  commodities  above  their  natural  value? 

A.  I think  the  tendency  of  speculation  is  rather  to  ecjualize  them 
where  there  is  no  corner  to  enhance  the  values.  It  is  not  such  a 
serious  evil  except  from  the  corners  ” because  the  speculative  pub- 
lic as  a rule  are  about  equally  divided  in  opinion,  and  when  the  bulls 
or  holders  of  any  article  put  it  up  too  high,  unless  there  is  a corner  ” 
there  are  generally  enough  people  to  bring  it  down  by  selling  it  short ; 
only  in  the  case  of  a corner  are  they  prevented  from  doing  so. 

Q.  Then  the  tendency  of  making  corners  is  to  enhance  the  prices 
of  commodities  ? 

A.  That  is  the  purpose  of  corners.  A corner  never  depresses 
prices  ; it  always  puts  them  at  an  unnatural  value  above  their  true 
basis,  and  by  unnatural  means. 

Q.  Can  you  tell  us  to  what  extent  the  prices  of  various  products 
have  been  increased  above  their  natural  value  at  any  thrie  by  the 
operation  of  ‘‘  cornering  ? ” 

A.  In  the  year  that  Mr.  Keene  undertook  to  control  the  wheat 
market  of  the  whole  country  he  put  the  price  up  as  high  as  $1.64:  on 
this  market,  where  it  was  held  for  a short  time,  although  it  ranged 
from  $1.40  to  $1.50  for  one  or  two  months  in  the  fall  of  that  year, 
and  from  $1.64  it  gradually  went  down,  as  very  little  export  busi- 
ness was  done  after  prices  were  put  up,  until  near  the  end  of  the 
crop,  when  millions  of  that  wheat  were  shipped  out  of  the  country 
on  consignments  on  a basis  of  about  $1  per  bushel.  That  year  there 
was  a short  crop  abroad.  My  impression  is  the  average  price  that 
year  of  wheat  exported  was  not  over  $1.25  a bushel,  I think  it  was 
less  ; while  the  accumulated  stock  of  the  clique  was  disposed  of  for 
much  less  (that  is  the  bulk  of  it),  while  this  year  we  have  had  the 
reverse,  good  crops  abroad  and  short  cro2:)S  at  home,  with  wheat  at  a 
higher  ])rice,  although  the  world’s  supply  of  wheat  this  year’s  turn- 
ing out  to  be  about  the  same  as  last  year,  which  upon  a legiti- 
jiiate  basis  would  make  the  price  of  wheat  this  year  not  materi- 
ally higher  than  a yeai*  ago,  for  our  market  has  been  held  higher 
tlian  those  of  the  world.  The  average  pi’ice  of  last  year  was  I think 
about  $1.25  for  No.  2 lied  Winter,  which  is  generally  dealt  in  here. 


159 


Instead  of  an  average  price  of  $1.25,  or  tlie  same  as  last  year,  with 
the  same  world’s  supply,  it  has  been  kept  up  by  these  cornering  opera- 
tions this  year ; speculators  bought  up  the  crop  at  from  $1.30  to 
$1.60,  the  average  is  somewhere  between  $1.40  and  $1.50  on  the 
whole  crop,  and  all  that  has  been  consumed  in  this  country  has  paid 
the  difference  between  last  year’s  price  and  this  year’s,  as  the  result 
of  speculation. 

Q.  What  was  that  difference  ? 

A.  The  difference  between  last  year’s  average  of  $1.25,  and  this 
year’s,  between  $1.40  and  $1.50.  This  will  depend  somewhat  upon 
the  amount  yet  to  come  forward,  and  the  price  it  will  bring  before 
the  new  crop,  upon  which  there  is  a division  of  opinions  among 
speculators.  Official  reports  show  that  there  is  enough  to  make 
the  above  average,  although  the  cliques  are  cornering  the  market, 
on  the  theory  that  there  is  none  or  very  little  to  come  forward. 

Q.  It  has  been  suggested  to  me  to  ask  you  whether  this  country, 
generally,  has  lost  that  amount,  the  difference  in  the  price  between 
this  and  the  last  year  ? 

A.  It  has ; because  we  have  exported  less  than  usual  this  year ; 
and  a greater  proportion  of  the  crop  has  been  consumed  at  home. 
This  money  has  not  been  brought  from  abroad,  and  we. have  had  to 
ship  gold  abroad  to  make  up  for  holding  our  surplus  wheat  above 
export  prices. 

Q.  In  1879  and  in  1880  how  was  that  ? 

A.  It  was  the  same  that  year  (1879),  the  year  of  the  Keene  deal, 
because  the  clique  held  the  bulk  of  their  stuff  until  near  the  new 
crop,  and  they  afterward  sold  it  at  a lower  price  than  they  kept  up 
here  at  which  we  could  make  no  shipments,  when  ships  were  tied 
here  to  the  docks  for  two  or  three  months. 

Q.  The  fictitious  price  amounted,  as  you  think,  to  $1.65  per 
bushel  ? 

A.  That  was  the  extreme. 

Q.  And  the  price  at  which  they  afterward  sold  was  what  ? 

A.  The  balance  of  that  crop  carried  into  the  next  — something 
like  ten  millions  of  bushels  or  more,  was  closed  out  at  nearly  one  dol- 
lar a husJiel  / some  of  it  was  consigned  abroad  and  brought  proba- 
bly less  than  that. 

Q.  Then  on  that  ten  millions  of  bushels  the  difference  between 
$1.00  and  $1.60  per  bushel  was  lost  entirely  to  this  country  by  reason 
of  that  corner  ? 


ICO 


A.  I would  say  tlie  diflcrence  on  this  ten  millions  was  lost  by  the 
men  who  held  it,  but  what  was  consumed  in  this  country  during  the 
time  the  clique  held  the  price  up  was  so  much  lost  by  this  country. 

By  Senator  Fitts  : 

Q.  Our  people  had  to  pay  tlie  difference? 

xV.  Certainly,  while  the  clique  held  up  the  market  price  all  over 
the  country. 

By  Senator  Boyd  : 

Q.  Has  it  been  the  custom  of  these  cliques  or  rings  to  which  you 
have  referred  to  attempt  to  influence  the  press  of  New  York  ? 

A.  There  have  been  two  or  three  attempts  of  that  kind. 

Q.  Please  state  what  these  attenq^ts  were  ? 

A.  There  was  an  attempt  made  (it  was  not  exactly  a cornering 
clique  at  that  time,  but  it  w^as  a clique  of  men  or  a ring  who  con- 
trolled the  Exchange)  to  prescribe  rules  by  which  the  members  of 
the  press  should  be  governed  who  came  on  the  Exchange,  and  the 
board  of  managers  passed  a resolution  which  was  presented  to  the 
members  of  the  press  for  their  signatures ; rules  by  the  board  of 
managers  for  the  government  of  the  press ; that  was  about  five  or  six 
years  ago.  The  representatives  of  the  press  all  refused  to  sign  it 
and  reported  at  head-quarters,  and  the  editors  and  members  took  it 
u]i  and  made  it  so  warm  for  them  that  the  wdiole  board  of  managers 
was  swept  out  at  the  next  election  of  the  Exchange.  There  has  been 
no  attempt  since  until  the  past  year,  and  as  that  was  personal  to 
myself  I may  be  biased.  . 

Q.  You  may  give  your  views  for  the  beiiefit  of  the  public. 

A.  I commenced  a series  of  articles  in  the  Commercial  Advertiser 
upon  the  new^s,  gossip  and  speculative  operations  upon  the  Exchange, 
and  criticized  this  monopoly  of  the  market  by  the  cliques.  I made  a 
special  eflort  at  getting  at  what  they  were  doing,  so  as  to  keep  the 
public  advised,  and  from  being  roped  in  I followed  that  up  with 
marked  success  for  a time  without  being  known,  as  I wished  to  see 
how  it  would  work.  Well,  as  one  of  the  members  of  the  leading 
houses  engaged  in  that  kind  of  business  told  me,  they  put  up  a job 
on  me  to  find  out  who  it  was  that  had  been  giving  this  information 
and  tlie  names  of  parties  engaged  in  these  operations,  and  there  was 
a gi’cat  jiressure  ])rouglit  on  me  to  leave  out  the  names  of  those  con- 
noeted  with  these  clique  o])erations,  which  interfered  with  their 
HiicccBSH.  One  operator,  who  was  manipulating  the  market,  told 


161 


the  public  that  he  was  going  to  put  np  prices  ; instead  of  doing  that 
he  was  unloading  on  them.  I exposed  it  and  effectually  stopped  the 
public  buying,  and  instead  of  the  market  going  up  it  broke  heavily. 
Tlien  he  made  a complaint  to  the  board  of  managers  and  asked  for 
my  expulsion  from  the  Exchange,  and  the  thing  was  nearly  going 
through,  but  was  barely  defeated.  This  same  party  brought  me  up 
again.  The  name  is  notorious,  both  in  Chicago  and  in  New  York, 
as  manipulators  of  the  markets,  and  it  was  on  their  operations  that  I 
was  then  writing ; that  was  the  second  time,  and  I defeated  him  in 
the  board  again.  This  thing  had  been  hanging  for  some  time  wdth 
an  occasional  threat,  “ that  if  I did  not  look  out  I would  get 
bounced  ” or  expelled  from  the  Exchange,  and  this  same  party,  after 
being  defeated  twice,  told  me  on  the  Exchange  that  if  I did  not  keep 
my  mouth  shut  he  would  get  me  off  the  Exchange  yet.”  When 
running  corners  the  cliques  have  all  of  the  stock,  and  one-half  of  the 
trade  are  dependent  on  them  for  their  business. 

I know  one  warehouseman  who  refused  to  sign  his  petition  for 
my  expulsion,  to  whom  that  party  went  and  told  him  he  wanted 
him  to  sign  it  and  in  such  a manner  that  was  equivalent  to  saying, 
‘‘  If  you  don’t  sign  it  you  will  get  no  more  grain  to  store  in  the 
same  way  the  brokers  were  dependent  upon  him  for  their  business, 
and  in  that  way  he  got  a large  number  of  persons  to  sign  it ; others 
wlio  were  opposed  to  it  did  not  dare  to  make  opposition  to  it. 
These  men  who  p’e  in  these  cliques  are  necessarily  large  capital- 
ists and  they  have  interests  in  nearly  all  the  banks  who  do  business 
with  the  Produce  Exchange.  These  look  over  the  bank  loans 
and  control  bank  accommodations.  The'  majority  of  the  mem- 
bers of  the  Exchange  are  thus  dependent  upon  the  good-will  of 
the  five  or  six  men  engaged  in  running  corners  for  their  bank 
accommodations,  and  this  combination  keeps  men  in  fear  that 
they  would  suffer  if  they  acted  contrary  to  their  wishes. 

Q.  What  rights  have  the  press  on  the  Produce  Exchange  ? 

A.  That  is  somewhat  doubtful.  It  has  been  considered  by  the 
members  of  the  Exchange  that  it  is  dependent  on  the  will  of  the 
board  of  managers  and  it  really  has  no  rights.  There  is  nothing  to 
prevent  the  press  from  being  excluded  from  the  floor  of  the  Ex 
change,  if  they  write  any  thing  it  don’t  like,  as  was  done  yesterday 

Q.  Don’t  you  think  it  necessary  that  the  press  should  have  free 
access  to  the  Produce  Exchange,  for  the  purpose  of  reporting  the 
transactions  in  the  interests  of  the  public  ? 

21 


A.  There  is  no  doubt  of  that  in  my  mind  whatever ; the  trouble 
with  me  was  that  I reported  too  much ; I certainly  think  there 
should  be  a law  defining  and  enforcing  the  rights  of  the  press  upon 
the  Exchange  or  any  institution  chartered  by  the  State. 

Q.  Has  the  Exchange  a regular  reporter  of  its  own,  an  official 
reporter  ? 

A.  Yes,  he  giv6s  the  public  just  such  information  as  the  board  of 
managers  of  the  Exchange  chooses  and  directs ; certainly  he  has 
no  option. 

Q.  Can  you  suggest  any  remedy  against  the  evils  in  the  opera- 
tions of  the  system  of  “corners”  and  “futures?” 

A.  I think  there  is  no  trouble. 

By  Senator  Pitts  : 

Q.  Can  you  give  a remedy  ? ' 

A.  I wrote  an  article  on  the  subject  and  I don’t  know  any  thing 
better  than  my  suggestion,  to  take  the  average  price  that  articles 
would  bring  in  the  chief  importing  countries  of  Europe,  upon  which 
our  market  is  dependent,  as  the  proper  basis,  of  their  legitimate 
value  here  in  Hew  York. 

A penalty  of  five  cents  a bushel,  to  be  added  to  or  deducted  from 
that,  as  a limit  to  which  speculative  manipulations  could  be  run, 
either  above  the  legitimate  value  on  a corner  or  below  it  by  undue 
depression  caused  by  a bear  raid  ; my  suggestion  was  that  whenever 
the  prices  for  a future  month  were  depressed  nve  cents  a bushel, 
under  the  cash  value  for  the  same  grade  of  the  same  crop,  the  “ bulls  ” 
may  be  entitled  to  limit  their  loss  at  that  j)oint  so  that  the  holders 
of  actual  stock  could  not  be  forced  to  sustain  the  loss ; and  on  the 
other  hand  when  the  “ bulls  ” elevate  the  price  five  cents  a bushel 
above  the  export  basis  I spoke  of,  that  there  should  be  a five  cent 
limit,  that  they  can  call  upon  the  shorts  for  margin  or  force  a settle- 
ment, and  that  five  cents  a bushel  either  ’way  should  be  the  penalty, 
or  remedy  for  undue  speculation. 

Q.  Then  you  think  a legislative  remedy  for  the  existing  evils  is 
possible  ? 

A.  Most  certainly  ; if  the  Exchange  won’t  make  and  enforce  such 
rules  themselves. 

]>y  Senator  J^rrrs : 

Supposing  they  do  not  ? 

A.  Then  have  a law  to  com})cl  them. 


163 


Q.  What  kind  of  legislation  would  you  suggest  for  the  purpose 
of  remedying  such  evils  ; State  or  National  ? 

A.  At  one  time  I wrote  that  National  legislation  was  the  only 
thing  that  would  do  it ; but  I have  seen  reason  to  change  my  mind. 
Mr.  Bingham,  who  was  before  you  as  a witness  and  is  one  of  the 
largest  shippers  from  the  United  States,  moved  at  a ‘‘■grain  call’’ 
one  day,  that  a committee  be  appointed  to  confer  with  the  grain 
committee  of  the  Exchange,  to  frame  rules  to  prevent  corners  in  the 
market.  Mr.  Young,  of  the  firm  of  E.  A.  Kent  & Co.,  one  of  the 
largest  commission  houses  in  New  York,  St.  Louis  and  Chicago, 
seconded  the  motion  on  the  ground  that  it  would  be  of  the  greatest 
advantage  to  New  York  to  bring  speculative  business  here,  as  peo 
pie  would  then  be  insured  against  the  dangers  of  corners.  I took 
the  view  that  National  legislation  was  a cure  at  that  time,  as  I sup- 
posed, that  Chicago  would  do  nothing  of  the  kind  or  enforce 
its  old  rules  against  cornering,  and  that  it  would  place  this  market 
at  a disadvantage,  when  that  market  was  under  manipulation. 
It  was  then  thought  that  Chicago  would  run  corners  to  the 
diversion  of  speculative  trading  from  New  York.  Since  then  Chi- 
cago has  enforced  its  old  rules,  and  a committee  was  appointed  to 
frame  new  regulations,  and  recommended  the  board  of  managers  to 
adopt  a rule  expelling  members  running  corners.  As  a result  they 
have  adopted  rules  in  reference  to  the  delivery  of  different  grades 
of  wheat  upon  contract  with  a view  to  stop  cornering  in  Chicago, 
and  I think  the  Produce  Exchange  must  take  similar  action,  or  her 
trade  will  even  go  back  to  Chicago.  I think  corners  now  being  for- 
bidden by  Chicago,  that  it  will  transfer  these  operations  to  this 
market. 

Q.  Do  you  consider  the  system  of  dealing  in  “futures”  and  mak- 
ing ‘ ‘ corners  ” a species  of  gambling  ? 

A . Well,  it  is  as  bad.  The  '■‘longs  ” bet  that  grain  will  go  up  in 
a certain  month,  and  the  “shorts”  bet  that  it  will  go  down  within 
a certain  month. 

Q.  Do  you  know  if  there  is  any  tribunal  to  enforce  the  laws  of 
the  Produce  Exchange  ? 

A.  There  is  if  any  dispute  has  to  be  decided. 

Q.  There  is  a court  of  arbitration  connected  with  the  Produce 
Exchange  ? 

A.  Tliere  is. 

Q.  Are  parties  compelled  to  submit  to  the  decision  of  the  court, 
usually  ? 


164 


A.  Yes,  and  there  is  no  appeal  from  it ; practically  they  are  com- 
pelled to  submit  their  cases  there,  although  their  by-laws  don’t  say 
that.  The  practice  of  the  Exchange  is  usually  for  members  to  sub- 
mit their  cases  to  the  arbitration  committee. 

Q.  How  are  the  decisions  of  the  arbitration  committee  enforced  ? 

A.  By  the  executive  officers  of  the  State  government.  The 
sheriff  is  obliged  to  issue  an  execution  to  enforce  their  decisions, 
which  have  the  same  force  as  decisions  of  the  Supreme  Court  of 
New  York, 

Q.  Do  you  know  if,  by  reason  of  the  operation  of  this  system  of 
cornering,  the  price  of  pork  has  been  raised  from  $8  to  $16  per 
barrel  ? 

A.  It  was ; I can’t  give  the  exact  date  ; it  was  sometime  within 
the  last  two  years ; there  was  a big  corner  in  Chicago  two  years  ago  ; 
I think  the  lowest  limit  was  $8;  it  was  run. up  here  and  there,  too, 
to  $20  ; it  was  the  worst  corner  that  ever  occurred  in  pork.  There 
has  been  very  little  done  in  this  market  in  pork,  in  option  dealings, 
within  the  past  two  years. 

Q.  If  the  power  to  enforce  the  decision  of  the  arbitration  com- 
mittee was  taken  away  from  the  Exchange,  would  it  have  a tendency 
to  remedy  the  evils  of  the  system  of  cornering  carried  on  there  ? 

A.  It  would  check  them,  but  whether  it  would  remedy  them 
while  the  arbitration  committee  or  the  board  of  managers  have  the 
powder  to  suspend  a member  if  he  refuses  to  arbitrate  or  abide  by 
their  decisions,  I could  not  say  ; I think  while  they  have  the  power 
to  make  a man  settle  up  in  order  to  hold  his  seat  and  avoid  expul 
sion,  it  would  be  doubtful ; but  still  it  would  check  it. 

Q.  Are  “corners”  of  frequent  occurrence  on  the  Exchange? 

A.  Well,  there  is  what  we.  call  a “squeeze”  in  anticipation  ot  a 
‘‘  corner,”  and  scarcely  a month  goes  over  but  there  is  a little  or  big 
squeeze,  which  is  another  name  for  a corner;  that  is  not  carried 
through  to  the  end  of  the  month. 

Q.  Are  these  corners  usually  financially  injurious  to  certain  par- 
ties engaged  in  them  ? 

A.  They  generally  are  in  the  end,  but  in  the  meantime  they  work 
against  all  the  members  except  the  few.  They  tend  to  make  the 
ma  jority  poorer  and  the  few  richer  every  year  ; they  make  the  aver- 
age Triernber  more  dependent  upon  those  few  rich  men  who  have 
the  cfipital  necessary  to  run  corners  and  they  monopolize  the  mar- 
kets. 


f 


165 

Q.  Do  you  consider  the  system  of  dealing  in  “ corners  ” and 
^‘futures”  opposed  to  public  policy  ? 

A.  Corners  most  certainly  are,  but  under  proper  restrictions  I 
don’t  think  dealing  in  futures  are. 

Q.  I mean  as  at  presen  t carried  on  ? 

A.  x\s  at  present  carried  on,  yes;  a restriction  would  make  a 
corner  impossible  ; but  restricting  a corner  would  not  wipe  out  op- 
’tion  dealings.  To  stop  all  dealings  in  options  would,  I think,  hurt 
trade,  it  would  hurt  the  Exchange  and  hurt  the  value  of  the  mem- 
bership, because  it  would  interfere  with  legitimate  speculation  if  not 
for  future  and  actual  wants.  Before  option  dealing  was  introduced 
here  there  was  some  legitimate  business  done  in  futures  as 
now.  Shippers  and  millers  used  to  buy  grain  to  arrive  at  a certain 
date,  and  legitimate  business  might  not  be  injured  at  all  by  the  total 
stoppage  of  option  dealing. 

Q.  Are  you  of  the  opinion  that  the  men  who  have  attempted  to 
interfere  with  the  freedom  of  the  press  on  the  Produce  Exchange 
are  attempting  to  use  the  Exchange  for  the  purpose  of  advancing 
their  own  interests  ? 

A.  There  are  a good  many  things  done  there  that  look  like  it. 
There  is  their  enormous  new  building  and  the  purchase  of  valuable 
properly  surrounding  it  which  is  not  necessary  for  the  Exchange, 
which  looks  like  a ring ; and  there  is  a pretty  strong  feeling  on  the 
Exchange  about  the  recent  purchase  of  $150,000  w^orth  of  property. 
They  purchased  the  rear  end  of  two  lots  for  $160,000  which  fronted 
on  Broad  street,  in  the  best  business  portion  of 'the  city,  and  near 
the  Stock  Exchange,  for  the  whole  of  which  only  about  $68,000  was 
paid  about  three  years  ago.  This,  purchase  makes  what  is  left  of 
the  original  property  bought  for  $68,000  worth  more  than  it  was 
before.  There  are  various  opinions  on  the  Exchange  about  that 
transaction  and  it  has  caused  a good  deal  of  feeling  as  to  the  manner 
in  which  the  purchase  was  rushed  through,  only  twenty-four  hours’ 
notice  of  it  having  been  given,  and  an  injunction  was  talked  of  to 
stop  it.  All  this  has  caused  a pretty  strong  feeling. 

Q.  Suppose  the  Produce  Exchange  to  ontain  control  of  the  mar- 
kets, what  eftect  would  that  have  in  controlling  trade  and  the  fixing 
of  prices  ? 

A.  The  Exchange  as  a body  could  not  do  that,  it  would  be  the 
members  of  the  Exchange,  but  these  members  could  enforce 
whatever  they  fixed  as  the  settling  price,  through  their  committees. 
In  fact,  they  have  had  plenty  of  corners  in  the  face  of  the  rule  they 


16G 


have  ‘‘ that  the  grain  committee  shall  not  fix  a fictitious  price. 
They  have  rules  which  are  not  enforced,  that  is  the  trouble  with 
most  of  these  rules  against  corners. 

Q.  Do  you  know  that  it  is  a fact  that  the  necessaries  of  life  have 
increased  in  price  very  much  recently,  such  as  breadstuffs  and  meats? 

A.  Meats  have  recently,  but  breadstufifs  have  been  held  very  high 
for  nearly  a year.  The  cliques  got  up  a short  crop  scare  last  sum- 
mer, and  they  have  held  prices  up  ever  since,  and  that  is  beginning 
to  have  its  effect  upon  the  prices  of  meats,  because  corn  is  the  chief 
element  in  the  price  both  of  hog  and  beef  products;  but  the  price 
of  beef  is  not  so  much  due  to  speculation  as  that  for  hogs.  During 
the  hard  winters  of  1880-81  much  of  the  stock  of  cattle  and  sheep 
on  the  plains  were  frozen,  when  they  had  no  shelter  and  no  food, 
for  it  takes  two  years  to  make  calves  into  beef  ; we  are  now  beginning 
to  feel  the  effect  of  this  in  addition  to  the  high  price  for  corn,  in 
the  present  prices  of  meats.  A large  shipper  of  beef  told  me  the 
other  day  that  this  beef  famine  was  not  so  much  dependent  on  the 
price  of  corn  as  on  the  scarcity  of  cattle. 

Q.  But  this  increased  price  in  the  necessaries  of  life  is,  to  a con- 
siderable extent,  due  to  illegitimate  speculation  ? 

A.  'No  doubt  of  it,  and  every  article  that  is  speculated  in  is  affected 
in  the  same  way. 

By  Senator  Pitts  : 

Q.  You  stated  that  you  understood  how  a corner  was  made; 
please  state  briefly  -how  that  is  done  ? 

A . The  usual  custom  is  for  a clique  which  goes  into  a “ deal  ’’ 
(which  is  another  name  for  cornering),  is  to  depress  prices  at  the 
time  of  the  year  when  the  crops  move  out  of  the  hands  of  the  farmers 
into  those  of  the  middle-men ; they  do  it  in  two  ways,  by  selling 
stuff  short”  themselves  to  others,  and  often  by  throwing  ‘^long” 
stuff  which  they  own  themselves,  in  small  quantities,  on  the  market 
sufficient  to  break  it,  and  ‘‘shake  out”  the  weak  holders. 

The  whole  of  this  option  business  is  done  on  margins.  If  I 
buy  or  sell  a load  of  ^heat  I am  liable  to  a call  of  ten  cents 
per  bushel  margin,  to  put'  into  the  hands  of  the  trust  company 
through  the  Exchange,  which  cannot  be  drawn  out  until  the  deal 
is  closed  and  without  the  signature  of  both  parties  to  the  contract 
made  at  tlie  Exchange.  Each  ])arty  to  tlie  trade  lias  to  keep  this 
ten  cents  margin  good  or  be  sold  out,  and  when  they  break  the 
market  they  knock  the  price  down  so  suddenly  that  the  weak  ones’ 


IGT 


margins  are  xixliausted  and  sold  out  by  the  commission  men  before 
the  market  gets  so  low  that  there  is  a loss  to  them ; that  is  the  way 
generally  of  beginning  a ‘‘  deal  ” at  tlie  same  time  the  crops  are 
moving  out  of  tlie  farmers’  hands  and  they  buy  the  actual  stuff, 
the  object  being  to  lower  the  price  as  much  as  possible  below  the 
legitimate  value  by  these  artificial  ^means  until  they  have  bought 
options  from  two  to  five  times  the  amount  of  the  available  cash 
stuff  which  they  have  already  bought  or  have  to  buy,  so  that  the 
parties  from  whom  they  have  bought  their  options  are  unable  to 
ulfill  their  contracts,  making  it  utterly  impossible  for  the  seller  to 
get  the  stuff  which  they  have  bought  from  him  ; then  after  it  is 
out  of  the  farmers’  hands  and  in  their  own  they  ‘‘  hoist  ” it  up  from 
ten  to  fifty  cents  a bushel  and  make  these  shorts  come  to 
them  and  settle  their  contracts. 

Q,  How  is  the  farmer  hurt  by  this  ? 

A.  He  is  hurt  in  this  way  : When  they  begin  their  deals  the 
knock  the  price  down  when  the  stuff’  is  coming  out  of  the  farmers’ 
hands  and  get  it  as  low  as  they  can,  but  they  usually  take  the  pre- 
caution to  run  the  deal  ” at  a time  when  the  least  possible  amount 
is  coming  out  of  the  farmers’  hands,  so  that  they  have  to  take  as  lit- 
tle cash  stuff  as  possible  while  getting  as  many  options.  They  don’t 
run  deals  and  corners  for  the  farmer’s  benefit,  they  run  them  at  a 
time  when  the  farmer  can  get  the  least  out  of  it.  To  establish  a 
corner  requires  considerable  pluck  and  plenty  of  capital,  which  the 
banks  furnish  the  cliques  who  avail  themselves  of  the  back  doors  of 
the  banks.  There  is  a bank  behind  every  deal.  It  requires  knowl- 
edge not  only  of  the  foreign  but  of  the  home  crop.  A man  must 
be  thoroughly  posted  to  run  a deal  successfully  ; but  the  banks  fur- 
nish the  great  bulk  of  the  capital  to  run  them,  and  the  men  who  re- 
ceive the  stuff  from  the  west,  when  a deal  is  being  run  and  money 
get  a little  tight,  they  go  to  the  banks  wdth  their  bills  of  lading  to 
get  the  money  needed,  it  is  a matter  of  favoritism  if  they  get  ac- 
commodated, while  the  cliques  get  all  they  want. 

Q.  How  much  do  you  think  they  are  able  to  depress  the  price 
to  the  farmer  under  the  actual  value  ? 

A.  It  will  depend  upon  the  financial  condition  the  farmer  is  in^ 

Q.  Taking  the  average  ? 

A.  It  has  changed  within  the  last  few  years  until  this  year. 
The  last  three  years  previous  to  this  year  the  immense  crops  made 
the  farmer  rich  ; at  the  time  the  crops  are  harvested,  if  they  were 
not  satisfied  with  the  price  they  would  hold  back,  but  a great  many 


lOS 

farmers  are  c;oin])elled  to  sell  a ])ortion  ot  their  crop  at  once  for 
money.  The  men  running  these  corners  last  year  carried  them 
through  nearly  the  whole  year  and  rout  out  crop  missionaries  last 
spring  ; one  house  in  Chicago  sent  out  three  men,  paying  them 
$5,000  a year  to  travel  through  the  farming  sections  to  educate  tlie 
farmers  up  to  bad  crops  and  high  price,  and  then  bad  ci’op  reports 
were  scattered  over  the  country,  and  that  induced  them  last  year  to 
hold  back  for  higher  prices  this  year  and  saved  the  cliques  carry- 
ing the  stocks  which  the  farmers  have  done  for  them  for  nothing. 

Q.  How  are  you  going  to  prevent  these  crop  missionaries  giving 
the  farmer  false  information  ? 

A.  If  there  is  no  corner,  there  is  no  occasion  for  crop  mission- 
aries. If  you  stop  corners  there  is  no  inducement  to  send  out  mis- 
sionaries ; it  won’t  pay  to  educate  the  farmer  in  a false  belief. 

Q.  What  do  you  think  is  the  average  difference  made  to  the 
farmer  on  his  produce  by  this  cornering  markets  ? 

A.  Taking  the  year  of  the  Keene  corner,  I think  it  was  a benefit 
to  the  farmer,  because  he  gained  by  selling  early  to  the  clique  and 
the  clique  lost  the  money,  but  that  was  an  exceptional  3mar.  I think 
that  on  the  average  it  would  make  very  little  difierence  with  the 
farmer,  taking  one  year  with  another,  who  are  not  forced  to  sell. 

Q.  What  difference  would  it  make  to  the  consumer  in  the  arti- 
cles of  flour  and  meat  ? 

A.  I think  it  makes  all  the  difierence  there  is  between  legitimate 
and  fictitious  values  to  him.  The  farmers  have  not  all  got  to  sell 
when  prices  are  depressed,  but  the  consumers  have  all  got  to  con- 
sume all  the  time  these  corners  are  being  run. 

Q.  But  there  are  exceptional  cases  where  the  farmer  is  obliged 
to  sell  ? 

A.  But  there  are  no  exceptional  cases  where  the  consumer  is  not 
obliged  to  eat ; they  have  to  pay  the  fictitious  price ; most  of  the 
money  the  cliques  make  on  the  actual  stuff  is  taken  out  of  the  pock- 
ets of  the  consumer. 

Q.  It  affects  the  consumer  in  the  end  ; that  is  the  class  that  gets 
hurt  ? 

A.  Yes;  but  the  farmer  gets  hurt  too,  who  is  obliged  to  sell  to 
raise  money,  and  this  includes  the  majority. 

(2-  fn  reference  to  a legislative  remedy,  do  you  think  it  possible 
that  tlie  legislature  could  stoj)  these  evils? 

A.  1 think  there  would  be  no  trouble  in  putting  down  conspira- 
eicK. 


nyj 


Q.  Whether  the  laws  of  New  York  would  affect  Chicago  ? 

A.  TJiey  would  not  affect  Chicago,  and  I have  the  impression  that 
the  interference  of  the  National  legislature  would  be  necessary  to 
render  any  laws  effective  there,  otherwise  these  corner  transactions 
might  be  transferred  from  this  market  to  Chicago,  in  the  same  ^vay 
that  they  arc  likely  to  be  transferred  from  Chicago  to  New  York 
by  her  anti-corner  action  of  late. 

Q.  That  being  so,  our  business  men  in  New  York  could  regulate 
matters  themselves? 

A.  They  never  have,  so  far  as  corners  are  concerned. 

Q.  I suppose  this  action  of  Chicago  was  recent  ? 

A.  Yesterday  the  decision  was  made  public. 

Q.  Laws  made  in  New  York  might  correct  the  evil  here,  but  have 
no  effect  in  Chicago ; the  business  men  there  could  revoke  the  rules 
adopted  yesterday  ; so  that  it  would  be  necessary  to  have  the  aid  of 
the  National  legislature  ? 

A.  I scarcely  think  so  from  what  I said  in  relation  to  Mr.  Bing- 
ham’ and  Youngs’  views  of  such  anti-corner  rules,  as  likely  to  help 
New  York.  I think  safety  lies  in  the  publication  and  exposure 
of  these  manipulations,  for  if  the  Exchange  can  say  what  shall 
not  be  published  on  the  penalty  of  a representative  of  the  press  be- 
ing shut  off  from  the  floor,  it  may  undertake  to  say  what  shall  be 
published,  and  to  prescribe  rules  for  the  regulation  of  the  press 
again. 

Q.  Do  the  parties  forming  combinations  to  make  “corners,”  re- 
port sales  to  influence  outside  operations,  when  there  are  actually  no 
sales  ? 

Ac  There  is  very  little  doubt  that  when  corners  are  being  run 

wash  sales”  are  made,  but  that  is  a thing  a man  cannot  prove  and 
therefore  cannot  charge ; when  these  corners  are  being  run  they 
are  not  carried  to  the  last  day  of  the  month,  usually,  as  they  used 
to  be  ; but  if  necessary  a deal  is  run  from  now  until  J uly,  and 
when  things  are  all  ready  they  often  put  the  price  up  by  these 

wash  sales,”  and  sometimes  advance  them  flve  to  ten  cents  a 
bushel  in  a few  days  for  the  express  purpose  of  forcing  people  to 
put  up  more  margin,  or  to  exhaust  them  and  force  them  to  settle  ; 
they  make  these  wash  sales  to  get  up  the  prices  and  force  outsiders 
to  come  in  and  cover ; they  get  up  the  prices  sharply  by  these 
means,  and  it  is  done  extensively,  no  doubt. 

Q.  Do  you  understand  the  printed  blank  contracts  used  at  the 
Produce  Exchange? 

22 


170 


A.  I have  seen  them  ; I liave  not  examined  them  particularly  ; 
they  are  subject  to  the  determination  of  trade  committees,  from 
which,  I believe,  there  is  an  a})peal  to  the  arbitration  committee. 

Q.  Through  how  many  hands  do  these  contracts  pass  without  an 
actual  delivery  of  the  produce? 

A.  You  cannot  tell ; they  may  pass  through  100  persons’  hands  or 
more;  I have  known  250  tierces  of  lard  to  settle  25,000  on  short 
contract  ; I have  seen  contracts  pieced  out  so  as  to  admit  of  ad- 
ditional indorsements  on  the  back,  from  one  to  another ; probably 
seven-eighths  of  all  of  the  option  trade  done  there  are  settled  up 
in  that  ^vay. 

Q.  Does  the  Exchange  hold  the  margins  to  keep  them  good  ? 

A.  They  are  deposited  with  the  trust  company,  but  it  is  not  re- 
sponsible for  them,  as  I understand  it ; if  the  trust  company  should 
fail,  parties  having  deposits  there  would  lose  the  money. 

Q.  Is  there  any  thing  else  you  would  like  to  state  to  the  commit- 
tee that  you  think  of  importance  ? 

A.  I don’t  think  there  is. 

Q.  Is  there  any  suggestion  ? ^ 

A.  I don’t  think  of  any. 

Kellogg  Baker ^ swmrn  : 

Examined  by  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  In  New^  York  city. 

Q.  Do  you  do  business  in  Hew  York  ? 

A.  Yes. 

Q.  What  is  your  business  ? 

A.  I am  engaged  in  the  wholesale  grocery  and  provision  business! 

Q.  Where  is  your  place  of  business  ? 

A.  335  and  337  Greenwich  street. 

Q.  How  long  have  you  been  in  business? 

A.  More  tlian  twenty-hve  years. 

Q.  Are  you  familiar  with  the  system  of  making  corners  and  deal 
iiig  in  futures  ? 

A.  Not  very  much;  I come  before  this  committee  more 
as  a merchant  and  a legitimate  trader  engaged  in  the  distribution  of 
actual  j)r<)duce,  Ixiying  and  selling  produce.  I am  a member  of  the 
Produce  Exchange  and  hear  more  or  less  and  know  something  about 
it 


171 


Q.  Will  you  state  to  this  committee  your  opinion  in  regard  to 
the  making  of  corners  in  reference  to  its  effect  upon  commerce  and 
its  unflueuce  upon  the  public  welfare  ? 

A.  I think  it  is  injurious  to  legitimate  trade;  it  unsettles 
values  and  puts  at  a tictitious  price  articles  that  are  speculatively 
dealt  in  ; especially  is  it  so  in  the  case  of  grain  and  provisions. 
Where  there  is  no  anticipation  or  expectation  of  delivery  of  the 
actual  product,  but  simply  a paper  transaction.  The  legitimate 
dealer  cannot  buy  these  goods  upon  what  should  be  their  true 
value  ; that  is  regulated  by  supply  and  demand  and  what  they  are 
worth  in  the  home  and  foreign  markets,  but  he  must  pay  the  price 
put  upon  them  or  made  by  those  who  deal  in  futures  or  options 
without  any  idea  of  ever  receiving  or  delivering  the  product.  The 
process  of  cornering  accumulates  products  at  large  commercial  cen- 
ters and  they  are  held  for  a limited  time  above  their  value ; then 
after  that  they  are  thrown  on  the  market  and  values  are  greatly  de- 
pressed below  their  legitimate  value,  lower  than  if  the  distribution 
had  been  allowed  to  go  in  an  even  market. 

Q.  Then  the  system  interferes  with  legitimate  trade  and  the  reg- 
ular order  of  business  ? 

A.  1 think  it  does  decidedly. 

Q.  Does  it  enhance  the  prices  of  the  necessaries  of  life  ? 

A.  It  does  at  times  ; it  causes  them  to  unduly  fluctuate ; there  is 
no  reason  why  a barrel  of  pork  should  be  worth  $20  the  last  day  of 
April  and  on  the  1st  day  of  May  (in  consequence  of  a corner)  it 
should  be  worth  no  more  than  $15  — the  result  of  this  manipula- 
tion. 

Q.  To  what  extent  have  you  known  the  necessaries  of  life  to  be 
increased  above  their  natural  value  by  reason  of  those  speculations  ? 

A.  It  would  be  difficult  to  state  exactly  ; the  last  witness  went 
over  that  ground  quite  generally, 

Q.  Then  your  opinion  in  regard  to  these  matters  corresponds 
with  the  ideas  suggested  by  Mr.  Pearce. 

A.  To  a certain  extent,  except  that  I don’t  believe  in  dealing  in 
options  and  futures,  where  there  is  no  idea  of  delivering  the  actual 
product ; I think  it  is  all  wrong ; it  is  simply  gambling, 

Q.  Would  you  call  it  a system  of  gambling  \ 

A,  It  is  betting  on  what  the  future  price  will  be  from  day  to  day 
and  from  month  to  month, 

Q.  Do  you  consider  all  such  speculation  against  good  public 
policy  ? 


172 


A.  I do»  I can  understand  that  a merchant  who  has  sometimes 
to  anticipate  his  wants,  buying  goods,  receiving  them  and  paying 
for  them  in  advance,  but  I refer  now  to  the  cases  wliere  there  is  no 
intention  of  receiving  the  goods  and  the  parties  dealing  know  not 
what  they  are  buying  or  selling  in  reference  to  quality  and  do  not 
care  to  know. 

Q.  Do  you  know  how  much  these  speculations  aflect  the  trans- 
portation interests,  domestic  and  foreign  ? 

A.  I think  at  times  they  injure  trade  by  tying  up  products  for  a 
time,  and  that  is  done  by  these  very  men  who  run  corners  and  put 
a fictitious  value  upon  the  product,  which,  therefore,  cannot  be  ex- 
ported without  a loss. 

Q.  Who  bears  the  burden  of  the  increased  price  caused  by  this 
undue  speculation  ? 

A.  I think  the  consumer. 

Q.  Have  you  any  other  suggestion  that  you  would  like  to  give  to 
the  committee  ? 

A.  I don’ t know  that  I have. 

Q.  Do  these  illegal  speculations  to  which  you  have  referred  affect 
other  branches  of  business  besides  those  in  which  they  are  generally 
carried  on ; is  any  business  besides  the  grain  business  affected  by 
this  system  of  corners  and  dealings  in  futures  ? 

A.  The  provision  market  is  decidedly,  but  perhaps  not  the  grocery 
deparment  so  much  ; still  it  extends  into  almost  every  thing  these 
speculative  operations. 

Q.  What  is  their  moral  effect  upon  business  generally  ? 

A.  I think  it  is  bad. 

Q.  In  what  way  ? 

A.  It  encourages  young  men  to  engage  in  these  speculations  or 
gambling  and  to  get  a livelihood  by  their  wits  instead  of  by  actual 
labor  and  legitimate  business. 

William  F.  Ford,,  sworn  : 

Examined  by  Senator  Boyd. 

Q.  Where  do  you  reside  ? 

A.  New  York  city. 

What  is  your  business  ? 

A.  I am  a journalist. 

(2-  Coiniect(‘.(l  with  what  paper? 

yV.  With  Ih-adstreet’s  Journal. 

Q.  For  how  long  ? 


173 


A.  About  two  years, 

Q.  What  is  the  character  of  that  journal  ? 

A.  It  is  a commercial  and  financial  journal,  and  political,  so  far  as 
dealing  with  business  legislation  is  concerned. 

Q.  Chiefiy  devoted  to  the  produce  interest,  is  it  not  ? 

A,  Not  as'inuch  to  produce  matters  as  to  finance. 

Q.  Are  yon  familiar  with  the  operations  of  the  Produce  Ex 
change  ? 

A.  No,  sir ; not  in  detail. 

Q.  Are  you  familiar  wtth  the  system  of  making ‘‘ corners ’’  and 
dealing  in  “ futures  ? ” 

A.  Yes,  so  far  as  an  outsider,  without  actually  being  in  the  busi- 
ness, can  be. 

Q.  But  in  your  capacity  as  a journalist  you  are  familiar  with  it  ? 

A.  Yes,  but  not  as  a journalist  who  is  constantly  on  the  spot  day 
by  day. 

Q.  Will  you  give  the  committee  your  opinion  in  regard  to  the 
whole  system  of  making  corners  and  dealing  in  futures,  in  reference 
to  the  effects  upon  commerce  and  the  influence  upon  the  public 
welfare  ? 

A.  Well,  sir,  it  would  be  idle  to  deny  that  ‘‘ corners”  are  at  times 
so  engineered  as  to  have  a decidedly  injurious  effect  upon  depend- 
ent trades  and  the  carrying  business.  The  miller  is  temporarily 
debarred  from  purchasing  grain,  and  the  vessel-owner  has  to  wait 
the  outcome  of  certain  manipulations.  It  would  be  well  if  the  evils 
admitted  could  be  obviated  by  a direct  and  simple  law.  But  it  has 
to  be  considered  whether  these  effects  should  be  dealt  with  as  iso- 
lated facts,  or  whether  they  are  not  so  far  incidental  to  a genera 
trade  development  that  to  attempt  by  the  arm  of  the  law  to  arrest 
the  excessive  speculation  would  do  far  greater  injury  to  legitimate 
trade  than  can  possibly  result  from  speculation.  I believe  an  affirma- 
tive answer  must  be  given  to  the  proposition,  and  am  unable,  there 
fore,  to  find  sufficient  reason  for  the  enactment  of  legal  measures 
intended  to  directly  check  or  prevent  speculation. 

From  the  general  point  of  view,  such  direct  interference  is  not 
within  the  domain  of  practical  legislation.  It  is  never  wise  to  lose 
sight  of  Humboldt’s  principle  that  the  law  should  forbid  only  such 
offenses  as  affect  society  directly.  But,  even  if  it  were  wfise  to  in- 
voke the  aid  of  law,  it  appears  that  under  the  rulings  of  the  courts 
no  effective  statute  could  be  devised.  While  the  State  courts  have 
generally  refused  to  enforce  contracts  purely  and  admittedly  specu- 


174 


lative,  the  Supreme  Court  of  Michigan  having  declared  that,  “ if 
parties  see  fit  to  invest  money  in  such  ventures,  they  must  get  it 
back  by  other  tlian  legal  measures,”  it  has  been  decided,  as  in  the 
opinion  of  Judge  Cole,  in  a Wisconsin  case,  that  ‘‘a  party  may  go 
into  the  market  and  buy  goods  which  he  has  agreed  to  sell  and  de- 
liverand  that  therefore  a contract  to  deliver  at  afutnre  day  is 
not  necessarily  a gambling  or  wagering  contract^  In  the  case 
under  consideration  the  enforcement  of  the  contract  was  refused, 
but  it  was  admittedly  speculative  — i.  e.,  with  no  intention  of  actual 
delivery.  Suppose  a law  to  be  passed  forbidding  contracts  purely 
speculative,  how  can  it  be  enforced  ? Who  is  to  say  tliat  in  the  case 
of  a given  contract  for  future  delivery  there  exists  no  intention  to 
deliver  the  goods?  Surely  not  the  parties  to  the  contract,  for  they 
are  agreed.  ‘‘Legal  measures  ” are  not  required  to  adjust  their 
difficulties,  as  the  trade  exchanges  of  the  country,  for  nearly  all  prac- 
tical purposes,  are  a law  unto  themselves.  I am  of  the  opinion  that 
there  is  more  “ law  ” existing  to-day  as  a menace  to  gambling  in 
stable  articles  than  can  be  enforced.  If  a contract  to  receive  or 
deliver  at  a future  day  is  not  necessarily  a gambling  contract,  as 
asserted  by  the  Wisconsin  court,  it  is  difficult  to  see  what  can  be 
done.  Where  the  attempt  has  been  made  the  result  is  flat  failure. 
The  statutes  of  Illinois  provide  as  follows : 

“ Whoever  contracts  to  have  or  give  to  himself  or  another  the 
option  to  sell  or  buy  at  a future  time  any  grain  or  other  com- 
modity, * or  corners  the  market,  or  attempts  to  do  so,  in 

relation  to  any  such  comitiodities,  shall  be  fined  not  less  than  $10  or 
more  than  $1,000,  or  confined  in  the  county  jail  not  exceeding  one 
year,  or  both,  and  all  contracts  made  in  violation  of  this  section  shall 
be  considered  gambling  contracts,  and  shall  be  void.” 

This  law  was  passed  some  years  ago,  but  no  convictions  nor  ar- 
rests have  ever  been  made  under  it.  So  far  as  can  be  seen,  the  only 
effect  of  the  law  has  been  to  sharpen  the  wits  of  the  members  of 
the  Chicago  Board  of  Trade  as  to  ways  and  means  for  evading  this 
and  all  similar  legislative  devices. 

It  is  sought  to  check  speculation  in  order  that  the  sharp  fluctua- 
tions supposed  to  1)0  caused  by  it  may  be  lessened  or  entirely  stopped 
this  to  the  end  that  legitimate  trade  may  not  continue  to  be  injuri- 
ously affected.  I give  herewith  fluctuations  in  the  price  of  cash  wheat 
during  the  month  of  March  for  eacli  of  the  last  fifteen  years,  the 
prices  given  being  that  of  the  first  day,  the  lowest,  highest,  and  the 
closing  quotations  for  the  month,  with  the  range: 


175 


Fluctuations  in  the  Price  of  Cash  Wheat  during  the  Month  of 


March  for  Fifteen  Years. 

First 

Lowest 

Highest 

Closing 

day. 

price. 

price. 

price. 

Range . 

1867 

$1  87i 

$ 1 87^. 

S 2 15 

$ 2 15 

S 25f 

1868... 

1 94: 

1 89 

2 00^ 

1 92 

Hi 

1869 

1 

1 08i- 

1 

1 lOf 

06f 

18T0 

79 

74-J 

85^ 

76|- 

Hi 

1871...,..., 

1 22f 

1 22| 

1 26J. 

1 

04i 

1872^ 

1 22| 

1 18i 

1 24i 

1 20 

06i 

1873 

1 64:J 

1 64 

1 72^ 

1 66 

08i 

1874:., 

1 54 

1 50i 

1 59 

1 57i 

08i 

1875 

1 13i 

1 in 

1 21 

1 m 

08i 

1876 

1 25 

1 24 

1 31 

1 28 

07 

1877 

1 40 

1 40 

1 49 

1 48 

09 

1878 

1 27 

1 23 

1 33 

1 29 

0 

1879 

1 13 

1 13 

1 16i 

1 14f 

013i 

1880........ 

1 48i 

1 37i 

1 

1 38 

Hf 

1881 

1 I9i 

1 19i- 

1 26i 

1 24i 

07 

1882,,, 

...... . 1 33J 

1 29J 

1 44i 

142J 

15 

The  speculative  “ call  on  the  New  York  Produce  Exchange  was 
instituted  three  years  ago.  The  month  of  March  is  thought  to  be  a 
fair  month  for  purposes  of  comparison.  The  record  of  prices  does 
not  show  that  fluctuations  have  been  more  violent  since  speculation 
in  the  staple  crops  came  to  be  so  widely  diffused,  and  so  large  in 
volume.  The  truth  is  that  fluctuations  in  the  prices  of  staple  arti- 
cles have  not  been  more  violent  during  late  years.  I append  a state- 
ment showing  that  the  tendency  has  been  toward  uniformity  of  price 
as  exact  information  concerning  the  yield  of  staple  crops  becomes 
more  easily  accessible  to  the  public  and  the  rapidity  of ’communica- 
tion increases.  [Exhibit  marked  Left  to  itself  I believe  that 

speculation  will  become  less  violent  as  the  work  of  crop  reporting 
reaches  greater  exactness  and  promptness,  and  transportation  facili- 
ties increase  and  improve. 

It  is  perhaps  worth  while  to  suggest  the  need  of  more  severe  pub- 
lic condemnation  of  those  who  gamble  in-  stocks  and  grain  while  oc- 
cupying positions  of  trust.  The  evident  disposition  is  to  only  con- 
demn those  who  lose.  And  there  is  room  for  society’s  inflicting 
more  severe  punishment  upon  the  speculative  embezzler.  As  the 
clearing-house  principle  finds  further  extension,  betrayals  of  trust 
become  more  heinous  crimes. 


^Prices  for  the  years  down  to  and  including  1872  are  Chicago  prices  ; or  the  re- 
inaining  years  New  York  prices. 

[The  daily  prices  in  detail  are  given’^in  Exhibits  marked  ‘ ‘A.”] 


170 


I hold  ill  my  hand  a telegram  from  Chicago,  recently  received 
from  a judge  of  a Chicago  court,  which  says  no  convic- 
tions nor  arrests  have  occurred  under  the  law  forbidding  specu- 
lation in  staple  articles,  but  contracts  have  been  held  void  in  civil 
suits,  ‘‘  see  cases  in  78th,  79th,  81st  and  83d  volumes  of  Illinois  re- 
.ports.”  I also  submit  to  the  committee  the  following  statement  as 
an  Exhibit  (put  in  evidence  and  marked  “ B”).  In  former  years 
liuctuations  were  exceedingly  violent. 


EXHIBIT  B. 


One  of  the  most  marked  results  of  the  introduction  of  steam 
transportation  is  that  prices  of  commodities  necessarj'-  to  life  have 
not  only  been  rendered  more  stable,  but  the  existence  of  local 
markets  with  widely  divergent  prices  has  been  placed  among  the 
things  that  were.  For  grain,  at  least,  there  is  but  one  market  — 
the  world. 

It  is  a mercantile  maxim  that  the  surplus  kills  the  price  ; hence? 
if  paying  prices  are  to  be  kept  up,  there  must  be  opportunity  to  get 
rid  of  the  surplus.  The  facilities  for  cheap  transportation  provide 
an  outlet  for  this  surplus,  which  secures  to  the  producer  a guarantee 
against  ruinous  prices  as  the  result  of  an  unforeseen  and  abnormal 
abundance. 

On  the  other  hand,  a slight  deficiency  in  an  article  like  food 
effects  an  abnormal  increase  in  price  if  there  is  no  opportunity  of 
supplying  the  deficiency  through  importation.  In  the  English  de- 
bates upon  the  corn  laws  in  the  early  part  of  this  century,  it  was 
estimated,  upon  data  furnished  by  Mr.  Tooke  in  his  “ History  of 
Prices,”  that  a deficiency  of  one-sixth  the  English  harvest  re- 
sulted in  a rise  of  at  least  100  per  cent  in  the  price  of  grain.  An- 
other estimate,  by  Davenant  and  King,  for  the  close  of  the  seven 
teenth  century,  corroborates  this  apparently  excessive  statement 
Their  estimate  is  the  following  : 


For  a deficit 
equal  to 

1-10.  . 
2-10.  . 
3 10. . 

4- 10.  . 

5- 10.. 


There  will  be  a 
rise  in  price  of 

3-10 

8-10 

16-10 

28-10 

45-10 


This  could  only  mean  misery  and  starvation  for  the  poorer  classes 
ill  case  of  a deficient  hiirvest;  but  free  importation  of  grain  and 
cliea]>  1 i’aus|M)rtatiou  have  set  aside  the  fear  of  any  such  results. 


No.  2 SPRING  WHEAT  AT  CHICAGO. 
DAILY  PRICES,  MARCH  1869. 


No.  2 Spring  Wheat  At  Chicago,  Daily  Prices,  March  1868. 


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NO.  2 SPRING  WHEAT  AT  CHICAGO. 
AVERAGE  DAILY  PRICES,  DURING  MARCH  1872. 


74- 


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AVERAGE  DAILY  PRICES,  MARCH  1873, 


XX 


No.  2 MILWAUKEE  SPRING  WHEAT  AT  NEW  YORK, 
AVERAGE  DAILY  PRICES.March  1875. 


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QUOTATION 
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No.  2 MILWAUKEE  SPRING  WHEAT  AT  NEW  YORK. 
AVERAGE  DAILY  PRICES, March  1877. 


SAME  — WHEAT  — MARCH  — 1878. 


1.23 


NO.  2 RED  WINTER  WHEAT  AT  NEW  YORK. 
AVERAGE  DA /LV  PRICES,  MARCH  1879. 


No.  2 RED  WINTER  WHEAT  AT  NEW  YORK. 
Daily  Prices  During  March  i88i. 


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No.  2 RED  WHEAT,  AT  NEW  YORK— New  Rule. 


March  i88j, 


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No.  2 RED  WHEAT,  AT  NEW  YORK— New  Rule.  April  1882. 

Highest,  Lowest,  Closing  Prices,  Cash.  Opening,  Highest,  Lowest,  Closing  Prices  for  May  Delivery. 


T"  v 


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CORN. 


HIGHEST,  LOWEST  AND  CLOSING  PRICES  EACH  DAY, 


March  1882, 


.Spot,  at  New  York. 


xApril  Delivery,  at  New  York. 


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CORN. 


HIGHEST,  LOWEST  AND  CLOSING  PRICES  EACH  DAY. 


April  1882. 


.Spot,  at  New  York.  May  Delivery,  at  New  York. 


PETROLEUM. 


Crude,  Certificates — Opening,  Highest,  Lowest  and  Closing  Prices  at  New  York.  March  1882. 


0.7 


REFINED  PETROLEUM. 


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PETROLEUM. 

Crude,  Certificates — Opening,  Highest,  Lowest  and  Closing  Prices  at  New  York,  April  1882. 


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COTTON. 

Middling  Uplands — Spot,  at  New  York. 


March  1882, 


3-16 

Vs 

1-16 

0.12 

15-16 

% 

13-16 

% 

0.11  11-16 


Middling  Uplands — at  New  York — May  Delivery. 


OPENING,  HIGHEST,  LOWEST  AND  CLOSING  PRICES  EACH  DAY. 


.56 
• 54 
.52 
.50 
.48 
.46 

.44 

.42 

.40 

.38 

.36 

.34 

.32 

.30 

.28 

.26 

.24 

.22 

.20 

.18 

.16 

.14 

.12 

.10 

.08 

.06 

.04 

.02 

12.00 


Middling  Uplands — Spot,  at  Liverpool. 


June — July  Delivery  at  Liverpool. 


COTTON. 


Middling  Uplands — Spot,  at  New  York. 


April  1882, 


X 

3 

5 

G 

10 

11 

12 

13 

14. 

15 

IT 

18 

19 

20 

21 

22 

21 

25 

26 

27 

28 

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--  

— 

— 

— 

- - - 

Middling  Uplands — at  New  York — June  Deliver)^ 


y4. 

3-16 

% 

1-16 


0,12 


OPENING,  HIGHEST,  LOWEST,  AND  CLOSING  PRICES  EACH  DAY. 


Middling  Uplands — Spot,  at  Liverpool. 


July-August  Delivery,  at  Liverpool. 


1 

3 

4. 

5 

Q 

11 

12 

13 

14. 

15 

IT 

18 

19 

20 

21 

22 

21 

25 

26 

27 

28 

29 

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55-64 

54-64 

53-64 

54-64 

B3-64 

52-64 

51-64 

X 

52-64 

N 



V 

51-64 

50-64 

50-64 

49-64 

6^d. 

47-64. 

46-64 

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49-64 

6^. 

47-64 

46-64 

45-64 

45-64 

44-64 

43-64 

42-64 

41-64 

6>id. 

44-64 

43-64 

— 

/ 

42-64 

41-64 

6?fed. 

- 

/ 

177 


The  effect  of  railroads  and  steamships  upon  the  uniformity  of 
prices  is  even  more  marked.  In  France,  for  example,  in  1817  the 
difference  between  the  highest  and  the  lowest  prices  of  grain  in 
different  parts  of  the  country  was  45  francs  per  hectoliter.  In 
1847  the  average  difference  w^as  26  francs.  Since  1870  the 
greatest  difference  at  any  time  has  been  3.55  francs.  The  same 
tendency  is  observable  if  the  prices  be  compared  between  various 
parts  of  Germany. 

Between  nations,  too,  the  same  tendency  is  observable.  The  fol- 
lowing table  represents  the  price,  in  silver  gulden  per  hectoliter,  of 
grain  for  various  periods  : 


■ England.  France.  Belgium.  Prussia. 

1831-30..... 10.25  7.35  6.44  5.65 

1831-40 9.60  7.61  7.31  5.37 

1841-50....' 9.15  7.89  7.99  6.41 

1851-60 9.40  7.84  9.65  8.07 

1861-70 8.80  8.69  9.24  7.79 


One  cannot  observe  such  a movement  in  prices  as  this  without 
recognizing  that  the  margin  for  speculation  in  grains  is  tending  to- 
ward narrower  limits,  and  that,  as  the  conditions  for  a perfect  mar- 
ket come  to  be  more  nearly  realized,  that  margin  will  be  rendered 
still  more  contracted. 

By  Senator  Pitts  : 

Q.  Before  you  had  these  corners  ? 

A.  Yes. 

By  Senator  Boyd  : 

Q.  Do  you  desire  to  explain  these  exhibits? 

A.  Ho,  sir ; they  explain  themselves.  I would  call  attention  to 
the  cotton  corner,  at  Liverpool  last  year,  when  the  action  of  the  cot- 
ton spinners  at  Manchester  and  Oldham  paved  the  way,  for  the  cor- 
ner. Spinners  sold  cotton  here  short’’  for  delivery  in  September, 
thinking  the  crop  would  be  a large  one,  this  was  known  as  the 

Banges  Corner ; ” when  September  came  round  Liverpool  men 
had  the  cotton,  and  the  spinners  had  to  pay  the  difference. 

Q.  Do  you  know  how  the  system  acts  upon  the  milling  interest 
of  the  country  ? 

A.  Yes;  I think  it  temporarily  affects  the  milling  interest,  but  I 
think  the  millers  are  men  able  to  hold  their  own,  and  are  as  strong 
as  the  men  on  the  Exchange ; the  milling  business  of  the  country  is 
in  strong  hands,  especially  in  the  north-west. 

23 


178 


Q.  Would  you  call  these  speculations  illegitimate  dealing  in  “ fu- 
tures ” aud  making  ‘‘  corners  ? 

A.  I cannot  say  that,  as  a general  proposition,  I would  call  a ‘‘  cor- 
ner” illegitimate;  1 could  not  say  that  any  body  of  men  so  engaged 
would  be  conducting  an  illegitimate  business;  I could  not  apply  the 
term  ‘‘illegitimate,”  except  to  individual  trade;  “illegitimate  is  a 
relative  term.  I cannot  say  as  a general  proposition,  that  a “ corner  ” 
is  “ illegitimate  ; ” I cannot  see  how  buying  up  grain  by  speculators, 
who  have  advanced  information  as  to  the  crops,  is  “ illegitimate.”  It 
may  have  a somewhat  beneficial  result,  as  if  the  crop  is  short  it  may 
have  the  effect  of  doling  out  the  supplies  in  a manner  calculated  to 
make  the  crop  go  round. 

Q.  Don’t  you  know  that  dealing  in  “ futures  ” and  making  “ cor- 
ners” has  a tendency  to  unnaturally  enhance  the  prices  of  commodi- 
ties and  the  necessaries  of  life? 

A.  No,  sir,  I don’t  know  that  I have  any  evidence  to  teach  me 
that. 

Q.  If  it  did  so  would  it  not  be  an  illegitimate  transaction  ? 

A.  I cannot  say  that  it  is  an  illegitimate  transaction  for  a man  to 
set  about  enhancing  prices  unless  he  employs  illegitimate  means,  such 
as  sending  out  false  information;  I can  only  apply  the  term 
“illegitimate”  to  the  methods  he  employs.  I conceive  that  this 
speculation  is  more  rife  during  recent  years  owing  to  the  more  wide- 
spread information  in  regard  to  the  crops.  Crop  reports  have  come 
to  be  more  thoroughly  done,  and  for  the  time  being  they  tend  to 
di-aw  more  persons  into  speculation.  The  State  reports  of  Illinois, 
Ohio,  and  some  other  States  and  other  wheat  States  have  become 
fairly  trustworthy.  When  it  becomes  generally  understood  that  a 
given  line  of  crop  reports  are  trustworthy,  people  will  wait  before 
going  into  speculation  until,  for  the  most  part,  the  reports  are  made 
known,  when  nobody  would  want  to  speculate. 

Q.  Don’t  you  think  that  any  system  of  speculation  which  tends 
to  disturb  the  natural  prices  of  commodities  in  the  market  is  illegal? 

A.  Only  so  far  as  illegal  methods  are  employed.  I can  conceive 
how  parties  may  proceed  by  false  information  in  these  matters.  I 
think,  however,  that  the  dealing  of  one  may  fairly  offset  thnt  of 
another.  I admit  that  these  are  temporary  “ short  ” corners  ; by 
tlie  diagram  which  I have  furnished  you  will  see  what  was  the  state 
of  things  in  Chicago  in  1870. 

Look  over  that  bill ; (Senate  bill  on  this  subject  shown  to  wit- 
ness*) what  is  your  opinion  of  tliis  bill  generally? 

A.  I think  the  ])rinci})le  is  unwise,  for  the  reason  that  it  imposes 
a tax  on  tlie  sales  of  nnu’cliandise  on  the  New  York  Produce  Ex- 


179 


change  whether  for  casli  or  future  delivery  ; that  it  is  a check  upon 
the  development  of  the  clearing-house  principle  ; that  it  checks  the 
rapid  movements  of  trade  which  are  a marked  characteristic  of 
modern  times.  I conceive  that  the  provisions  of  this  bill  are  unsound 
for  the  same  reason  that  I think  a tax  on  bank  checks  is  very  unwise, 
because  it  discourages  the  use  of  checks  in  commerce.  1 believe  in 
a free  movement  so  far  as  practicable, 

Q.  Do  you  not  think  that  it  is  the  natural  right  of  the  consumer 
of  all  products  to  obtain  those  products  at  their  natural  value  — at 
a value  fixed  by  the  laws  of  supply  and  demand  ? 

A.  Yes. 

Q.  Don’t  you  think  that  any  system  of  speculation  which  inter- 
feres with  the  trade  and  compels  the  consumer  t oay  a much  larger 
price  for  his  articles  and  necessaries  of  life  than  the  natural  value  is 
wrong  ? 

A.  As  a consumer  I would  say  yes  to  your  premises,  but  I don’t 
think  your  premises  are  sound, 

Q.  Which  premises  ? 

A.  You  ask  me  first — if  any  influence — if  the  producer  should  not 
have  a natural  price,  as  fixed  by  the  laws  of  supply  and  demand ; if 
so,  yes.  Now  you  say  if  any  influence  given  him  other  than  an 
average  price  is  it  not  wrong ; you  ask  me  to  admit  that  it  is  so. 

Q.  Suppose  such  a speculative  system  to  exist ; if  it  does  exist,  is 
it  not  wrong  ? 

A.  I don’t  concede  that  it  exists. 

Q.  If  it  does  exist,  is  it  not  wrong  to  allow  it  ? 

A.  I don’t  think  any  thing  is  right  which  gives  him  a price  that 
does  not  come  from  the  natural  laws  of  supply  and  demand. 

Q,  Is  it  not  a fact  that  the  system  of  dealing  in  corners  and 
futures  does  frequently  tend  to  enhance  the  cost  of  the  necessaries 
of  life  far  above  their  natural  value — above  the  laws  of  supply  and 
demand  ? 

A.  No,  sir;  I can  buy  a commodity  for  a certain  market,  and  it 
will  take  care  of  itself,  if  the  purchase  is  based  upon  the  laws  of 
supply  and  demand,  else  it  would  be  a failure  ; if  a man  makes  a 
deal  in  grain  with  the  statistical  position  against  him  he  is  fined 
pretty  heavily. 

Q.  What  is  the  object  of  speculators  in  making  corners,  if  it  is 
not  to  enhance  the  prices  of  the  necessaries  of  life,  or  of  the  articles 
ill  which  they  deal  ? 

A.  T don’t  understand  from  this  point  of  view  the  advantage  of 
making  a corner  to  enhance  the  price.  I understand  a man  makes 


180 


a corner  to  take  advantage  of  the  situation  which  enhances  the 
price. 

Q.  Take  Mr.  Keene’s  corner,  where  a large  quantity  of  grain  was 
bought  and  the  price  run  up  to  a point  beyond  what  it  would  liave 
done  if  that  corner  had  not  been  made,  was  not  that  so? 

A.  I cannot  speak  absolutely  ; I only  know  by  representation. 
You  mean  a wheat  corner,  which  would  have  increased  the  price  if 
he  had  succeeded  with  the  corner. 

Q.  He  did  for  some  time. 

A.  He  paid  two  or  three  millions  for  it. 

Q.  But  wdiile  the  pricq  was  held  at  this  high  range  the  necessaries 
of  life  were  increased  in  price,  and  the  cost  of  living  was  increased* 
Was  that  not  illegitimate  and  unlawful? 

A.  I don’t  conceive  that  it  was  unlawful  if  he  did  not  employ 
unlawful  means. 

Q.  Have  you  any 'other  statement? 

A.  Ho,  sir  : nothing  occurs  to  me. 

Q.  Speculation  in  the  grain  market  in  March  is  not  so  active  as  in 
other  months  ? 

A.  Either  March  or  April  is  the  dividing  line  between  two  crops, 
I conceive  that  in  time  you  will  know  in  the  United  States,  at  a 
given  date,  what  grain  is  held  in  Europe  and  elsewhere.  I look  to 
the  State  reports,  and  those  resulting  from  private  enterprise,  to 
largely  develop  it,  and  then  you  can  take  these  two  and  put  them 
together.  I conceive  that  eight  or  ten  men  are  able  to  extract  this 
information  from  the  country  in  advance  of  the  rank  and  file,  and  if 
the  people  on  the  Exchange  will  follow  what  they  conceive  to  be 
the  right  course,  they  may  make  a great  movement  sometime,  and 
the  means  of  doing  these  things  are  getting  to  be  more  easy.  The 
fluctuations  in  the  United  States,  I have  been  informed,  were  con- 
siderable in  1847  in  the  staple  article. 

Q.  AThat  is  your  theory  in  relation  to  the  present  increase  in 
prices  of  meats  and  breadstuffs  ? 

A.  It  arises  from  two  causes  ; first,  the  short  supply,  and  second 
a natural  rise  in  response  to  an  active  trade  ; within  the  last  three 
years  prices  have  naturally  gone  up  ; every  man  has  been  trying  to 
make  a ])rofit  on  his  purchases  ; I think  the  “bears”  and  “bulls” 
work  hard,  and  we  ship  our  products  to  Europe  to  pay  our  debts, 
instead  of  gold,  and  I see  no  cause  for  alarm  if  we  shipped  gold.  I 
have  conlidencc  in  the  collective  judgment  of  the  business  commu- 
nity. 

Adjourned. 


181 


Buffalo,  N.  Y.,  Novemher  11,  1882.  # 

The  Committee  met  at  the  Tifft  House  in  the  city  of  Buffalo,  H. 

Y.,  on  the  14th  day  of  November,  1882. 

Present  — Senators  Boyd,  Cliairman,  and  Brownino,  of  the  com- 
mittee, John  W.  Corning,  sergeant-at-arms  of  the  Senate,  and  Dan- 
iel A.  C.  Cooney,  clerk  of  the  committee. 

W.  S.  Jenkins  was  duly  sworn  as  stenographer. 

Alonzo  Richmond^  being  dulv  sworn,  testified  as  follows : 

By  Senator  Boyd  : 

Q.  Where  do  you  reside,  Mr.  Bichmond  ? 

A.  At  Buffalo. 

Q.  What  is  your  business  ? 

A.  Our  business  is  commission  merchants,  handlers  of  grain. 

Q.  Are  you  a member  of  a firm  ? 

A.  I am  of  the  firm  of  J.  M.  Bichmond  & Co. ; we  have  handled 
grain  here  for  a great  many  years. 

By  Senator  Browning  : 

Q.  How  many  years  ? 

A.  I have  been  connected  with  it  since  1866.  It  was  about  eight 
or  ten  years  before  that  my  brother  was  in  the  business ; I was  at 
that  time  in  Chicago. 

By  Senator  Boyd,  resuming  : 

Q.  How  long  have  you  been  in  the  grain  business  altogether  ? 

A.  W ell,  I have  been  for  fifteen  or  sixteen  years. 

Q.  In  what  different  places  ? 

A.  In  Chicago  and  in  Buffalo. 

Q.  How  long  in  Chicago  ? 

A.  I commenced  to  live  in  Chicago  — I left  Syracuse  and  went 
to  Chicago  in  the  fall  of  1856,  and  remained  there  until  1866,  and 
since  that  time  I have  resided  in  Buffalo. 

Q.  Are  you  familiar  with  the  system  of  making  corners  and  deal- 
ing in  futures  ? 

A.  I think  I am.  I have  paid  considerable  attention  to  it  — 
that  is,  I have  thought  of  it  considerably.  I have  never  been  in 
the  business,  but  I know  what  it  is,  from  observing  it  and  the  man- 
ner in  which  it  is  done  by  others. 

Q.  Will  you  state  to  the  committee  what  your  opinions  are  in  re- 
lation to* the  whole  system  of  making  corners  and  dealing  in  futures 


182 


with  respect  to  its  influence  upon  commerce  and  its  influence  upon 
the  public  welfare  ? 

A.  I think  it  is  ajgreat  evil,  and  I have  thought  so  for  many  years. 
As  early  as  1870,  I saw  that  this  system  was  increasing  rapidly  and  I 
was  satisfied  that  it  was  not  an  evil  that  would  cure  itself,  and  I then 
wrote  to  the  secretary  of  the  Chicago  Board  of  Trade,  the  secretary 
of  the  Toledo  Board  of  Trade,  and  the  secretary  of  the  Board  of  Trade 
of  Milwaukee,  also  two  gentlemen  in  the  city  of  New  York,  calling 
their  attention  to  this  system  of  option  trading,  and  saying  that  un- 
less something  was  done  to  break  it  up  that  it  would  destroy  the  le- 
gitimate business;  that  it  made  it  difficult  for  men  who  wanted  to 
do  an  honest  business  and  a legitimate  business,  and  made  it  a great 
deal  easier  if  men  wanted  to  do  this  gambling  business. 

Q.  You  speak  of  option  trading  — is  it  identical  with  this  system 
of  dealing  in  futures  ? 

A.  Yes;  this  system  of  trading  in  futures  commenced  with  the 
system  of  grading  grain.  It  is  not  possible  to  do  it  the  way  that 
we  handle  grain  in  Buffalo,  nor  was  it  possible  for  it  to  be  done  in 
the  city  of  New  York  until  recently,  because’when  a cargo  of  grain 
came  to  Buffalo  it  was  stored  separately  and  sold  by  sample.  But 
in  the  western  cities,  where  the  grain  is  brought  into  the  cities 
by  railroads,  each  railroad  had  connected  with  it  a warehouse,  and 
the  warehousemen  found  that  it  would  be  almost  impossible  for 
them  to  keep  separate  each  car-load  of  grain.  At  an  early  day  the 
warehousemen  commenced  to  grade  the  grain.  There  became  a 
dissatisfaction  with  the  men  who  owned  the  grain  about  it,  and 
claiming  that  if  they  did  not  grade  their  grain  differently,  put  it  up 
higher,  they  would  send  it  to  another  warehouse* — where  there 
were  two  warehouses  on  the  same  track — and  therefore  at  an  early 
day  they  started  this  system  of  grading  the  grain,  appointing  inspect- 
ors to  examine  the  wheat,  and  grade  it,  as  the  Board  of  Trade  de- 
nominated it,  into  what  was  No.  1 wheat,  and  No.  2 wheat,  and  other 
lower  grades.  From  that  time  they  ceased  to  deal  in  grain  and 
dealt  in  receipts  of  grain.  As  the  volume  of  grain  increased  they 
issued  more  receipts  and  made  it  possible  for  them  to  do  a larger 
business.  I called  the  attention  of  the  men  at  one  time  in  writing 
to  them,  although  I did  not  believe  in  it,  T told  them  it  would  be 
better  for  you  to  abolish  your  whole  system  of  inspection  than  to 
keep  this  option  trading  going  on,  but  it  would  be  almost  impossible 
as  long  as  the  grading  svstem  continued  ; and  I called  their  atten- 
tion to  this  thing, which  I was  satisfied  was  an  illegal  business'.  I was 


183 


satisfied  that  it  was  an  illegal  business  for  the  reason  that  it  was,  I 
thought,  contrary  to  honest  dealing,  and  my  opinion  has  been  sus- 
tained by  a recent  decision  ^of  the  Superior  Court  in  Oliicagu,  111., 
which  declares  that  this  option  trading,  or  the  dealing  in  grain  where 
no  grain  is  to  be  delivered,  is  illegal  and  cannot  be  enforced.  I 
simply  called  the  attention  of  these  Boards  of  Trade  to  my  opinion 
and  asking  them  not  to  enforce  option  contracts.  Said  I,  Gentle- 
men, if  you  will  not  enforce  that  system  of  trading  in  future  sales 
when  no  property  is  designed  to  be  delivered,  you  will  make  the 
trade  so  hazardous  that  men  will  not  be  likely  to  go  into  it  — if  you 
do  not  enforce  the  collection  of  these  illegal  trades.”  But  that  they 
would  not  do,  because  as  this  business  increased  more  men  went  into 
it,  and  in  a little  while  the  great  majority  of  men  in  the  trade  were 
in  that  way  of  dealing,  and  it  was  therefore  for  their  interest  to  keep 
up  the  business.  They  try  to  get  men  all  around  the  country  to  do 
it,  because  they  get  a commission  out  of  it — and  the  result  is  that 
to-day  there  is  hardly  a city  in  the  United  States  where  this  option 
trade  is  not  now  going  on. 

Q.  The  system  of  dealing  in  futures  and  options  has  been  charac- 
terized by  witnesses  who  have  given  their  testimony  before  this  com- 
mittee heretofore,  as  gambling — -what  is  your  opinion  about  that? 

A.  That  is  my  opinion  ; I believe  it  is  a gambling  business. 

Q.  What  is  its  effect  upon  the  public  welfare? 

A.  I think  it  is  demoralizing  ; I think  it  has  a tendency  to  drive 
out  a class  of  business  men  that  would  buy  the  property  and  ship  it 
and  do  what  we  call  a legitimate  business,  it  fosters  a class  of  men 
who  are  more  hazardous  and  disposed  to  do  this  gambling  business, 
and  what  we  call  the  solid  business  men  are  out  of  the  business  — 
going  out  of  it. 

Q.  Have  they  been  driven  out  by  this  system  ? 

A.  They  have  been  driven  out  by  this  hazardous  business. 

Q.  Do  you  know  to  what  extent  the  prices  of  bread-stuffs  and 
other  produce  has  been  increased  by  reason  of  the  system  of  op- 
tion dealing  and  dealing  in  futures  ? 

A.  Well,  I never  have  figured  that.  My  attention  has  never 
been  called  to  it,  to  figure  it.  I know  that  a great  many  times  they 
are  at  higher  prices  than  they  would  have  been  if  the  market  had 
taken  a natural  course,  a natural  channel.  I think  they  not  only  af- 
fect the  price  of  grain,  but  are  injurious  to  those  interested  in  the 
shipping  of  grain.  I have  known  these  corners  to  keep  the  'grain 
back  so  that  vessels  would  come  down  without  freight,  and  I know 


184: 


last  year  tliere  was  a time  wlien  boats  came  down  froiri  Cliicairo  t(» 
Buffalo  light,  or  with  but  enough  for  ])a]last. 

Q.  You  mean  that  they  had  not  their  full  cargo? 

A.  They  could  not  get  a cargo  there,  while  at  the  same  time  there 
was  a large  quantity  of  grain  in  <-he  elevators,  held  hack  by  those  who 
run  the  corner. 

By  Senator  Browning  : 

The  grain  was  held  hack  ? 

A.  Yes. 

Q.  On  whom  does  the  burden  of  this  increase  in  price  of  bread- 
stuffs  and  other  produce  fall  ? 

A.  I think  it  falls  on  the  consumer  ; the  poor  men  suffer  the  most. 

Q.  Then  you  have  ho  hesitation  in  asserting  that  the  system  of 
making  corners,  dealing  in  futures  and  options,  increases  the  price 
of  produce  and  hreadstuffs  to  the  consumer  ? 

A,  I think  it  does ; not  only  that,  hut,  I think,  it  makes  all  busi- 
ness more  uncertain  ; for  instance,  a man  that  wishes  to  manufacture 
flour  or  deal  in  provisions,  it  makes  it  very  uncertain  for  them. 

Q.  Then  the  milling  interest  is  injured  by  this  system  ? 

A.  Yery  much. 

Q.  And  of  course  all  laborers  employed  by  t#ie  mills  are  injured  ? 

A . Yes,  sir. 

Q.  By  being  deprived  of  constant  and  steady  employment? 

A.  Well,  mills  may  do  business,  but  they  do  it  very  hazardously 
and  may  do  it  at  a loss ; they  will  probably  have  to  keep  up  the 
price  higher  than  it  should  be  ; I think  not  only  the  milling  interest, 
but  you  take  the  pork  business  and  any  thing  where  it  is  possible  to 
corner  the  market,  it  will  make  prices  higher  than  it  would  be  if  left 
to  follow  the  natural  law  of  supply  and  demand  ; the  man  that  con- 
sumes it  is  the  man  that  it  falls  the  hardest  upon. 

Q.  What  would  usually  fix  the  natural  price  of  produce  ? 

A.  The  law  of  supply  and  demand  should  fix  it ; there  is  a mys- 
terious law  in  trade  that  no  one  can  exactly  saywhat  it  is — but  so  it  is 
— and  if  trade  is  left  to  follow  its  natural  channel  it  will  regulate  itself. 

Q.  And  this  system  of  gambling,  to  which  you  refer,  interferes 
with  the  regulation  of  the  prices  by  the  law  of  supply  and  demand  ? 

A.  It  does;  it  keeps  it  in  an  unnatural  state,  a fluctuating  state,  a 
feverish  state. 

(^.  What  remedy  would  you  propose  or  suggest  for  this  evil  ? 

A.  I tliirdc  that  ])robably  it  can  be  done  by  legislation  and  proba- 
bly the  general  government  ; T think  the  Slate  of  New  York  should 


185 


pass  a law  making  it  illegal  to  deal  in  a man  selling  a thing  that  he 
has  not  got,  particularly  in  grain  — in  the  necessities  of  life  ; a man 
has  no  right  to  sell  any  thing  that  he  lias  not  got ; I have  no  objec- 
tion to  a man  selling  any  thing  that  he  knows  he  can  deliver  ; 1 think, 
as  this  system  of  trading  now  extends  all  over  the  country,  the  gen- 
eral government  should  take  hold  of  it  and  pass  a law  making  it  penal; 

I don’t  think  it  can  be  regulated  unless  you  do  ; it  will  not  regulate 
itself ; it  is  a thing  that  will  keep  growing  ; I saw  it  in  1870  and  I 
see  it  now  ; I am  surprised  to  see  the  growth  of  this  system  ; it  is 
wonderful  ; somehow  or  another  it  fostered  the  love  of  gambling^ 
and  keeps  in  itself  a certain  stratum  of  society,  and  that  is  the  men 
that  have  got  hold  of  this  business. 

Q.  Have  you  any  other  suggestions  that  you  would  like  to  make 
in  reference  to  this  matter  ? 

A.  I do  not  know  that  I have  ; if  you  want  I should  explain  that 
it  is  confined  to  these  places  where  this  grain  comes  in  in  warehouses  ? 

Q.  Any  thing  of  that  kind  that  you  think  would  be  advantageous? 

A.  I say  that  this  system  is  confined  exclusively  to  places  where 
grain  comes  in  by  railroad  and  in  car-load  lots,  and  is  sampled  and 
graded  ; those  are  the  places ; I do  not  know  that  there  is  any  other 
way  but  this  grain  must  be  graded  ; but  I say  in  no  other  part  of 
the  world  is  this  done  as  it  is  done  in  Chicago  and  Milwaukee  and 
Toledo,  and  now  to  some  extent  in  Hew  York,  where  this  grain  is 
warehoused,  as  before  named. 

Q.  Is  it  conducted  in  that  way  in  Hew  York  ? 

A.  Since  they  have  conducted  this  system  of  grading  grain  it  has  ; 
it  comes  from  that  idea  — from  that  system. 

• Q.  Are  you  familiar  with  the  workings  of  the  Produce  Exchange 
in  Hew  York  city  ? 

A.  I am  not. 

Q.  What  effect  has  the  making  of  corners  — the  accumulation  of 
vast  quantities  of  grain,  as  you  have  stated,  upon  the  railroad  in- 
terests ? 

A.  It  is  disastrous  to  all  transportation  interests.  As  I said  be-  ' 
fore,  the  interest  of  all  men  in  society  is  to  let  the  law  of  trade  govern 
itself  — let’  property  move  as  it  naturally  would  without  any  inter- 
ference. Freight  men  that  want  to  do  a legitimate  business  in  trans- 
portation, or  any  other  business,  is  affected  if  it  is  interfered  with. 

Q.  Do  you  know  that  many  of  these  speculators  who  deal  in  fu- 
tures and  corners  and  options  have  become  rich  by  that  business  ? 

A.  Well,  I do  not  know;  there  maybe  some.  My  observation 
21 


186 


around  in  this  section  is  that  many  of  them  have  become  poor;  it  is  a 
gambling  business  and  I think  it  has  been  very  disastrous  to  them.  I 
hear  of  some  men  that  have  made  money  out  of  it,  but  I know  of  a 
great  many  who  liave  lost  by  it ; I think  it  is  very  -disastrous  and 
very  demoralizing. 

Q.  Have  you  a Produce  Exchange  in  Buffalo  ? 

A.  Yes,  sir. 

Q.  W ere  you  ever  an  officer  ? 

A.  I was  at  one  time. 

Q.  When  ? 

A.  In  1877  I was  president  of  the  Board  of  Trade. 

Q.  Who  is  the  president  now  ? 

A.  Mr.  Schoellkopf. 

Q.  What  is  his  business  ? 

A.  He  is  a miller,  and  in  many  other  kinds  of  businesses. 

Q.  What  do  you  sell  on  the  Produce  Exchange  in  Buffalo  ? 

A.  We  sell  grain. 

Q.  AYhat  else  ? ^ 

A.  Just  at  present  it  is  more  confined  to  grain,  and  flour  is  occa- 
sionally sold. 

Q-  Pork? 

A.  Occasionally. 

Q.  Lard. 

A.  Sometimes. 

Q.  Petroleum  ? 

A.  I don’t  think  they  sell  petroleum. 

Q.  At  the  time  that  you  wrote  the  letters^to  Chicago  and  Cleve- 
land, were  you  an  officer  ? 

A.  I might  have  been  one  of  the  directors. 

Q.  Did  you  write  upon  authority,  or  upon  your  own  motion  ? 

A.  My  own  motion. 

Q.  You  thought  that  it-  was  an  evil  that  ought  to  be  brought  to 
the  notice  of  these  people,  and  you  wrote  ? 

A.  Yes,  sir. 

Q.  What  evils  did  you  see  then  ? ' 

A.  I saw  that  the  system  was  growing,  and  saw  that  it  would 
continue  to  grow. 

Q.  When  did  they  begin  grading  grain  ? 

A.  I cannot  remember  definitely ; about  1857,  I should  say. 

C^.  Al)out  foui-  years  ago? 

A.  ft  is  a good  deal  before  that ; I went  to  Chicago  in  the  fall  of 
1856  ; there  was  no  grading  tlien  by  warehouse  ins])CCtors,  but  a few 


187 


years  afterward  it  began.  Then  at  that  time  people  made  up  cargoes 
and  sold  by  samples,  but  a few  years  afterward  they  commenced  the 
system  of  grading. 

Q.  You  have  calls  here  every  day  on  grain  ? 

A.  I think  they  do. 

Q.  How  many  times  ? 

A.  Once  a day,  I think. 

Q.  Are  they  all  recorded  ? 

A.  I think  they  are. 

Q.  What  is^the  percentage  of  legitimate  sales  comparev^  with  the 
number  of  sales  each  day  on  the  floor  ? 

A.  I have  had  very  little  to  do  with  the  business  of  the  Board  of 
Trade  for  several  years. 

Q.  You  cannot  answer  that  question  ? 

A.  I cannot  answer  that  question. 

Q.  Who  is  the  secretary  of  the  Board  of  Traue  now  ? 

A.  William  Thurston. 

Q.  Do  you  know  any  thing  about  the  bucket-shops  in  this  town  g 

A.  I know  that  there  are  such  shops. 

Q.  What  do  they  sell  at  these  bucket-shops  ? 

A.  This  option  grain. 

Q.  You  can  go  in|;o  one  of  these  bucket-shops  and  say,  I want 
to  buy  50,000  bushels  of  grain  to  be  delivered  next  month  ” and 
put  up  a margin  ? 

A.  1 think. so. 

Q.  You  know  that  tnere  are  bucket-shops? 

A*.  Yes,  sir. 

Q.  They  have  been  described  to  you  ? 

A.  Yes,  sir. 

Q.  Do  you  know  any  thing  about  policy-sbops  where  they  sell 
policies  on  lotteries  in  Kentucky  ? 

A.  Yes,  sir,  I have  heard  of  such  things. 

Q.  Are  you  familiar  enough  with  the  bucket-shops  and  policy- 
shops  to  say  that  the}^  are  very  much  alike  ? 

A.  I think  they  are  very  much  the  same  thing;  I have  always 
looked  upon  it  as  a gambling  system. 

Q.  Can  you  tell  us  what  ought  to  be  the  prices  of  grain  and  what 
is  the  price  of  grain  in  consequence  of  the  options  for  future  de- 
livery — in  other  words,  how  much  does  that  option  trade  increase 
the  price  over  its  legitimate  value  ? , 

A.  I do  not  know  as  I could  tell.  But  I made  this  assertion  to 
the  secretary  of  the  Board  of  Trade  of  Toledo,  Chicago  and  Mil- 


188 


wankee  in  1870  — then  the  business  was  small  to  what  it  is  now  — 
then  I figured  that  the  price  was  several  cents  a bushel  higher  than 
it  would  have  been,  than  the  market  would  have  been  if  it  had  been 
allowed  to  regulate  itself  by  the  law  of  supply  and  demand,  so  much 
higher  that  it  made  it  unprofitable  for  a man  to  attempt  to  buy  grain 
in  that  market  and  ship  it.  I have  never  looked  up  exactly  what 
the  difference  vras. 

Q.  You  say  that  this  business  of  speculating  in  grain  is  confined 
to  places  where  there  are  warehouses  ? 

A.  Yes,  sir. 

Q.  Don’t  you  know  that  there  are  bucket-shops  where  they  sell 
the  same  as  they  do  in  this  town,  throughout  the  Union  ? 

A.  They  do  it,  but  tliey  do  it  for  grain  in  Chicago  ; they  do  not 
do  it  here  ; they  don’t  do  it  for  grain  that  is  warehoused  in  Bufialo  j 
they  do  it  for  grain  that  is  warehoused  in  Toledo,  Milwaukee  and 
Chicago,  principally  in  Chicago,  because  that  is  the  great  grain  cen- 
ter. It  is  confined  to  places  wdiere  grain  is  graded  and  receipt 
given  for  it.  The  dealing  is  not  in  grain,  but 'in  receipts  for  grain. 

Q.  It  is  on  the  price  ? 

A.  It  is  on  the  price 

Q.  Ilise  or  fall? 

A.  Uise  or  fall.  • 

Q.  A man  puts  up  his  margin  and  loses  or  wins  according  to  tne 
sales  that  day  or  the  day  previous  ? 

A.  Tes,  sir. 

Q.  These  places  exist  throughout  the  Union  ? 

A.  I was  surprised  to  find  one  in  Washington. 

Q.  That  isn’t  a grain  center  ? 

A,  No,  sir,  and  I was  surprised  to  find  in  Syracuse  two  or  three 
there. 

(^.  They  call  them  bucket-shops  ? 

A.  Yes,  sir. 

Q.  It  is  a' fact  that  these  shops  do  exist  and  receive  margins  to 
pay  the  difference  between  the  rise  and  fall  in  the  value  of  grain  ? 

A.  So  I understand  it. 

Q.  It  occurs  to  me  that  some  of  the  witnesses  stated  that  it  affec- 
ted the  canal  boat  interest,  in  that  they  were  taken  here  occasionally 
and  could  not  get  loads  to  bring  — is  that  a fact? 

A.  Yes,  sir.  I remember  a time  when  we  had  5,000,000  or  6,000- 
000  ]>uRliels  of  grain  held  in  our  warehouses  by  parties  who  held  the 
corner  in  Chicago,  and  of  course  it  was  not  for  sliipinont. 


189 


Q.  What  do  you  know  about  this  Western  Ware-house  associa- 
tion here  in  Buffalo? 

A.  I know  that  there  is  an  elevator  association  that  has  been  here 
for  quite  a number  of  years. 

Q.  Who  is  the  president  ? 

A.  Mr.  Abell. 

Q.  Who  is  the  secretary  ? 

A.  Mr.  P.  G.  Cook,  Jr. 

Q.  Do  they  both  reside  here  ? 

A.  Yes,  sir. 

Q.  Do  you  understand  about  this  bucket-shop  business? 

A.  No,  sir,  I do  not. 

Mr,  Charles  G.  Bru7idige,JhQmg  duly  sworn  and  examined  by 
Senator  Boyd,  testified  as  follows : 

Q.  Where  do  you  reside,  Mr.  Brundige  ? 

A.  In  Buffalo. 

Q.  What  is  your  business  ? 

A.  Commission  shipping  merchant. 

Q.  Are  you  a member  of  any  firm  ? 

A.  Brundige,  Bruce  & Co. 

Q.  Are  you  a member  of  the  Buffalo  Produce  Exchange  ? 

A.  Yes,  sir. 

Q.  How  long  have  you  been  in  the  produce  business  ? 

A.  About  thirty-five  years. 

Q.  Are  you  familiar  with  the  system  of  making  corners  and  deal- 
ing in  futures  and  options  ? 

A.  I am 
dealing. 

Q.  And  by  observation? 

A.  Yes,  sir. 

Q.  Will  you  state  to  the  committee  your  opinion  concerning  the 
whole  system  of  making  corners  and  dealing  in  futures  and  options, 
with  respect  to  its  effect  upon  commerce  and  its  influence  upon  the 
public  welfare  ? 

A. The  whole  system  of  “corners”  and  “options”  I look  upon  as  being 
exceedingly  injurious  to  the  commercial  interests  of  the  community,  * 
and  it  is  not  confined  merely  to  these  articles  which  are  usually  dealt 
with ; it  affects  every  branch  of  trade,  in  my  opinion,  because  it  un- 
settles values,  particularly  in  grain,  and  embarrasses  very  much 
legitimate  trading  ; by  legitimateTrading  I mean  the  baying  and  sell- 
ing to  meet  an  actual  Avant  for  consumption  ; and  its  influence 
in  the  community  as  to  the  morality  of  the  thing,  I think  it  is  exceed- 
ingly  pernicious  and  is  growing  more  and  more  so  ; for  instance^ 


partially,  mostly  Ay  information  ! rather  than  by  actual 


190 


clerks  in  the  stores,  in  the  dry  goods  stores,  if  tliey  can  accninidate 
a few  dollars  to  put  up  for  a margin  they  put  it  up  on  one  of  these 
deals;  when  they  lose  their  money,  as  they  usually  do,  they  want 
to  find  it  where  they  lost  it,  and  they  often  fall  into  crime  in  order 
to  supply  their  passion  for  this  gambling. 

Q.  Then  you  have  no  hesitation  in  designating  this  nsa  system  of 
gambling  ? 

A.  Purely  so  ; that  is  my  opinion  in  general  upon  the  matter. 

Q.  What  is  its  effect  upon  the  transportation  irjterests  of  the 
country  ? , 

A.  My  opinion  is  that  it  has  a deleterious  influence  upon  that,  in 
that  it  deranges  the  current  of  transporation,  sometimes  depressing 
and  sometimes  increasing  the  rates.  In  order  to  meet  the  requirements 
of  these  corners  grain  is  sometimes  held  back  so  that,  for  instance,  in 
regard  to  the  canal  boats,  they  come  here  and  wait  for  a long  time 
to  get  loads,  and  frequently  accept  very  low  rates  rather  than  to  lie 
idle  ; and  sometimes  in  obedience  to  the  behests  'of  those  who  hold 
a considerable  quantity,  it  goes  up, 

Q.  It  interrupts  the  legitimate  industries  connected  wdth  the 
transportation  interests  ? 

A.  Yes,  sir. 

Q.  What  effect  has  it  upon  the  prices  of  necessaries  of  life? 

A.  The  general  tendency  is  to  increase  them  ; to  illustrate  — 
w^e  look  to  what  is  called  the  supply  and  demand  to  regulate  the 
price  of  grain.  When  these  corners  are  being  run,  of  course  they 
will  not  ship  it  to  meet  the  requirements  of  grain  in  other  places. 
They  hold  ^ back  for  their  own,  purposes.  I am  accustomed  to  re- 
ceive cargoes  to  sell  on  commission,  but  wdien  these  corners  are 
running  no  one  will  sell  on  commission,  because  of  the  danger  of 
loss.  If  I want  grain  to  supply  those  who  are  accustomed  to  come 
to  me  to  purchase  for  their  consumption  I am  compelled  to  buy, 
and  if  I buy  in  Chicago,  I buy  at  a great  risk  of  losing,  and  the  re- 
sult is  that  I think  grain  is  several  cents  a bushel  higher  in  Buffalo 
than  it  would  be  if  it  were  not  for  these  corners  — that  is,  when 
the  corners  are  existing. 

Q.  Do  option  speculations  and  dealing  in  futures  tend  to  in- 
crease the  price  of  breadstuff’s  ? 

A.  Yes,  sir,  I think  they  do.  It  takes  the  price  out  of  the  rela- 
tion of  supply  and  demand. 

Q.  Upon  whom  does  this  increase  in  price  fall? 

A.  Ultimately  upon  the  consumer. 


191 


Q.  Does  the  producer  derive  any  benefit  from  these  speculations  ? 

A.  I shouldn’t  think  they  did  in  the  long  run.  Sometimes  they 
lose  and  sometimes  they  make  on  it,  but  I should  think  that  the 
producer  gets  a higher  price  than  he  would  if  it  were  not  for  the 
option  deals.  Very  likely  if  a farmer  gets  his  grain  in  Illinois  when 
they  are  running  the  price  up  very  high,  he  gets  more.  The  prices 
on  the  produce  board  in  Chicago  are  mostly  fictitious. 

Q.  When  they  let  the  accumulated  mass  of  grain  go  into  the  mar- 
ket it  has  a tendency  to  depress  the  prices  ? 

A.  Yes,  sir;  below  its  normal  rate. 

Q.  Then  the  producer,  if  he  takes  his  grain  to  market,  cannot 
get  as  good  prices  for  his  grain  as  if  there  was  no  interruption  in 
this  way '?  ^ 

A.  No,  sir. 

Q.  So  that  in  that  way  the  producer  is  sometimes  made  to  suffer 
as  well  as  the  consumer  ? 

A.  Yes,  sir. 

Q.  To  what  necessaries  of  life  does  this  system  of  dealing  in  op- 
tions and  futures  and  making  of  corners  extend  ? 

A.  Mainly  to  the  wheat,  corn,  oats,  pork  and  lard,  those  are  the 
principal  articles  that  are  dealt  in  in  these  places. 

Q.  There  is  nothing  to  prevent  it  extending  to  other  products  ? 

A.  No,  sir ; any  product  that  has  an  established  grade  can  be 
brought  under  this  system. 

Q.  What  remedy  for  the  evils  which  result  from  this  system  of 
speculation  would  you  suggest  ? 

A.  That  is  a problem  that  I have  not  been  able  to  solve  to  my 
own  satisfaction.  If  laws  could  be  enforced  with  any  degree  of  cer- 
tainty, they  might  be  suppressed  by  legal  enactment,  but  there  are 
so  many  ways  of  avoiding  any  law,  that  I see  nothing  but  the  ele- 
vation of  the  tone  of  public  sentiment. 

Q.  Would  it  not  be  possible  to  enact  a law  forbidding  the  sale  by 
persons  of  produce  not  in  their  actual  possession,  or  which  they  do 
not  own  ? 

A.  That  would  cut  off  the  selling  of  actual  grain  by  commission 
men.  We  sell  grain  that  is  not  in  our  possession,  but  is  promised 
to  us  by  our  correspondents.  , 

Q.  Could  not  an  exception  be  made  in  that  direction  ? 

A.  It  might  be,  but  that  exception  would  leave  a loop-hole 
through  which  all  trades  might  pass. 


192 


By  Senator  Browning  : 

Q.  Is  that  your  opinion  ? 

A.  That  is  my  opinion,  yes,  sir. 

Q.  Could  not  a law  be  passed  that  where  there  is  assurance  of  deliv- 
ery that  could  be  excepted,  for  instance,  by  a bill  of  lading — do  yon 
think  that  would  leave  a loo]i-hole? 

A.  They  can  crawl  through  a pretty  small  hole. 

Q.  Do  you  think  that  a heavy  tax  on  all  sales  for  future  delivery 
would  have  a tendency  to  check  that  system  of  trading  ? 

A.  No,  sir,  I do  not, 

Q.  You  think  they  would  pay  the  tax  ? 

A.  I think  they  would  pay  the  tax;  just  as  a man  will  impose  a 
heavy  fee  for  license,  people  will  drink ; unless  you  can  elevate  the 
moral  sentiment  of  the  people  above  gambling  in  grain,  you  cannot 
suppress  it,  in  my  opinion;  if  you  propose  a tax  they  will  pay  the 
tax  and  the  cost  will  ultimately  come  upon  the  consumer ; the  fact 
is  that  the  whole  community  is  corrupted  by  this  system  ; it  extends 
to  all  classes  and  ages  and  sexes. 

Q.  That  is  a pretty  grave  charge,  Mr.  Brundige  ? 

A.  I know  it  is,  but  it  is  true. 

Q.  You  may  pass  a law  forbidding  it  ? 

A.  Forbidding  the  dealing  in  options  on  the  regular  Produce 
Exchanges  by  calls  — by  call  board  on  the  Produce  Exchanges  ; but 
then  you  would  drive  the  same  dealing  into  the  bucket-shops. 

Q.  blow  long  have  you  had  a call  board  ? 

A.  I do  not  know  ; we  have  had  a call  board  here  for  about  four 
years. 

Q.  How  did  you  get  along  before  that  ? 

A.  We  have  dealt  in  that  way  for  about  twelve  years  ; offices  in 
Chicago  have  had  their  agents  here,  and  the  man  that  wanted  to 
deal  in  this  would  step  in  and  tell  him  to  buy  so  much  grain  on 
such  a margin  ; the  agf^nt  would  telegraph  right  up,  and  he  would 
put  up  his  margin  with  the  man  here,  and  then  when  he  chose  to 
sell  he  would  step  in  and  say,  “ Sell  my  grain ;”  it  is  done  in  that 
wa}^  now. 

(F  I would  like  to  have  you  explain  the  call  board  system  ? 

A.  It  is  this  : tliose  who  run  the  call  board — the  members  of  the 
Excliange  — will  assemble  at  the  ])lace  designated  and  the  auction- 
eer will  take  his  stand,  with  secretaries  near  by  to  record  all  these 
tilings,  and  he  says,  for  instance,  “ January  corn,”  and  one  or  more 


193 


will  say,  ‘‘  I offer  so  many  biisliels  of  January  corn  at  such  a price,” 
and  if  it  is  not  immediately  taken  he  always  lowers  his  price,  and  if 
he  chooses,  he  lowers  it  still  more,  until  he  gets  a call,  and  somebody 
takes  it  and  it  is  sold ; then  he  would  offer  it  for  more,  may  be. 

Q.  The  man  who  says  he  will  take  this  call  in  January,  he  has 
the  privilege  of  calling  upon  the  person  of  whom  he  bought  it  for 
delivery  in  January  ? 

A.  Yes,  sir.  » 

Q.  Do  you  understand  the  bucket-shop  system  ? 

A.  I do  not. 

Q.  Have  you  heard  of  them  ? 

A.  I have  heard  of  them ; I have  been  through  them  in  Chicago, 
but  just  merely  to  walk  through  ; I have  been  in  what  they  called  a 
bucket-shop  — a huge  blackboard  stretched  across  the  room  — on 
which  the  prices  are  set  down. 

Q.  A good  deal  like  a stock  board  ? 

A.  Ho,  sir;  they  have  chairs  there,  and  put  up,  say  $5. 

Q.  Bet  their  money  ? 

A.  Bet  their  money. 

Q.  As  the  prices  change  on  the  board  the  money  changes  hands  ? 

A.  Ho,  sir  ; they  get  their  prices  from  the  Exchange  near  by. 

Q.  Have  they  any  of  these  bucket-shops  in  Buffalo  ? 

A.  I do  not  know. 

Q.  Or  in  Hew  York  ? 

A.  I do  not  know. 

Q.  Or  in  any  other  city  in  the  State  of  Hew  York  ? 

A.  Ho,  sir  ; I know  that  options  are  dealt  in  everywhere,  in  the 
villages  and  everywhere. 

Q.  In  the  villages  ? 

A.  Yes,  sir,  I presume  wherever  there  is  a telegraph  station,  there 
is  somebody  dealing  in  it.  I was  in  a neighboring  village  a few  days 
ago,  and  found  that  some  of  the  village  worthies,  as  I call  them, 
were  engaged  in  this  same  trade ; I also  heard  of  a farmer  in  the 
vicinity  who  was  obliged  to  mortgage  his  farm  in  order  to  make  up 
his  losses  on  his  futures. 

Q.  Do  you  not  believe  it  would  be  Y-^ossible  to  have  a law  passed 
to  break  up  the  system  of  bucket-shops  altogether  ? 

A.  A law  could  be  passed  to  break  them  up  openly,  but  then  they 
Avoiild  exist  in  private,  just  as  gambling  dens  are  existing  everywhere. 

Q.  However,  it  is  the  duty  of  the  law-making  pov/er  to  discharge 
all  its  duty  in  endeavoring  to  suppress  this  thing,  is  it  not  ? 

25 


194 


A,  That  is  the  duty  of  tlie  law-making  power,  to  be  sure. 

Q.  It  is  the  duty  of  every  State  to  see  tliatyou  have  a good  Execu- 
tive to  enforce  the  laws? 

A.  That  is  so,  but  it  is  hard  to  get  that  kind  of  a man. 

Q.  Then  it  is  the  fault  of  the  people  ? 

A.  That  is  so.  “ 

Q.  Is  there  any  thing  else  in  relation  to  this  matter  that  as  a good 
citizen  you  desire  to  state?  % 

A.  I have  a desire  that  the  whole  thing  might  be  suppressed,  for 
it  is  demoralizing  on  legitimate  trade. 

Q.  And  it  is  continuing  to  grow  ? 

A.  It  is  increasing  ; it  is  dangerous  now  for  a man  to  buy  the  grain 
itself  with  llie  idea  — for  instance,  here  is  a merchant  who  is  dealing 
in  grain.  It  is  difficult  for  him  to  supply  his  customers  because  of 
the  manipulations  of  these  corner  men.  It  takes  it  out  of  his  power 
to  deal  intelligently  ; he  is  at  the  beck  of  a lot  of  gamblers.  If  a 
man  wishes  to  deal  in  grain  he  will  take  an  option  call  that  he  can 
gee  rid  of  in  a moment,  rather  than  take  a cargo  of  grain  that  may 
take  him  some  time  to  get  it  where  he  can  control  it,  and  submit  to  a 
loss.  He  knows  when  he  buys  his  grain  that  he  is  not  buying  it  with 
the  expectation  that  the  natural  law  will  prevail  ; he  takes  his 
chances  on  the  doings  of  gamblers,  as  I call  them. 

Q.  What  do  ^mu  suppose  will  be  the  ultimate  result  of  this  thing 
if  it  is  permitted  to  continue  ? 

A.  I think  it  will  create  a public  sentiment  that  will  bring  about 
this  reform. 

Q.  What  effect  would  it  ultimately  have  upon  the  consumers  of 
products,  if  it  continues  to  increase  in  the  way  you  have  just  re- 
ferred to? 

A.  To  be  sure,  they  must  submit  to  paying  higher  prices  than 
they  otherwise  would. 

Q.  You  think  these  prices  will  continue  to  increase  until  the  con- 
sumers will  be  aroused  ? 

A.  Ho,  sir,  I do  not  think  it  can  be  carried  to  that  extent.  The 
demoralizing  influence  of  this  trade  in  unsettling  and  destroying  the 
number  of  our  young  men  that  are  engaged  in  business,  clerks  and 
men  just  commencing  in  business,  and  its  demoralizing  influence 
through  households  will  be  so  great  that  they  will  say  that  this  thing 
must  be  stopped.  It  will  not  l)e  through  the  burdens  that  the  con- 
sumer bears  in  conse(|uence  of  the  higher  prices,  but  will  be  through 
the  moral  inlluence  which  it  will  have  through  the  community. 


195 


Q.  According  to  your  opinion,  tlien,  if  this  state  of  things  con- 
tinues, the  legitimate  business  interests  of  those  who  are  engaged  in 
dealing  in  grain  and  other  products  will  be  totally  ruined  ? 

A.  'No,  sir,  not  totall}^  ruined,  but  they  will  be  subject  to  great 
embarrassments,  and  those  embarrassments  will  create  a higher  price 
to  the  consumer. 

Q.  But  you  say  that  at  present  you  have  no  opinion  to  offer  in  re- 
lation to  any  action  that  should  be  taken  by  the  Legislature  with  a 
view  to  remedy  these  evils  ? 

By  Mr.  Browning  : 

Q.  As  I understand  Mr.  Brundige,  he  recommends  the  abolish- 
ing of  calls  and  the  closing  of  bucket-shops? 

A.  Yes,  sir  ; it  would  have  a tendency  to  check  it,  but  what  is 
now  done  in  public  would  then  be  carried  on  in  private,  it  would 
have  about  the  same  effect  as  the  laws  against  gambling. 

Q.  Do  you  know  that  many  people  have  become  rich  in  this  busi- 
ness? 

A.  My  acquaintances  who  have  dealt  in  this  business  will  gener- 
ally confess  that  they  are  out  of  pocket,  and  I hear  of  people  mak- 
ing largely  by  it,  but  like  all  gamblers,  if  they  keep  on  they  may 
ultimately  be  out  of  pocket. 

Q.  How  about  the  bucket-shops,  do  they  get  rich  out  of  it  ? 

A.  I do  not  know. 

Q.  The  whole  effect  is  that  it  impoverishes  the  many  to  make  rich 
the  few  ? 

A.  Yes,  sir ; if  they  are  careful  and  require  ample  margins  and 
these  margins  to  be  kept  up,  they  are  the  ones  that  make  the  money  • 
and  I think  the  dealers  as  a class  are  the  losers. 

Kecess  until  3 o’  clock  p.  m . 


Proceedings  of  3 o’clock  p.  m. 

M.  F.  Bensley  sworn  as  assistant  stenographer. 

II.  M.  Kinne,  sworn  and  examined  by  Mr.  Boyd,  testified  as  fol- 
lows : 

Q.  Where  do  you  reside  ? 

A.  In  Buffalo. 


196 


Q.  What  is  your  business  ? 

A.  Grain  and  lake  business. 

Q.  Are  you  a member  of  any  firm  ? 

A.  Yes,  sir. 

Q.  A¥hat  is  the  name  of  the  firm  of  which  you  are  a member? 

A,  Kiiine,  Wilbur  & Company. 

Q.  Do  you  do  business  in  Buffalo  ? 

A.  Yes,  sir. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  Forty  years. 

Q.  What  does  your  business  consist  of  ? 

A.  Commissions,  handling  property  for  shipment,  and  of  course 
more  or  less  buying. 

Q.  Are  you  familiar  with  the  system  of  making  corners  and  deal- 
ing in  futures  ? 

A.  I know  of  them,  and  I know  their  ways. 

Q.  Have  you  ever  been  engaged  in  that  business  yourself  ? 

A.  Ho,  sir. 

Q.  State  to  the  committee  the  system  by  which  these  corners  are 
gotten  up  ? 

A.  It  is  an  organized  party,  an  organized  party  that  get  together 
as  we  are  in  this  room  and  go  on  and  make  arrangements  that  they 
get  in  this  corner  all  the  property  they  can  and  squeeze  everybody 
out  of  all  the  money  they  can  get  hold  of  and  pocket  it. 

Q.  How  do  they  go  about  their  work  in  making  these  corners  ? 

A.  It  is  exactly  like  forming  any  other  corporation  ; as  I said  be- 
fore a half  a dozen  gentlemen  get  together,  men  of  wealth  and 
power,  they  get  together  and  make  a certain  scheme  and  make  use 
of  that  scheme  in  a way  to  make  a great  deal  of  money  out  of  these 
various  operations,  generally  a corner  of  that  kind,  a party  of  gen- 
tlemen get  together,  it  is  left  to  one  party,  sometimes  two,  to  engi- 
neer and  run  this  pool,  as  they  call  it,  and  then  they  buy  and  con- 
trol this  property  ; it  is  not  left  to  all  but^generally  to  one  man,  one 
or  two,  and  it  is  understood  generally  that  this  man  that  is  dealing 
the  pool  don’t  tell  anybody  what  he  is  doing,  don’t  tell  them  ; that 
is  wliat  is  called  a blind  pool.  A pool  corner  is  a pool  got  up  by 
certain  individuals,  half  a dozen  men,  you  may  say  it  is  in  pork, 
lard  or  any  one  thing,  it  is  generally  one  article  ; they  put  in  so 
much  money  and  it  is  left  generally  in  the  hands  of  one  man,  they 
select  one  man  to  operate  and  run  this  pool,  and  sometimes  these 
men  slash  onto  the  market  a large  amount  of  property  and  break  it 


197 


so  as  to  get  things  lower  and  squeeze  the  outsiders  ; I cannot  explain 
it  any  other  way  than  it  is  a general  combination  of  men  to  rob  the 
public  and  rob  the  people,  and  they  say  it  is  legitimate;  the  busi- 
ness used  to  be  a good  business  here,  now  it  is  not  worth  any  thing  at 
all ; most  everybody  that  was  in  it  has  been  broke,  for  the  reason  of 
this  selling  ^hort;  there  is  just  one  concern  in  Chicago  that  can  con- 
trol the  whole  business. 

Q.  Will  you  explain  what  is  meant  by  dealing  in  futures  ? 

A.  Yes,  sir  ; a man  sells  ten  or  twenty  thousand  bushels  of  grain, 
or  of  any  kind  of  these  articles,  he  sells  for  future  delivery  and  there 
is  no  property  delivered,  no  property  passes  hands.  On  the  first  of 
January  you  can  buy  property  in  Chicago,  all  you  want  for  the  year, 
and  that  gives  them  twelve  months  to  deliver  that  property,  and 
you  can  sell  it  again  at  any  time  if  you  see  fit  to,  that  is  if  the 
market  raises  so  you  can  make  a profit  and  sometimes  they  are  glad 
to  get  out  of  it  at  a loss.  There  is  no  property  delivered  or  passes 
hands,  it  is  merely  wind. 

By  Mr.  Browning  : 

Q.  On  the  day  of  settlement  they  pay  the  difference  to  the  pur- 
chaser 

A.  Yes,  sir. 

Q.  If  there  is  any  coming  to  him  ? 

A.  Yes,  sir. 

Q.  If  not  he  is  the  loser  ? 

A.  Certainly. 

By  Mr.  Boyd  : 

Q.  Is  the  word  option  ” applied  to  this  system  ? 

A.  Yes,  sir;  the  option  is  for  futures.  You  may  telegraph  to 
Chicago  to-day  and  buy  a December  option  of  wheat,  or  corn,  and 
they  will  buy  it  for  you  and  you  can  hold  it  as  long  as  you  choose. 
If  they  buy  a December  option  for  you  the  party  selling  it  can  de- 
liver it  to  you  in  one  day,  or  he  can  do  it  on  the  second  of  Decem- 
ber, or  third  or  fourth,  or  at  any  time,  and  make  the  settlement  with 
you. 

Q.  Are  there  any  places  in  the  city  of  Buffalo  where  dealing  in 
futures  or  options  is  carried  on  ? 

A.  There  is  the  Board  of  Trade  of  Buffalo  profess  to.  They 
have  opened  a call  board,  but  the  trading  in  Buffalo  is  mere  noth- 
ing; it  don’t  amount  to  any  thing.  The  trading  in  ISTew  York  five 


198 


years  ago  did  not  amount  to  any  tiling,  and  now  it  is  the  great  trade 
of  'New  York,  and  just  so  with  Chicago,  but  I don’t  think  tlie  trad- 
ing in  Buffalo  amounts  to  any  thing,  it  amounts  to  mere  nothing. 

Q.  How  long  is  it  since  the  system  was  introduced  in  Buffalo? 

A.  I should  say  not  over  three  or  four  years  ; to  the  outside  not 
over  five.  I don’t  know  but  Mr.  Hazard  recollects  about  it,  he  was 
in  the  business  a long  time.  It  was  not  over  four  years. 

Q.  Does  it  seem  to  be  on  the  increase  ? 

A.  I want  to  say  about  that  Buffalo  Board  of  Trade,  it  don’t 
amount  to  any  thing  ; there  is  very  little  trading  on  the  Board  of 
Trade. 

Q.  In  addition  to  the  Board  of  Trade  I understand  you  have  cer- 
tain institutions  called  bucket-shops? 

A.  There  are  some,  of  course ; may  be  one  or  two.  I suppose 
by  that  you  mean  they  are  small  institutions  ; that  is  by  a bucket- 
shop  you  mean  it  is  a small  way  of  doing  business,  or  a place  where 
they  do  business  on  a small  scale  ; there  is  the  Trade  room  in  Chi- 
cago, what  they  call  a bucket-shop  there,  and  there  they  sell  five 
hundred  bushels  of  wheat  and  buy  it  for  five  dollars,  that  is  a small 
way  from  the  regular  Board  of  Trade.  There  is  no  trade  made  in 
the  regular  Board  of  Trade  in  Chicago  less  than  five  thousand  bush- 
els, and  in  a regular  bucket-shop  they  can  buy  or  sell  five  hundred. 

Q.  A bucket-shop  is  a small  board  of  trade  on  a small  scale  ? 

A.  Yes,  sir;  not  connected  with  the  Board  of  Trade. 

By  Mr.  Browning  : 

Q.  At  one  place  you  can  lose  a million  dollars  and  at  the  other 
place  you  can  lose  five  dollars  ? 

A.  Yes,  sir  ; in  a bucket-shop  they  keep  a blackboard  and  you  go 
in  and  tell  them  you  will  take  five  dollars’  worth  of  wheat,  or  you 
can  buy  more  if  you  wish  to. 

Q.  These  transactions  in  the  bucket-shops  are  made  with  the 
owners  of  the  institution  ? 

A.  Yes,  sir ; very  much  so  ; some  of  them  have  put  themselves  in 
the  shape  of  a bank,  issue  checks,  and  an  operator  can  settle  every 
minute,  if  he  chooses  to  — settle  the  differences  every  minute ; m the 
regular  Board  of  Trade  room  they  don’t  recognize  any  trade  less  than 
five  thousand  bushels  ; it  is  nothing  but  gambling;  it  is  just  on  the 
same  ])rinci])le,  or  the  same  system,  as  the  French  pools  on  horse-races= 

Q.  The  (leal  is  entirely  made  between  the  speculators  and  the 
proprietors  of  the  place  ? 


19D 


A.  YeSj  sir  ; the  proprietor  gets  a percentage  of  one-eighth  or  a 
quarter  both  ways. 

Q.  Do  you  know  of  the  existence  of  any  such  institutions  in  the 
city  of  New  York  ? 

A.  I don’t  know  of  any  bucket-shops  there,  but  the  trading  there, 
I think,  is  generally  on  the  Board  of  Trade  ; that  is  my  impression  ; 
there  may  be  one  or  two  bucket-shops  here,  but  I don’t  know  whether 
they  are  exactly  upon  the  same  principle  or  not,  but  pretty  much  so, 
as  I understand  it ; I don’t  know  as  there  is  any  bucket-shops  here  of 
rny  own  knowledge  ; in  Chicago  you  will  find  in  the  bucket-shop  the 
regular  board  and  on  the  curb  five  thousand  able-bodied  men,  there 
figuring  to  buy  and  sell,  and  to  rob  or  ruin,  or  do  something ; there 
is  five  thousand  men  within  a circuit  of  five  hundred  feet,  that  is, 
including  the  Board  of  Trade,  the  open  board,  and  the  bucket-shop 
and  the  curb,  trying  to  rob  or  ruin  somebody. 

Q.  It  has  been  suggested  to  me  to  ask  you  if  you  don’t  know  of 
your  own  knowledge  that  the  men  who  patronize  the  bucket-shops  in 
Chicago  are  men  chiefly  who  have  been  broken  down  by  their 
adyentures  in  the  Board  of  Trade  ? ~ 

A.  I know  that  to  be  so. 

Q.  You  have  no  hesitancy,  I suppose,  in  characterizing  these 
speculations  as  gambling  ? 

A.  I have  not  the  least,  sir. 

Q.  What  is  your  opinion  in  reference  to  the  effect  of  this  system 
of  making  corners  and  dealing  in  futures  upon  the  commerce  of  the 
country  and  the  public  welfare  ? 

A.  I consider  it  injurious  to  all  legitimate  business,  entirely  so. 

Q.  In  what  way  does  it  affect  the  legitimate  business  ? 

Ac  In  various  ways  ; it  is  difficult  to  tell  the  details  of  all  these 
effects.  But  for  instance  a miller  buys  his  wheat  to  stock  up  for  the 
winter,  and  when  he  buys  his  wheat  he  pays  a fair  price,  and  the 
first  thing  he  knows  there  is  a lot  of  bears  comes  in’and  jumps  on  to 
the  market  and  knocks  it  down  fifteen  or  twenty  cents,  and  a man 
don’t  know  whether  he  is  afoot  or  horseback.  We  never  pretended 
to  sell  any  thing  without  we  had  it  to  sell  and  to  furnish,  and  since 
I have  been  here  I have  handled  a great  deal  of  grain,  and  if  a ves- 
sel came  in  I would  sell  it,  but  if  didn’t  come  in  I would  not  sell. 
We  didn’t  think  of  selling  any  thing  unless  we  had  it  to  sell. 

By  Mr.  Browning  : 

Q.  You  say  you  are  in  the  lake  business? 


2U0 


A.  I am  not  in  tlie  transportation  business. 

Q.  Yon  brin^  grain  from  the  north-west  down  to  Buffalo? 

A.  Yes,  sir. 

Q.  Upon  the  lake  ? 

A.  Yes,  sir. 

Q.  IIosv  do  yon  get  it  east,  by  canal  and  railroad  ? 

A.  Yes,  sir  ; as  directed. 

Q.  Do  yon  ever  find  grain  held  back  there  so  you  cannot  bring  it 
forward  ? 

A.  Yes,  sir;  a great  deal  of  it.  For  instance  a year  ago  to-day^  1 
will  speak  from  the  best  information  I have  now,  that  there  was  in 
Chicago  six  millions  — fifteen  millions  of  bushels  of  grain  in  Chi- 
cago a year  ago  to-day,  from  twelve  to  fifteen  million  bushels,  and 
a good  deal  of  it  was  held  by  pools,  which  laid  there  and  didn’t  come 
this  way. 

By  Mr.  Boyd  : 

Q.  How  did  that  affect  the  transportation  interests  ? 

A.  That  affected  the  transportation  interests  very  seriously. 
There  was  plenty  of  grain  but  they  didn’t  want  to  send  it  down 
here,  because  they  were  carrying  it  there. 

By  Mr.  Browning  : 

Q.  Were  the  boats  lying  idle  ? 

A.  Yes,  sir ; canal  freights  to-day  are  lower  than  I ever  knew 
them  in  my  life  at  this  season  of  the  year;  we  are  shipping  wheat 
to  day. at  five  and  three-fourths.  I have  known  it  to  be  fifteen 
cents  a bushel  since  I have  been  in  the  business  for  transportation  of 
wheat  from  here  to  Hew  York,  and  have  seen  wheat  shipped  at  three 
and  five-eighths. 

Q.  What  does  it  cost  you  to  ship  by  the  canal  boats  ? 

A.  Five  and  three-quarters. 

Q.  What  does  it  cost  to  ship  by  the  railroads? 

A.  About  seven  and  one-half  for  wheat. 

Q.  On  a bushel? 

A.  Yes,  sir. 

Q.  What  is  the  influence  of  all  this  system  of  speculation  upon 
commerce  generally  ? 

A.  Well,  so  far  as  regards  that,  T think  it  is  very  detrimental ; this 
o[)tion  trading  1 think  is  very  detrimental  to  the  whole  business  of 
the  country;  that  is  my  feeling  about  it. 

Do  you  know  of  any  ])articular  instances  where  disastrous 
results  have  been  caused  by  this  system? 

A.  You  can  say  so  far  as  that  is  concerned  that  there  is  one 


201 


thousand  men  that  has  been  ruined  by  it,  but  of  course  you  say  on 
the  otlier  hand  that  these  }3eople  put  their  lingers  in  the  tire  and  got 
them  burnt  ; they  have  no  need  to  have  done  so.  You  can  sum  it 
all  up,  it  is  nothing  more  than  gambling.  Hainan  goes  to  Chicago 
to-day  with  one  thousand  dollars  in  his  pocket  and  spends  it  on  the 
Board  of  Trade,  it  is  just  the  same  as  though  he  lost  it  at  a faro-bank, 
it  is  one  and  the  same  thing,  that  is  my  opinion  ; there  is  no  differ- 
ence. You  will  find  farmers  on  the  Board  of  Trade  at  Chicago, 
lots  and  lots  of  them,  from  the  country,  and  they  are  there  speculat- 
ing on  the  Board.  You  may  trace  back  the  failures  of  this  country 
and  I will  guaranty  if  you  can  get  at  the  facts  about  it  that  three- 
quarters  of  them  can  be  traced  right  back  to  Wall  street  of  Hew 
York,  or  the  Boards  of  Trade,  I have  no  doubt  about  it. 

Q.  Among  the  Boards  of  Trade  you  enumerated  the  Produce 
Exchange  of  New  York? 

A.  Yes,  sir.  A man  might  consider  it  a legitimate  business,  he 
may  go  into  the  mercantile  business  and  follow  it  right  along,  he  is 
bound  to  get  rich  in  twenty  or  twenty-five  years,  and  the  minute 
he  steps  one  step  and  goes  to  speculating,  he  goes  to  the  devil,  and 
three-quarters  of  them  will  be  traced  to  speculating  in  stocks. 

Q.  What  effect  has  that  upon  the  legitimate  price  of  breadstuffs 
and  the  necessaries  of  life  ? 

A.  It  has  greatly  been  increased ; there  was  a case  here  in 
July,  they  finally  settled  on  wheat  at  $1.35  a bushel  when  the 
value  of  the  wheat  was  about  $1.05  or  $1.10,  which  made  a differ- 
ence of  about  $1.50  for  a barrel  of  flour.  They  have  carried  this 
into  the  courts,  and  the  Board  of  Trade  is  a powerful  Board  in  Chi- 
cago, and  they  have  more  or  less  control  over  the  courts,  and  the 
courts  have  allowed  them  to  rule. 

Q.  How  much  has  the  price  of  flour  or  wheat  been  increased  by 
these  speculations  to  your  knowledge,  in  any  particular  instance  ? 

A.  I don’t  know  that  I can  specify  any  particular  instance,  except 
generally  that  the  increase  of  flour,  of  course,  was  ruled  by  the  price 
of  wheat  more  or  less.  When  the  market  goes  up  wheat  is  higli 
and  the  millers  have  got  to  have  better  prices  for  their  flour ; some- 
times wheat  goes  so  high  they  cannot  buy  it  at  all.  I think  the  millers 
are  opposed  to  this  option  trading,  I think  they  would  be  opposed  to 
it  generally,  that  is  my  idea  of  it. 

Q.  You  know,  do  you,  that  the  price  of  breadstufifs  has  been  in- 
creased by  these  speculations  ? 


26 


202 


I 


A.  Y es,  sir,  largely  ; these  things  occur  a number  of  times  a year. 

Q.  On  whom  does  the  burden  of  this  increase  fall  ? 

A On  the  consumers,  as  a matter  of  course, 

Q.  Do  you  believe  the  producer  derives  any  part  of  that  in- 
crease ? 

A.  In  a measure  he  does,  because  if  he  lias  got  any  wheat  on  hand 
he  is  obliged  to  take  it  in  the  corners,  and  on  the  other  hand  when 
they  go  in  for  depression  then  it  affects  the  agricultural  interests. 

Q.  It  disorganizes  even  agricultural  interests  ? 

A.  Yes,  sir,  and  I have  my  doubts  whether  any  law  could  be 
passed  to  reach  this  evil. 

By  Mr.  Browning  : 

Q.  Do  you  think  by  stopping  the  so-called  bucket-shops  would 
have  a tendency  to  stop  it  ? 

A.  If  that  could  be  done  I think  it  would. 

Q.  Can  you  suggest  any  thing  else  ? 

A.  I don’t  know  as  I can,  you  get  my  views  generally.  I will  say 
as  I said  before  that  in  speculating  in  grain  the  way  it  is  managed 
now  is  gambling  ; they  claim  it  is  not,  but  I think  it  is,  I don’t  see 
any  other  way  for  it. 

By  Mr.  Boyd  : 

Q.  You  think  the  system  is  on  the  increase  ? 

A.  Entirely  so  ; I don’t  think  it  is  over  four  years  that  there  was 
nothing  of  this  kind  in  New  York,  and  when  the  Buffalo  Board  of 
Trade  tried  it  it  didn’t  amount  to  any  thing.  Formerly  all  of  our 
business  was  buying  cargoes  as  they  arrived,  and  naming  the  vessels 
and  naming  the  property  itself.  We  didn’t  feel  for  a minute  that 
we  had  any  right  to  sell  any  property  unless  we  had  it,  that  was  the 
feeling  twenty  years  ago. 

Q.  Do  you  know  any  system  now  existing  in  the  city  of  Buffalo 
in  relation  to  the  grain  trade  that  ought  to  be  remedied  ? 

A.  No,  I cannot  say  that  I do.  The  trading,  as  I said  before, 
all  the  option  trading  don’t  amount  to  any  thing.  There  is 
nothing  of  it  ; there  is  not  enough  of  it  to  report,  as  far  as  that  is 
concerned.  I don’i>know  as  there  is  any  particular  system  being 
done  here  that  is  injurious. 

By  Ml-.  JIuowning: 

C^.  Is  your  system  of  warehousing  injurious  at  all? 

A.  The  warehousing,  that  is  the  elevators,  there  are  a good  many 


203 


of  them,  there  is  too  many  I think,  and  they  have  to  turn  every  way, 
shape  and  manner  in  order  to  get  something  out  of  it.  We  liave 
got  perhaps  thirty  elevators  here,  and  they  run  ten  or  twelve  of  them, 
and  the  ten  or  twelve  have  got  to  pay  for  themselves  and  tlie 
rest  of  them.  There  is  too  many  elevators.  The  management  of 
the  elevators  I do  not  approve  of  myself,  for  the  reason  I have 
not  any  confidence  in  their  integrity  ; that  while  they  will  do  for 
you,  and  do  for  you  certain  things,  they  will  not  do  the  same  for 
me  ; there  may  be  strings  that  you  can  pull  and  compel  them  to  do 
acts  that  I could  not,  so  we  are  not  on  an  equal  footing. 

By  Mr . Browning  : 

Q.  Don’t  you  think  that  this  pooling  of  the  elevators,  somo 
working  and  some  laying  idle  and  paying  those  that  lay  idle  a 
share  of  the  profits,  has  a tendency  to  increase  the  cost  of  elevating  ? 

A.  Undoubtedly. 

By  Mr.  Boyd  : 

Q.  Tell  us  to  what  extent  ? 

A.  To  the  extent  of  one-half  almost  of  the  elevating  capacity. 

Q.  If  I should  come  into  Bufialo  and  build  an  elevator  and  attempt 
to  do  business  on  a small  profit,  wouldn’t  the}^  make  an  effort  to 
take  me  into  the  ring  and  pay  me  some  of  their  profits  to  close  my 
elevator  up  ? 

A.  They  probably  would  make  an  effort  at  once  to  get  you  into 
their  pool  of  course.  Here  is  a new  elevator  just  finished  about 
thirty  days  ago  that 'they  call  the  Lehigh  Yalley,and  then  the 
Pennsylvania  road  they  have  built  a big  elevator  and  they  don’t  go 
into  the  association  ; they  begin  and  contract  property  west,  and  get 
it  through  to  sink  their  commissions  here,  and  all  that  sort  of  things 
and  it  would  not  be  satisfactory  to  the  receivers  here,  of  course. 
Even  the  l^ew  York  Central  railroad  elevators  — they  have  two  — 
and  they  don’t  do  the  same  thing  fairly,  they  don’t  treat  every- 
body alike. 

Q.  Who  suffers  from  this  ? 

A.  The  canal  suffers  somewhat  more  or  less. 

Q.  Canal  boatmen  ? 

A.  Canal  boatmen  ; the  boats  don’ t get  what  they  ought  to  have. 

Q.  Will  you  explain  that  a little  more  definitely? 

A.  For  instance  there  are  two  or  three  houses  or  lines,  the  Com- 
mercial line  and  the  Wabash  line  contracting  from  Buffalo  to  New 
York,  covering  all  charges,  they  contract  a load  and  when  it  gets 


204 


here,  the  boats  want  to  get  it,  they  will  contract  this  grain  from  the 
west  and  when  it  gets  here  the  boatmen  will  want  to  get  it  to  take 
to  New  York,  and  they  have  got  to  take  it  at  the  lowest  price  in  or- 
der to  get  it.  The  railroads  have  been  very  fair  this  year  with  re- 
gard to  their  freight  from  Buffalo,  they  have  done  as  much  as  to  say 
to  the  canal  boatmen  we  are  not  in  your  way,  we  charge  nine  cents 
a bushel  and  never  plow  against  it,  but  go  on  and  get  good  i)rices, 
and  instead  of  that  they  have  carried  this  property  for  a mere  noth- 
ing. There  are  too  many  scalpers  here  in  Buffalo  for  the  business, 
too  many  men  connected  with  the  canal  so  far  as  regards  living  off 
from  it,  and  it  is  injurious  to  the  boatmen,  there  is  no  question 
about  ito 

By  Mr.  Browning  : 

Q.  Tell  us  what  the  scalper’s  method  is  ? 

A.  A boat  comes  in  here  and  a scalper  gets  hold  of  it  for  the  sea- 
son ; this  scalper  gets  it  for  the  season  ; and  I get  him  6,000  bushels 
of  wheat  to  carry  ; he  takes  it  and  insures  it  and  gives  us  a bill  of 
lading  ; and  he  takes  this  wheat  and  gets  out  of  it  about  five  per 
cent  on  the  gross  amount ; he  gets  it  carried  for  less  than  I have  to 
pay  him,  and,  consequently,  makes  something  by  it ; and  most  of 
the  shipping  business  is  done  in  that  way  — done  by  that  class  of 
men  ; and  there  are  a great  many  of  them. 

Q.  The  scalper  is  a sort  of  middle  man  ? 

A.  Yes,  sir ; for  instance,  here  is  a scalper  who  has  control  of 
thirty  or  forty  boats  ; he  loads  them  and  sends  them  off  as  fast  as  he 
can,  and  they  carry  the  freight  so  low  it  is  all  the  time  crowding  the 
price  down  ; as  I said  before,  there  are  too  many  scalpers  ; it  injures 
the  boatmen,  and  it  is  a thing  you  cannot  reach. 

Q.  Does  all  of  this  have  a tendency  to  enhance  the  prices  of  the 
necessaries  of  life  ? 

A.  Yes,  sir. 

(^.  And  breadstuffs  ? 

A.  Yes,  sir. 

Q.  And  the  whole  burden  falls  upon  the  consumer  ? 

A.  Yes,  sir  ; it  must;  you  may  take  oil ; I have  seen  millions  of 
Ijarrels  of  oil  sold  in  a day  here  more  than  there  was  in  the  country. 

Do  they  deal  in  futures  in  oil  also  ? 

A.  Yes,  sir  ; but  generally  tlie  oil  is  in  a shape  where  there  is  a 
<;(;rt i1i(‘at(i  ]>assed. 


205 


Q.  Tliey  sell  it  by  a certificate  ? 

A.  Yes,  sir  ; our  banks,  I presume,  are  all  full  of  those  certificates  ; 

I know  there  has  been  large  amounts  of  them  in  the  banks  ; some  of 
them  have  been  full  of  these  oil  certificates  when  you  could  not 
borrow  any  money  on  grain  ; money  is  sometimes  scarce  in  Buffalo, 
and  why,  simply  because  they  are  loaning  money  to  these  oil  men, 
and  they  will  pay  them  more  for  it ; the  canal  men  sometimes  want 
money  and  they  cannot  get  it ; why,  because  the  oil  men  have  got  it 
all  on  these  certificates  ; if  you  pass  a law  to  do  away  with  all  of 
these  bucket-shops  and  option  business ; if  money  would  do  it  there 
would  be  large  amounts  that  would  be  paid  willingly  ; my  own  im- 
pression is  that  they  cannot  pass  any  law  to  reach  any  of  these 
things. 

Q.  But  you  think  they  might  be  improved  somewhat  ? 

A.  Yes,  sir;  of  course.  You  see  there  are  men  connected  with 
this  business  in  Chicago,  and  all  that,  do  you  suppose  a membership  * 
would  be  worth  $10,000  in  New  York  or  Chicago  to  do  away  with 
^this  business?  not  a cent,  and  do  away  with  this  option  business, 
you  can  walk  in,  or  they  will  invite  you  in. 

George  S.  Hazard^  sworn,  and  examined  by  Mr.  Boyd,  testified  a^ 
follows  : 

Q.  Wliere  do^you  reside  ? 

A.  Buffalo. 

Q.  Doing  business  in  the  city  of  Buffalo  ? 

A.  No,  sir.  I 

Q.  You  are  not  engaged  in  any  business  now? 

A.  No,  sir,  I am  not  engaged  in  any  business  now. 

Q.  Are  you  a member  of  any  firm  ? 

A.  I am  not. 

Q.  Have  you  been  ? 

A.  Yes,  sir,  my  firm  on  the  dock  was  G.  S.  Hazard  & Co.,  but  I 
left  in  1873,  nine  years  ago. 

Q.  TYhat  business  did  your  firm  carry  on  ? 

A.  Produce  dealers  and  commission  merchants. 

Q.  How  long  were  you  in  that  business  ? 

A.  Nearly  thirty  years,  twenty-seven  or  twenty-eight  years. 

Q,  That  was  previous  to  the  system  of  dealing  in  futures  and 
options  ? 

A.  YYs,  sir. 


206 


. Q.  Do  you  know  any  thing  about  the  system  of  dealing  in  futures 
and  options  and  the  making  of  corners  from  observation  ? 

A.  Yes,  sir,  by  observation  more  than  personal  experience,  as  I 
never  bought  an  option  or  sold  one. 

Q.  You  have  known  of  their  being  bought  and  sold,  have  you  ? 

A.  Yes,  sir. 

Q.  Will  you  state  to  the  committee  what  your  opinion  is  in  refer- 
ence to  the  effect  upon  commerce  and  public  welfare  of  such  trans- 
actions in  corners  and  dealings  in  futures  and  options  ? 

A.  That  is  a problem  which  is  very  difficult  to  solve.  Some  of 
the  effects  I could  give  aii  opinion  in  regard  to  them,  but  the  gen- 
eral effect  is  a difficult  problem  to  solve.  In  some  instances  the 
option  business  and  the  future  business  is  a benefit,  and  then  again 
it  is  a damage.  I think,  however,  that  the  damage  is  greater  than 
• the  profits  as  a rule. 

Q.  What  does  this  damage  consist  of? 

A.  I think  it  has  a moral  tendency  to  lead  young  men  into  specu- 
lations, and  it  cultivates  and  induces  a speculation  with  a desire  to* 
become  suddenly  rich.  They  hear  of  great  speculations,  people 
making  ten,  or  fifteen,  or  twenty,  or  thirty,  or  forty,  or  fifty  thou- 
sand dollars  and  begin  in  a very  small  way,  and  they  cannot  see 
why  they  with  their  $100,  or  $500,  they  majffiiaveof  surplus  funds, 
they  cannot  see  why  they  cannot  become  suddenly  rich  as  well  as 
Tom  Jones,  or  John  Smith  that  they  have  heard  of, 

Q.  Do  these  speculations  tend  to  enhance  the  price  of  the  neces- 
saries of  life  from  what  they  ought  to  be  according  to  the  laws  of 
supply  and  demand  ? 

A.  Sometimes  they  do,  and  sometimes  perhaps  when  a corner  is 
broken,  then  the  property  is  very  apt  to  go  below  the  real  or  true 
market  value. 

Q.  In  that  case  does  the  producer  not  suffer  ? 

A.  Perhaps  the  producer  may  to  some  extent,  but  during  the 
low  condition  of  the  market  he  is  the  fellow  to  hold  on  as  a general 
rule,  thinking  the  market  will  rise  again.  I think  they  are  the 
very  last  men  to  sell  on  a low  price. 

'’J’he  tendency,  however,  is,  according  to  your  observation,  to 
disarrange  the  legitimate  business,  the  legitimate  course  of  business? 

A.  Temporaril}^,  I don’t  think  it  does  seriously;  temporarily, 
there  is  an  excitement  and  large  advances  in  different  localities,  it 
does  not  affect  the  ])rices  in  Liverpool  to  any  extent,  if  any,  or  any 


207 


part  of  the  country  ; it  does  not  affect  the  prices  in  New  York.  I 
think  the  prices  in  Chicago  are  higher  than  in  Xev\^  York. 

Q.  Is  it  not  true  that  the  prices  of  American  wheat  in  the  United 
States  are  sometimes  actually  higher  to  the  consumer  than  it  is  in 
the  city  of  Liverpool  ? 

A.  Yes,  sir;  I think  so;  I think  if  a man  wants  to  buy  wheat  at 
any  particular  time  of  the  year,  or  at  any  day  of  the  year,  that  he 
can  buy  it  cheaper  in  Uew  York  than  he  can  in  Chicago. 

Q.  What  is  the  cause  of  that  ? 

A.  This  speculation  that  exists  at  Chicago.  It  in  some  respects 
has  a good  effect,  the  farmer  gets  better  prices  for  his  property.  If 
the  farmers  would  not  turn  into  speculators  they  would  very  soon 
get  rich. 

Q.  The  temptation  is  so  great  I suppose  they  are  anxious  to  get 
into  it  ? 

A.  Yes,  sir  ; they  don’t  see  why  they  cannot  go  to  Chicago  and 
make  more  money  than  they  can  to  be  a farmer. 

Q.  Taking  the  system  of  dealing  in  futures  and  options  and  mak- 
ing corners,  is  it  not  a system  of  gambling  ? 

A.  In  a sense  it  is  ; it  is  neither  roulette,  .or  cards,  or  poker  nor 
euchre,  but  in  a great  many  respects  it  does  amount  to  a species  of 
gambling. 

By  Mr.  Browning  : 

Q.  You  can  compare  it  with  a lottery  ? 

A.  Yes,  sir,  you  can  ; and  that  is  so  with  a great  many  of  these 
smaller  dealers  ; that  is,  the  bucket-shops  ; I think  a great  portion; 
perhaps  nineteen-twentieths  of  the  property  sold  on  the  Chicago  Ex- 
change are  hona  fide  transactions. 

Q.  Then  it  is  really  a game  or  transaction  of  chance  ? 

A.  In  a very  great  extent,  undoubtedly ; I don’t  approve  of  this 
style  of  dealing;  I have  seen  its  effects  in  some  instances,  and  still, 
I have  no  doubt  it  exists  in  many  branches  of  trade  at  a great  loss  ; 
for  instance  in  dealing  in  sugar,  coffee  and  cotton,  a groceryman 
buys  a cargo  of  sugar,  he  don’t  expect  to  sell  it  out  by  the  barrel  for 
the  same  he  gave  for  it,  he  buys  it  on  a speculation ; so  it  is  with  a 
great  many  other  things  ; I am  not  defending  this  system  of  Chicago 
speculation,  and  I am  not  condemning  it  really,  for  I am  greatly  at 
a loss  to  say  whether  I think  it  is  a benefit,  a real  benefit  or  'a  real 
damage  to  the  people ; it  is  sometimes  a benefit  and  sometimes  a 
damage  I think.  . • 


208 


Q.  In  all  of  these  transactions  somebody  must  profit  by  the  large 
amount  of  money  that  is  turned  over  ? 

A.  Undoubtedly, 

Q.  Do  the  masses  profit  by  that,  or  is  it  only  a few  individuals, 
lucky  ones  ? 

A.  There  has  been  a great  many  cases  where  they  have  made  a 
great  deal  of  money  undoubtedly,  and  there  has  been  a great  many 
cases  where  they  have  lost  probably  $100,000 ; so  far  as  I am  able  to 
judge,  the  result  of  corners  has  not  been  profitable,  and  from  hearsay 
I am  inclined  to  think  that  the  results  of  corners  have  not  been  prof- 
itable  ; and  from  what  I have  heard,  the  result  of  some  corners  has 
been  very  disastrous. 

Take  the  system  of  dealing  in  futures  and  options,  is  there 
not  quite  a large  number  of  gentlemen  who  have  accumulated  large 
fortunes  ? 

A.  I think  likely,  and  then  again  some  have  been  stripped  en- 
tirely . 

Q.  Who  has  to  bear  the  burden  of  this  extra  tax  upon  the  neces- 
saries of  life  ? 

A.  That  is  a pretty  difficult  question  to  decide ; if  a pooV  man 
wants  a barrel  of  flour  and  happens  to  be  out  when  the  prices  are 
very  high  he  has  got  to  pay  probably  a dollar  a barrel  more  ; if  he 
is  fortunate  enough  to  get  out  about  the  time  the  market  is  down  he 
saves  that  much  probably,  and  yet  the  equilibrium  is  pretty  well  pre- 
served like  our  lake  here,  when  the  wind  is  blowing  strongly  from 
the  east  we  have  very  low  water  here  and  it  is  very  high  water  at 
Toledo  or  Detroit,  Toledo  particularly,  and  suddenly  it  turns  around 
and  we  get  the  water  back  again  and  they  have  low  water  up  tliere, 
and  after  a while  the  wind  ceases  and  the  lake  becomes  calm  again  and 
the  water  becomes  level.  Tliese  speculations  are  founded  upon  dif- 
ferent circumstances.  A party  of  men  get  together  and  say,  now^ 
the  accounts  of  the  crops  are  bad,  there  may  be  a frost,  there  has 
been  a heavy  rain,  and  the  corn  looks  badly,  and  the  wheat  is  get- 
ting rusty,  and  the  reports  are  bad,  there  are  three  or  four  or  five 
millions  of  bushels,  or  twenty  millions  in  the  way  of  spot  wheat,  and 
instead  of  there  being  a failure  of  the  crop  it  is  abundant,  so  these 
men  they  have  to  suffer  in  consequence  of  it,  but  if  their  prognosti- 
cations prove  true  and  there  is  a failure,  then  they  can  squeeze  the 
market  as  hard  as  they  please,  and  somebody  else  suffers  for  it.  This 
][)roj)erty  has  got  to  bo  sold,  they  cannot  use  it,  they  must  sell  it, 
they  cann#)t  hold  it,  because  wheat  and  corn  are  ]>erishable  articles 
to  some  extent,  and  if  corn  is  held  too  long  in  the  bin  it  is  likely  to 


209 


sweat  and  injure  very  materially,  and  that  is  the  case  with  wheat. 
I have  known  wheat  to  come  down  to  Buffalo  here  and  put  into  the 
warehouses  and  be  kept  there  until  they  would  have  to  cut  it  up  in 
chunks  to  get  it  out,  and  I have  known  corn  to  come  here  that  would 
heat  in  the  bins  so  hot  you  could  not  hold  your  hands  in  it,  and 
prices  of  produce  of  course  is  governed  by  all  these  things.  The 
market  has  a rather  serious  effect  upon  the  prices  ; sometimes  they 
will  get  false  reports  from  Liverpool  about  the  markets,  either  up  or 
down,  and  that  will  monopolize  this  whole  thing,  and  all  these  things 
are  governed  by  all  these  little  straws  that  are  falling  constantly,  and 
causes  the  market  to  go  up  or  down. 

Q.  Is  it  not  a singular  fact  that  the  cost  of  living  in  the  cities  of 
the  United  Sates,  where  we  have  every  thing  in  abundance,  is  greater 
than  it  is  in  Great  Britain,  where  they  have  to  depend  upon  foreign 
produce  for  their  support,  and  can  you  account  for  it  ? 

A.  I cannot  say  that  I believe  that  to  be  a fact ; so  far  as  my  ob- 
servation is  concerned  my  impression  is  that  living  is  cheaper  in  this 
country. 

Q.  In  the  cities  ? 

A.  I will  say  that,  yes,  sir;  I think  that  living  in  New  York  city 
is  cheaper  than  it  is  in  London ; England  is  taking  all  of  these 
articles,  grain,  flour,  all  our  meats,  not  only  barreled  up  but  live 
stock,  all  that  we  have  got  to  spare  and  will  continue  to,  besides  the 
abundance  that  is  raised  in  Russia,  she  will  take  all  that  we  have  got 
to  spare ; every  ship-load  of  grain  that  goes  over  across  the  ocean 
tends  to  make  the  prices  here,  and  all  of  these  articles,  cheese,  butter, 
petroleum  and  cotton  that  England  takes  — I don’t  know  but  I used 
to  be  familiar  with  the  statistics,  and  it  seems  tome  now  we  export 
to  England  not  less  than  100,000,000  bushels  of  grain,  that  is  wheat, 

Q.  And  yet  the  fact  is  that  as  you  have  stated  American  produce 
is  not  any  more  expensive  in  Liverpool  than  it  is  in  Chicago  ? 

A.  Adding  the  freight,  of  course,  yes,  sir. 

By  Mr.  Browning  : 

Q.  It  has  been  stated  here  by  some  of  the  witnesses  before  our 
committee  that  the  cost  of  produce,  a bushel  of  grain  with  a fair  profit 
added  and  the  transporation  to  the  sea-board  is  the  natural  value 
of  the  product,  do  you  concur  with  that  ? 

A.  I suppose  it  is  the  natural  profit. 

Q.  And  they  have  told  us  that  about  three  per  cent  of  the  sales 

27 


210 


V ■ 


are  legitimate  sales  and  ninety -seven  per  cent  are  illegitimate  sales, and 
that  these  speculations  in  grain  is  the  consequence  of  it,  and  grain 
has  been  increased  from  fifty  to  one  hundred  per  cent  in  consequence 
of  this  system  of  speculation,  and  that  that  falls  upon  the  great  mass 
of  people,  do  you  concur  in  that  ? 

A.  No,  sir;  I do  not  entirely,  it  may  temporarily. 

Q.  And  that  while  this  system  continues  from  day  to  day  the 
prices  are  increased  in  consequence  of  it,  and  that  the  profits  to-day 
can  be  called  a continuance  of  the  business  done  upon  an  illegitimate 
basis,  and  illegitimate  profits,  and  increases  the  actual  values,  do 
you  concur  with  that  ? 

Ao  Not  entirely  ; I think  the  less  legislation  we  have  in  re- 
gard to  commerce  the  better  ; commerce  has  a law  of  its  own,  and  it 
is  unchangeable  in  many  respects,  and  while  there  may  be  at  one 
time  a very  high  price  it  is  sure  to  be  followed  a corresponding  low 
price ; I know  of  friends  that  I have  who  live  on  the  Wabash,  years 
ago  were  men  of  wealth,  and  they  ought  to  have  been  now ; they  ac- 
cumulated a very  large  amount  of  property  there  about  twenty  years 
ago,  but  they  have  been  ruined  by  going  to  Chicago  and  speculating, 
and  sending  their  sons  there  and  allowing  them  to  go  into  the  specu- 
lation business  and  backing  them  up. 

Q.  What  these  people  lose  somebody  must  get  ? 

A.  Certainly. 

Q.  There  is  not  any  doubt  but  what  this  system  disarranges  the 
trade  more  or  less  ? 

A.  Perhaps  it  does,  yes,  sir.  It  is  a new  thing  in  its  modern  in- 
vention, whether  it  is  good  or  not,  I don’t  know.  I know  a great 
many  have  been  ruined  by  it,  and  a great  many  become  enriched. 

By  Mr.  Browning  : 

Q.  Tell  us  how  in  your  opinion  it  can  be  a good  thing  ? 

/ A.  Well,  I don’t  know  as  I can  tell  you  how  it  can  be  a good 

thing.  I think  it  has  had  one  good  effect,  for  instance  the  high 
prices  of  grain  and  pork  have  expanded  our  population  in  the  Wes- 
tern States,  and  covered  those  vast  prairies  with  energetic  people 
who  are  raising  thousands  of  bushels  of  grain,  and  these  people  liave 
become  rich,  and  our  po])ulation  has  doubled,  and  in  some  of  our 
Western  States  quadrupled. 

Q.  Do  you  attribute  that  to  dealing  in  futures  1 

A.  No,  sir,  I don’t  know  as  I do.  I will  say  this  much,  that  so 


21i 


far  as  the  deal  in  futures  is  concerned  I think  it  has  enhanced  the 
price  undoubtedly  of  the  necessaries  of  life  to  the  consumer. 

Q.  That  you  say  falls  upon  the  consumer  ? 

A.  You  might  say  say  that,  yes,  sir. 

By  Mr.  Browning  : 

Q.  If  we  should  confine  the  trade  to  what  is  produced  and  what 
is  consumed  I think  we  would  be  a great  deal  better  off,  the  pro* 
ducer ; we  don’t  object  to  that,  but  we  do  object  to  buying  what  you 
don’t  want  and  what  you  haven’ t got  ? 

A.  IIow  are  you  going  to  prevent  a fellow  from  doing  it?  you 
might  as  well  say  this  grocer  across  here  wiW  not  trust  people  and 
fail  every  five  years.  I should  be  glad  if  our  State  or  Government 
would  pass  laws  to  make  everybody  honest,  and  industrious,  and 
faithful,  and. competent  to  do  any  thing  they  undertook  and  make 
them  successful,  but  how  are  you  going  to  do  it?  I don’t  believe  it 
can  be  done. 

Q.  What  is  a fair  price  for  elevating  grain  ? 

A.  impression  is  that  our  elevators  cannot  afford  to  do  the 
business,  even  if  there  was  not  half  as  many  as  there  are  now,  for 
less  than  what  they  are  charging  now,  which,  I think,  is  three-quarters 
of  a cent  a bushel ; and  then  they  store  it  for  ten  days,  I think. 

Q.  How  long  has  that  been  the  rate  ? 

A.  I think  nine  or  ten  years. 

Q.  And  during  the  existence  of  the  combination  ? 

A.  Yes,  sir  ; the  business  has  increased  to  some  extent,  still  the 
railroads  take  away  so  much  the  elevators  here  don’t  really  get  as 
much  as  they  ought  to? 

Q.  Do  you  know  of  any  one  person  in  the  city  connected  with 
the  Elevator  Association  who  can  give  us  an  account  of  the  number 
of  bushels  of  grain  that  has  passed  through  the  different  elevators 
during  the  season  ? 

A.  Yes,  sir. 

Q.  Who? 

A.  Mr.  Thurstone  and  P.  G.  Cook,  Jr.,  I think ; I never  have 
known  a single  instance,  and  I have  had  millions  and  millions  of 
bushels  go  through  the  elevators  from  184T  to  1873 ; during  my 
period  on  the  dock,  and  while  I was  in  the  bank  six  years  — presi- 
dent of  the  bank  — I had  occasion,  of  course,  to  handle  a great  many 
elevator  receipts,  and  I never  had  a single  instance  that  ever  exhib- 
ited the  want  of  integrity,  or  common  honesty  in  any  respect ; and  I 


212 


have  always  got  the  very  grain  that  I put  into  the  elevator,  and 
never  had  reason  to  saj"  tliat  the  grain  was  not  as  good  as  it  was  in 
the  vessel ; and  I never  had  any  cause  to  say  but  what  T got  rny 
identical  grain  ; and  I never  had  any  cause  to  say  that  the  elevator 
men  were  not  accommodating,  and  were  not  taking  proper  care  of 
my  grain  ; and  I never  had  the  least  cause  to  complain ; and  I never 
considered  myself  a favorite,  or  pushed  out  one  side  for  some  one 
else  ; and  never  had  any  of  my  neighbors  make  any  complaints  to 
me  about  it ; I considered  the  elevator  receipts  just  as  good  as  tlie 
United  States  notes  ; it  is  an  institution  that  has  been  regarded  with 
great  favor  by  the  banks;  there  have  been  years  when  ten  would  not 
do  the  work,  and  there  has  been  years  when  ten  would  be  sufficient 
to  do  the  work ; and  sometimes  we  have  received  two  millions  of 
bushels  of  grain  in  a day  and  eight  or  ten  elevators  could  not  haTidle 
all  of  it  and  get  the  vessels  away  in  any  reasonable  time  ; but  these 
elevators  are  compelled  to  keep  their  forces  on  hand  and  keep  every 
thing  ready,  so  on  demand  they  can  elevate  a vessel ; there  is  no 
place  in  the  world  where  the  amount  of  grain  can  be  handled  in 
twenty-four  hours  as  can  be  in  Buffalo. 

Q.  How  many  elevators  in  Buffalo  have  you  that  have  not  been 
used  for  two  years  ? 

A.  I don’t  know. 

By  Mr.  Boyd  : 

Q.  You  are  not  connected  with  the  association  yourself? 

A.  Ho,  sir. 

Q.  Those  bonds  or  checks  of  the  association,  what  are  they  ? 

A.  When  a vessel  unloads,  the  elevator  association  gives  a receipt 
to  the  owner  of  the  grain  and  then  he  collects  his  freight  on  it. 
That  receipt  reads : Beceived  in  store  from  schooner  John  Brown 
so  many  thousand  bushels  of  grain  and  pounds,  if  any,  to  whom  it 
may  concern,  subject  to  the  order  of,  naming  the  consignee.  That 
receipt  is  taken  by  our  banks  as  perfect  security,  and  no  one  can 
draw  that  grain  out  unless  upon  the  order  of  the  bank,  because  the 
bank  has  had  it  transferred  over  to  them.  This  man  takes  it  when 
he  wants  the  money  upon  it  and  gets  this  receipt  changed  to  tlie 
order  of  the  Bank  of  Attica  or  Bank  of  Commerce,  or  whatever  bank 
it  is. 

Q.  Tlien  you  have  no  hesitation  in  taking  these  receipts  or  ad- 
vancini^  money  on  them? 

A.  Ho,  sir. 


213 


George  Urbin^  sworn  and  examined  by  Mr.  Boyd,  testified  as  follows : 

Q.  Where  do  you  reside? 

A.  I reside  near  Bufl:‘alo. 

Q.  What  is  your  business  ? 

A.  Milling. 

Q.  Are  you  in  company  with  any  one  ? 

A.  Yes,  sir. 

•Q-  What  is  the  name  of  the  firm  ? 

A.  George  Urbio  & Co. 

Q.  How  long  Iiave  you  been  in  that  business  ? 

A.  About  six  months  in  the  milling  business. 

Q.  What  business  were  you  in  before  that  ? 

A.  Flour  business. 

Q.  How  long  had  you  been  in  that  business? 

A..  Since  1868. 

Q.  Have  you  any  knowledge  of  the  system  of  making  corners 
and  dealing  in  futures  and  options,  either  from  personal  experience 
or  observation  ? 

A.  I have  no  knowledge  from  personal  experience,  but  I have 
from  observation  and  hearsay. 

Q.  Have  you  any  knowledge  from  experience  — has  it  affected 
your  business  ? 

A.  Yes,  sir;  it  has  to  some  extent  when  w^e  w^ere  in  the  flour 
business  ; it  would  prevent  our  buying  wheat  because  it  would  be 
higher  in  Chicago,  and  it  would  not  pay  to  buy  it  there  and  bring 
east. 

Q.  Were  you  compelled  at  any  time  to  suspend  your  business  in 
any  way  ? 

A.  No,  sir ; all  we  would  do  was  to  buy  a small  stock. 

Q.  Did  you  employ  as  much  help  during  that  time  as  you  did 
other  times? 

A.  Yes,  sir. 

Q.  What  is  your  opinion  in  reference  to  the  effect  of  dealing  in 
futures  and  options  and  making  of  corners  upon  the  commerce  and 
public  welfare  ? > 

A.  I think  as  it  was  originally  started  it  was  a good  thing.  I 
look  upon  it  that  it  was  originally  started  by  buyers  out  in  the 
country  back  of  Chicago,  and  who  sold  grain  to  be  delivered  at  some 
future  time  without  intending  to  speculate,  and  they  would  buy 
grain  every  day  to  keep  their  warehouses  going,  and  by  not  selling 
at  a future  time  they  would  become  speculators.  If  they  should 


214 


buy  five  thousand  bushels  to-day  and  sell  it  to  he  delivered  in 
York  city  and  the  grain  was  sold  as  they  bought  it,  I think  they 
would  be  doing  a legitimate  business.  But  T think  it  has  been 
abused,  and  been  made  use  of  by  people  wlio  had  no  business  to. 

Q.  What  do  you  mean  when  you  say  it  has  been  abused  ? 

A.  Because  it  has  been  done  by  people  who  never  expected  to  use 
any  grain,  nor  pay  for  any  grain,  but  simply  bet  on  the  market,  make 
a bet  that  certain  grain  would  be  a certain  price  by  a certain  time, 
just  as  a man  would  bet  that  a certain  horse  in  a certain  race  would 
come  in  first. 

Q.  Then  you  regard  this  system  as  a system  of  gambling  ? 

A.  Yes,  sir„ 

Q.  Will  you  state  any  particular  instance  that  you  know  of  where 
the  millers  have  been  disastrously  affected  ? 

A.  I don’t  know  as  I can  state  any  particular  instance  where  we 
have  been  disastrously  affected.  I have  known  of  one  instance  wdiere 
it  would  probably  work  in  favor  of  the  Buffalo  millers,  providing 
they  were  using  that  kind  of  wheat.  Wheat  was  selling  in  Chicago 
last  year  in  July  for  $1.34  for  quite  a while,  $1.34  to  $1.45,  and 
these  men  would  contract  all  the  wheat  they  could,  and  I think  that 
is  one  reason  why  wheat  is  cheaper  a great  many  times  in  New  Yoi*k 
and  Liverpool  than  it  is  Chicago,  where  they  contract  so  much  and 
hol'd  it  to  break  the  market  down,  and  for  the  purpose  of  speculat- 
ing. Their  object  I think  in  running  corners  is  to  get  hold  of  all 
the  actual  wheat  that  would  make  them  any  trouble,  for  instance,  if 
they  are  buying  grain  they  will  induce  people  to  sell  short,  expect- 
ing if  they  buy  at  a certain  time  there  will  be  a plenty  of  wheat  to 
deliver  on  those  contracts,  and  at  the  same  time  they  are  buying 
wheat  as  fast  as  they  can,  or  as  fast  as  it  comes  in.  Then  they  will 
sell  it,  they  cannot  sell  it  there,  they  have  got  to  send  it  east,  to 
some  place  where  it  would  not  come  back  again  to  trouble  them. 

Q.  In  these  fluctuations  the  price  of  flour  and  wheat  is  sent  up 
above  their  actual  value  sometimes  ? 

A.  Yes,  sir,  flour  is  not  affected  as  quickly  as  wheat  I think. 

Q.  On  whom  does  the  burden  of  this  increase  of  prices  fall  ? 

A.  I think  on  the  general  public. 

Q.  That  is,  the  consumers  then  ? 

A.  Yes,  sir;  sometimes  on  the  manufacturers. 

l>y  Mr.  BjiowNiNO  : 

Qo  W hat  is  the  price  of  a barrel  of  flour  to-day  ? \ 


215 


A* Six  dollars. 

Q.  What  did  that  sell  for  a year  ago  to-day  ? 

A.  Seven  dollars  and  fifty  cents. 

Q-  What  did  it  sell  for  six  months  ago  ? 

A.  Seven  dollars  and  twenty-tive  cents. 

Q.  Can  you  tell  us  the  cause  of  the  difference  in  the  price  ? 

A.  Low  prices  for  wheat  is  the  cause  of  the  difEerence  in  the  price 
of  hour. 

By  Mr.  Boyd  : 

Q.  This  season’s  crops,  the  abundant  crops,  hasn’t  that  some  effect 
upon  it  ? 

A.  Yes,  sir. 

Q.  That  I presume  would  be  the  chief  criterion  of  the  judging  of 
the  value  in  any  year  ? 

A.  Yes,  sir. 

Q.  Were  it  not  on  account  of  these  legitimate  speculations? 

A,  Yes,  sir. 

By  Mr.  Browning  : 

Q.  Was  there  a corner  in  Detroit  in  June  ? 

A.  Yes,  sir. 

Q.  Did  that  increase  the  prices  ? 

A.  Yes,  sir. 

Q.  Have  you  any  thing  else  that  you  would  like  to  state  to  the 
committee  on  this  subject  ? 

A.  I want  to  say  something  about  the  Buffalo  Board  of  Trade, 
where  they  have  this  call  board.  So  far  as  I have  seen  the  Buffalo 
call  board  has  not  been  used  as  a gambling  concern  ; as  far  as  I know 
any  thing  about  it  all  the  deals  have  been  actual  deliveries  of  the 
stuff  at  some  future  time.  If  we  wanted  to  buy  wheat  to  keep  our 
mill  going,  if  we  can  buy  wheat  to  be  delivered  next  month  for 
less  than  it  would  cost  to  buy  that  w^heat  for  cash  and  carry  it  we 
would  think  it  was  a good  thing  to  do,  providing  we  thought  it 
was  low  enough  and  we  wanted  to  be  sure  of  having  stock  to  run 
our  mill  with.  If  we  were  not  crowded  for  room  we  would  not 
hesitate  in  buying  one  or  two  thousand  bushels  ahead  to  be  delivered. 
We  bought  some  in  Detroit  once  and  did  not  send  it  or  have  it  sent 
forward  because  we  could  make  just  as  much  to  sell  it  there  as  to 
have  it  sent  forward  and  grind  it,  we  could  buy  wheat  here  to  re- 
place it. 


Alonzo  Jltchmond  recalled,  testified  as  follows  : • 

I wish  to  say  in  regard  to  this  option  trading  in  the  Ihiflalo 
Board  of  Trade  that  I agree  with  Mr.  Urhin,  that  most  of  the  trans- 
actions here  are  su])])osed  to  he  future  arrivals  of  the  property,  hut 
as  I said  before  you  never  will  get  a large  amount  of  option  trading 
in  any  one  city  unless  you  first  get  a system  of  grading  the  grain. 
The  reason  that  option  trading  is  not  so  large  in  hfew  Yoi’k  city  is 
because  they  have  got  their  elevators  where  they  grade  this  grain. 
Most  of  the  option  trading  that  is  done  in  this  city  is  done  by 
agents  that  have  their  offices  and  do  their  trading  in  Chicago;  there 
is  a great  deal  of  that. 

In  regard  to  the  elevators  I would  say  that  I agree  perfectly  with 
what  Mr.  Hazard  says,  but  I want  to  say  one  thing  in  favor  of  these 
elevators.  The  elevator  system  of  Buffalo  is  peculiar.  In  Toledo 
the  elevators  are  all  connected  with  the  railroads  and  the  grain 
must  go  to  their  elevator,  the  grain  that  they  carry.  The  Illinois 
Central  Hailroad  Company  has  elevators,  and  all  of  the  roads  that 
run  into  Chicago  have  elevators  that  take  care  of  their  property, 
their  grain,  so  you  see  it  is  a very  difficult  thing  for  a man  in  Chi- 
cago to  take  any  of  his  grain  anywhere  except  to  the  elevator  that 
is  connected  with  the  road.  M^hen  you  come  to  Buffalo  it  is  differ- 
ent. As  I said  before  years  ago  we  used  to  store  a great  deal  of 
property  here,  as  much  as  our  elevators  had  capacity  to,  but  during 
the  war  they  kept  the  prices  up  every  year,  two  cents  a bushel,  and 
that  induced  men  to  build  many  of  them  ; and  then  came  on  a time 
when  they  began  to  discriminate  against  Buffalo,  and  that  induced 
men  to  build  floating  elevators,  and  also  induced  them  to  build 
transfer  elevators,  as  the  property  was  simply  transferred  from  the 
vessel  to  the  canal  boat.  While  as  this  grain  did  not  come  steadily 
but  came  in  by  fleets,' when  there  was  a great  fleet  that  came  in  all 
of  the  elevators  would  have  all  they  could  do,  but  when  there  \yas 
not  a fleet  only  one  or  two  of  the  vessels,  the  elev^ators  a great  many 
of  them  were  lying  idle,  and  so  far  as  that  is  concerned  it  made  a 
great  combination  between  the  elevators,  and  so  far  as  it  made  fluc- 
tuations in  the  prices  for  elevating,  the  people  made  up  their  minds 
the  only  way  was  to  combine  the  elevators  in  order  to  make  any 
money.  When  our  railroads  began  to  cany  grain  they  had  to  have 
elevators,  and  the  New  York  Central  road  has  elevators,  and  the 
Erie  road,  about  all  the  roads,  and  the  Pennsylvania  road  here  is 
Iniilding  a large  elevator,  the  elevator  men  found  that  they  had  to 
keep  up  this  combination  in  order  to  make  any  mone}",  and  my  op- 


/ 


217 

inion  is  that  the  price  of  elevating  here  for  two  years  back  has  not 
been  remunerative,  I am  sure  ot'it.  The  year  before  that  we  had  a 
large  arrival  ot  grain,  and  most  of  the  elevators  were  in  use  and  get- 
ting a fair  premium.  I would  not  give  fifty  cents  on  a dollar  for 
the  cost  of  an  elevator  to-day  in  Buffalo.  One  great  thorn  of  the 
elevators  is  this,  here  you  have  transfer  elevators,  and  floating  ele- 
vators, and  these  large  elevators  are  not  willing  to  take  them  into 
this  association.  Now,  I think  the  large  elevators  here  would  be 
willing  to  have  the  Legislature  fix  this  rate,  say  at  half  a cent  a 
bushel  on  the  grain  and  cover  an  eighth  of  the  vessel,  if  they  would 
drive  out  all  of  these  floating  elevators  from  the  creek,  pass  a law 
that  no  floaters  should  do  business  in  this  creek,  and  also  do  another 
thing,  and  that  is  to  pass  a law  that  no  transfer  elevator  should  be 
allowed  to  do  business  that  did  not  have  capacity  to  store  at  least 
the  largest  cargo  that  comes  here.  I have  no  interest  directly  or  in- 
directly in  an  elevator,  nor  my  firm.  If  there  is  any  legislation  to 
be  done  it  should  embody  that,  and  that  may  be  applied  to  Buffalo 
and  Oswego,  but  should  not  be  to  New  York  city.  This  would  ap- 
ply particularly  to  Buffalo  and  particularly  to  Oswego,  and  I am 
quite  sure,  and  I have  talked  with  our  elevator  men  and  they  say  if 
you  will  save  us  from  these  blackmailers  w’e  are  willing  to  have 
them  fix  the  price  anywhere.  1 think  there  should  be  some  agree- 
ment, they  should  agree  upon  some  fair  way  of  doing  the  business, 
I wish  to  say  something  about  the  scalpers ; when  there  were 
large,  wealthy  transportation  companies  on  the  canal — -I  don’t 
remember  the  names — -but  there  was  a time  when  the  wealthy 
transportation  companies  on  the  line  would  get  the  grain,  a schooner 
would  go  to  them  and  give  them  the  grain,  and  they  were  responsi- 
ble companies,  while  the  individual  boatman,  a great  majority  of 
them,  are  not  men  of  much  responsibility  ; and  when  they  would 
come  to  Mr.  Hazard,  or  J.  M.  Bichmond  & Company,  for  a cargo 
of  grain,  w^e  would  not  know  these  men,  but  we  would  know  some 
scalper,  and  he  would  come  to  us  and  say,  that  is  a good  boat,  I 
know;  I have  examined  the  boat ; therefore,  w^e  would  take  the  boat 
of  the  scalper,  and  we  would,  of  course,  get  the  captain  always  to 
sign  the  bill  of  lading,  and  we  would  get  the  scalper  also,  and  make 
the  scalper  bring  us  a certificate  of  insurance  on  the  cargo  ; but  with 
the  W estern  Transportation  Company  we  would  not  even  ask  for  a 
certificate  of  insurance,  because  they  were  responsible  ; but  the  boat- 
man we  did  not  consider  him  responsible  ; he  may  have  been  an 
honest  man,  but  the  law  was  so  stringent  in  regard  to  taking  prop 


218 


erty  we  would  have  the  scalper  to  look  after  the  property,  and  the 
certiticate  of  insurance  covered  the  loss  from  water  ; I don’t  believe 
this  business  can  ever  be  done,  as  it  has  been,  without  scalpers  ; the 
time  may  come  when  we  get  a more  prosperous  business,  and  when 
we  form,  I have  no  doubt,  combination&  with  the  companies;  and 
we  will  go  back  again  to  the  old  system  and  go  to  those  companies, 
this  company,  or  that  company,  that  are  responsible;  I don’t  know 
what  they  charge,  but  they  charge  a certain  amount  for  doing  the 
business  ; here  is  a poor  man  ; he  has  got  to  have  some  money  ; he 
has  got  to  have  his  bills  paid,  as  it  has  been  years  back ; and  when 
J.  M.  Richmond  & Company,  or  Hazard  & Company,  receive  a 
cargo  of  grain,  our  duty  is  to  look  and  see  that  it  goes  into  the  proper 
boat ; and  we  know  these  scalpers  to  be  honest  men  ; and  they  know 
such  a boat  to  be  a good  one  ; and  so  we  do  the  business  with  the 
scalper,  and  he  makes  the  transactions  with  the  boatmen. 

Adjourned  until  half-past  ten  o’clock,  morning. 


Proceedings  Wednesday  a.  m.,  ]}^ov.  15,  1882. 

Horace  J.  Harvey^  being  duly  sworn  and  examined  by  Senator 
Boyd,  testified  as  follows  : 

Q.  Where  do  you  reside,  Mr.  Harvey  ? 

A.  In  Buffalo. 

Q.  What  business  are  you  engaged  in  ? 

A.  In  the  milling  business. 

Q.  What  is  the  name  of  your  firm  ? 

A.  Harvey  & Henry. 

Q.  How  long  have  you  been  engaged  in  that  business  ? 

A.  About  fifteen  years. 

Q.  Are  you  familiar  with  the  system  of  making  corners  and  deal- 
ing in  futures  and  options? 

A.  Well,  I hav^e  never  had  any  thing  to  do  with  them  ; all  I 
know  is  from  hearsay. 

Q.  Have  you  had  any  observation  of  the  methods  of  procedure  ?' 

A.  I have  my  opinion  in  regard  to  how  they  are  made. 

Q.  Well,  jfiease  state  that  opinion? 

A.  Well,  for  instance,  if  there  is  a hundred  thousand-bushels  of 
No.  1 hard  Duluth  in  this  market,  and  I should  buy  it  all,  and  you 
or  some  other  dealer  should  come  to  me  and  say,  will  sell  you 


219 


25,000  bushels  of  hard  Duluth,  to  be  delivered  next  month,’’  and  I 
should  buy  it,  and  did  the  same  with  other  parties,  it  would  be  dif- 
ficult for  these  parties  next  month,  if  I hold  all  the  wheat,  to  supply 
it ; and  I could  compel  them  — perhaps  not  legally  — to  either  fur- 
nish me  the  grain,  or  furnish  me  the  difference  in  price  that  we 
should  agree  upon. 

Q.  That  is,  you  could  compel  them  according  to  the  rules  of  the 
Board  of  Trade  ? 

Ac  Yes,  sir. 

Q.  Will  you  state  to  the  committee  your  opinion  in  regard  to  the 
effect  of  the  system  of  making  corners  and  dealing  in  futures  and 
options  upon  commerce,  and  its  influence  upon  the  public  welfare  ? 

A,  I have  always  contended  that  there  is  more  money  lost  than 
made  in  dealing  in  options ; if  one  party  sells  the  other  buys  and 
one  or  the  other  has  to  lose,  and  besides,  there  is  a commission  to 
pay.  There  is  certainly  a commission  lost  in  every  transaction.  One 
may  make,  but  the  other  loses,  and  the  one  that  makes  does  not 
make  as  much  as  there  is  lost,  because  the  broker  has  to  have  his 
commission ; as  a miller,  I consider  it  injurious  to  my  business. 

By  Senator  Browning  : 

Q.  Why? 

A.  Because  i^ there  is  a large  advance  in  grain,  wheat  for  instance, 
we  cannot  get  a proportionate  advance  in  flour ; flour  advances  more 
gradually.  After  these  corners  are  broken  and  the  market  declines, 
then  it  hurts  our  trade  again ; flour  will  sell  readily  on  the  advance, 
and  on  the  decline  buyers  will  hold' off,  it  getting  lower  and  lower 
and  we  have  to  hold  our  stock  until  it  gets  to  the  bottom. 

Q.  How  did  the  corner  on  winter  wheat  afiect  the  sale  of  flour 
last  summer  ? 

A.  We  got  some  advance  on  flour. 

Q.  How  much  ? 

A.  I couldn’t  tell  exactly,  but  not  as  much  as  the  advance  in 
grain. 

Q.  How  long  did  the  rise  continue  before  you  got  back  to  the  old 
figures  ? 

A.  Well,  I couldn’t  tell  from  memor}^  just  how  long. 

Q.  Have  they  lowered  at  all  ? 

A.  Oh,  yes. 

By  Senator  Boyd,  resuming : 

Q.  Will  you  state  any  particular  instances  when  you  felt  or  knew 
that  this  system  injuriously  affected  your  business  as  a miller  ? 


220 


A.  I cannot  tell  any  particular  case.  There  is  no  trouble  at  all  on 
the  advance  on  the  market,  because  we  can  buy  the  grain  if  it  is  ad- 
vancing and  make  a profit  on  our  flour.  The  trouble  is  when  the 
decline  comes,  then  it  makes  a very  dull  flour  market ; consumers 
who  are  in  the  habit  of  laying  in  stock  will  buy  very  lightly  until 
they  think  the  bottom  is  reached. 

Q.  Then  your  observation  has  been  that  the  effect  of  making  cor- 
ners and  dealing  in  options  and  futures  has  been  to  unsettle  markets? 

A.  Yes,  sir. 

Q.  And  render  legitimate  business  in  produce  and  breadstuffs  un- 
certain ? 

A.  Yes,  sir. 

Q.  And  fluctuating  ? 

A.  Yes,  sir  ; but  still  I don’t  see  how  you  can  remedy  it ; I think 
if  I buy  this  100,000  bushels  of  wheat  and  you  offer  to  sell  me 
25,000  bushels  to  be  delivered  next  month,  I don’t  know  whether 
you  have  got  it  coming,  or  whether  you  are  selling  something  you 
have  no  prospect  of  getting,  and  I don’t  see  how  you  can  prevent 
my  buying  it. 

Q.  i3ut  don’t  you  think  it  is  quite  possible  to  have  a law  so 
framed  as  to  punish  men  who  will  sell  or  pretend  to  sell  produce 
that  they  never  intend  to  deliver ; or  have  any  visible  means  of  de- 
livering ? • 

A.  I don’t  think  you  can  reach  them  by  law  ; they  have  tried 
that  in  Chicago  ; you  might  go  further  and  say  that  if  a farmer  comes 
in ‘and  says  I want  to  sell  you  a thousand  bushels  of  wheat  to  be  de- 
livered next  month,  I have  no  means  of  knowing  that  he  has  the 
wheat,  and  we  frequently  buy  a farmer’s  crop,  and  I don’t  know 
why  a dealer  hasn’t  as  good  a right  to  sell  wheat  to  be  delivered  in 
the  future  as  a farmer  or  any  one  else. 

Q.  Don’t  you  distinguish  between  a legitimate  dealer  and  the 
mere  speculator  in  grain  ? 

A.  I would  prefer  not  to  have  any  corners ; I think  that  steady, 
legitimate  business  is  the  best  business,  but  I cannot  see  how  you 
can  remedy  it. 

(i.  Do  you  think  that  the  system  of  making  corners  and  dealing 
in  futures  and  options  is  an  evil  ? 

A.  Yes,  sir. 

C^.  Do  you  think  it  is  contrary  to  good  public  policy  ? 

A.  fiir. 

And  don’t  you  think  it  is  the  duty  of  the  Legislature  to  in- 
terfcrct  and  remedy  those  evils? 


221 


A.  I should  tliink  so  if  I thought  they  could,  but  I don’t  think 
they  can  ; millers  here,  for  instance  — there  is  very  little  speculation 
here  in  options,  but  millers  frequently  buy  wheat  to  be  delivered 
the  next  month,  or  the  next  month  after;  they  buy  it  for  legitimate 
purposes,  they  buy  it  for  their  own  use ; I do  it  some ; if  I am  go- 
ing to  need  wheat  in  December  and  can  buy  it  now  for  less  than  I 
can  then  I prefer  to  buy  it ; there  are  parties  with  whom  we  deal 
that  have  this  wheat  coming  and  will  be  here  say  the  first  of  De- 
cember ; the  owners  of  this  wheat  order  it  sold’;  I don’ t consider 
that  — although  you  may  say  it  is  an  option,  I don’t  consider  we 
are  doing  au}^  thing  to  make  a corner,  we  are  simply  buying  for 
legitimate  business. 

Q.  That  is  a legitimate  transaction,  but  what  we  want  to  get  at  is 
a remedy  for  the  evils  of  merely  speculative  transactions  ? 

A.  I don’t  you  think  you  can  make  a distinction. 

By  Senator  Browning  : 

Q.  How  long  have  you  known  corners  to  prevail  in  the  grain 
market  ? 

A.  Well,  I have  heard  of  them  for  years,  I don’t  know  how 
many. 

Q.  As  far  back  as  from  six  to  ten  years 

A.  Yes,  sir;  I should  judge  five  to  six  years,  and  perhaps  longer. 

Q.  Can  you  give  any  reason  for  it  ? 

A.  No  reason  except  that  a clique  of  men  that  have  the  means  see 
some  commodity  that  they  think  they  can  control  by  buying  it  all 
and  they  buy  it  and  buy  the  options  on  the  article,  and  generally 
make  money,  sometimes  they  lose. 

Q.  Do  you  recollect  when  they  sold  grain  by  sample  ? 

A.  We  sell  grain  here  almost  altogether  by  sample ; there  is 
% only  one  o^rain  that  is  sold  sold  by  grade  here  and  that  No.  1 hard 
Duluth. 

A.  You  are  speaking  now  of  wheat  ? 

A.  Yes,  sir. 

By  Senator  Boyd,  resuming : 

Q.  Do  you  know  any  thing  about  the  so-called  bucket-shop  sys- 
tem ? 

A.  I think  I understand  how  they  do  business. 

Q.  Please  state  what  you  know  about  it  ? 


222 


A.  I don’t  think  I was  ever  in  one,  that  is  a regular  bucket-sliop. 
I could  not  tell  you  any  thing  only  what  I have  heard. 

Q.  You  don’t  know  any  thing  of  your  own  knowledge  ? 

A.  'No,  sir;  there  are  grain  brokers  here,  but  they  don’t  call 
themselves  bucket-shops.  I understand  a bucket-shop  is  a sho]> 
where  you  put  up  a certain  amount  of  margin  on  the  pres- 
ent quotations,  and  when  that  margin  is  gone  your  money  is  gone  ; 
if  it  goes  up  you  stop  it  when  you  please,  hang  on  until  you  get  your 
profit. 

Q.  Is  there  any  thing  else  that  you  would  like  to  state  to  the 
committee? 

A.  I don’t  think  that  I would  be  any  good  to  you  as  a witness. 

John  B.  Griffin,  sworn  and  examined  by  Senator  Boyd,  testified 
as  follows: 

Q.  Where  do  you  reside  ? 

A.  Butfalo. 

Q.  What  is  your  business  ? 

A.  Merchant  miller. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  More  or  less  for  forty  years  — since  I started  in  this  business 
about  twenty  years  ago. 

Q.  Are  you  familiar  with  the  system  of  making  corners  and  deal- 
ing in  options  and  futures  ? 

A.  No,  sir;  1 am  not. 

Q.  Have  you  any  knowledge  of  it  at  all  from  observation  ? 

A.  Well,  the  dealing  in  options  is  one  thing  and  making  corners 
is  another ; I have  dealt  in  options  to  a certain  extent,  but  not  in 
corners. 

Q.  Then  you  refer  to  making  corners  when  you  say  you  have  no 
personal  knowledge  ? 

A.  Yes,  sir. 

CJ.  Please  state  to  the  committee  your  experience  in  relation  to 
this  ? 

A.  My  experience  has  been  that  when  I am  overloaded  with  a 
stock  I hold  1 have  sent  to  Chicago  and  sold  wheat  against  it,  for 
fear  of  a break  in  the  market,  and  to  protect  myself.  For  I have 
bought  wheat  in  anticipation  of  the  use  of  it  for  milling  purposes. 

C^.  What  is  your  opinion  in  relation  to  the  effect  of  this  system 
U])on  commerce  generally,  and  its  inlluence  upon  the  public  welfare  ? 


223 


A.  I think  it  is  only  a change  of  progress  — a commercial  trans- 
action. 

Q.  You  think  it  is  a progressive  change? 

A.  Yes,  sir. 

Q.  Do  you  think  it  is  beneficial  to  the  public  ? 

A.  Well,  take  it  as  a whole  1 think  it  is. 

Q.  What  are  your  reasons  for  arriving  at  that  conclusion  ? 

A.  Frequently  the  buyers  for  export  have  orders  for  August, 
September,  October  or  November,  and  they  can  fill  these  orders  by 
stepping  into  a market  and  buying  these  options  to  be  delivered 
when  they  want  it,  instead  of  going  into  the  interior  and  buying  it 
and  carrying  it  forward. 

Q.  You  now  speak  of  legitimate  transactions  in  buying? 

A.  Yes,  sir. 

Q.  Are  you  familiar  with  the  merely  speculative  transactions  ? 

A.  Nothing  more  than  that. 

Q.  Do  you  think  the  speculative  system  is  beneficial  to  the  public  ? 

A.  It  is  difficult  to  answer  that  question,  for  a farmer  gets  the 
benefit  of  it  and  the  speculator  takes  the  chances ; I think  it  would 
be  as  well  to  abandon  it  if  you  could. 

Q.  What  benefit  does  the  consumer  get  out  of  it  ? 

A.  The  consumer  gets  the  benefit  — 

Q.  And  the  middleman  ? 

A.  Takes  his  chances. 

Q.  How  does  the  consumer  get  the  benefit  ? 

A.  The  answer  to  that  would  be  some  particular  market  and 
when  we  could  reach  another  market ; in  case  of  a corner  of  all  the 
markets  it  would  be  deleterious  to  the  interests  of  the  consumers. 

By  Senator  Browning  : 

Q.  I want  to  ask  you  just  one  plain  question  ; at  evidence  taken 
by  this  committee  in  New  York  city  given  by  some  of  the  best  busi- 
ness men,  who  are  thoroughly  familiar  with  this  business  and  who 
have  made  a study  of  it,  they  tell  us  that  in  consequence  of  this 
speculation  in  grain  the  price  has  been  increased  over  the  natural 
value  something  like  forty-five  per  cent  — now,  we  want  to  know 
if  you  think  that  is  a good  thing  for  the  people  ? 

A.  Well,  that  was  a corner — I say  that  if  corners  could  be 
abolislied  I should  be  in  favor  of  it. 

Q.  That  is  a result  of  this  dealing  in  futures — now  you  say  that 


you  think  upon  tho  whole  it  is  a good  thing  ; do  you  think  it  is  a 
good  thing  if  tliat  was  the  fact  ? 

A.  I don’t  mean  to  say  that  corners  are  a good  thing. 

Q.  Dealing  in  futures  ? 

A.  Dealing  in  options  — legitimate  trading. 

Q.  1l  ou  don’t  think  any  law  can  be  passed  to  prevent  your  buy- 
ing grain  from  any  farmer  who  has  it  or  has  any  ]>rospective  pos- 
session, because  you  don’t  want  to  buy  from  day  to  day,  you  want 
to  buy  so  as  to  keep  your  in  ill  going  the  year  around  ; I understand 
that,  but  if  it  is  possible  to  break  up  this  system  of  dealing  in  fu- 
tures— and  about  iiinety-seveii  per  cent  of  the  sales  ou  calls  are 
merely  speculative  — don’t  you  think  it  is  a good  thing  ? 

A.  1 don’t  think  you  can  break  it  up. 

Q.  I am  not  asking  you  that  ? 

A.  ISTo,  I don’t  think  that  there  is  any  objections  to  my  buying  wheat 
for  October  or  November  if  I can ; I was  formerly  one  of  the  largest 
receivers  here,  and  I was  also  receiver  in  New  York  before  the 
option  business  was  started.  There  is  almost  as  much  speculation 
in  that  apparently  as  in  buying  as  I speak  of  for  futures.  So  far  as 
the  gambling  part  of  it  is  concerned,  I have  never  acquainted  myself 
with  it. 

Q.  Do  you  think  by  selling  by  grade  is  an  improvement  by  sell- 
ing by  samples? 

A.  It  becomes  a necessity;  for  instance,  we  buy  No.  1 white  wheat 
in  Chicago  and  we  have  no  other  way  of  getting  this  grade  except 
by  buying  the  grade  established  by  sample.  The  same  when  I buy 
Duluth  wheat. 

Q.  As  a legitimate  dealer  if  you  should  make  a contract  to  have 
delivered  to  you  50,000  bushels  of  No,  2 white  winter  wheat  — 
is  No.  1 white  winter  wheat  better  than  No.  2 ? 

A.  It  is  for  some  purposes ; it  is  considered  better  — always  brings 
a little  more  money. 

Q.  Suppose  you  make  a contract  to  have  delivered  to  you  50,000 
bushels  of  No.  2,  for  a certain  purpose,  and  the  person  from  Avlioin 
you  purchased  could  not  furnish  that,  but  would  offer  you  No.  1, 
would  you  take  it  in  place  of  the  other  \ 

A.  That  would  depend  upon  what  kind  of  wheat  it  was. 

Q.  Of  the  same  class  of  wheat  ? 

A.  1 should  be  obliged  to. 

(T  You  would  take  the  better  kind  of  wheat? 

A.  Yes, sir. 


225 


Q.  That  is  just  the  difference  between  you  and  a speculator,  they 
will  make  a corner  in  No.  2 and  refuse  No.  1,  and  they  will  demand 
tlie  difference  between  the  price  of  No.  2 and  the  price  they  were  to 
have  it  delivered  for  ? 

A.  That  is  not  as  I understand  it.  Mr.  Manning  was  supposed  to 
be  running  a corner  in  Chicago  and  he  cornered  the  wheat  market, 
and  along  about  the  last  of  August  he  shipped  large  cpiantities  of  it 
down  here  and  portions  of  it  was  for  sale.  I bought  a cargo  of  wheat 
here  of  Mr.  Meadows  as  No.  2 wdieat,  but  it  turned  out  to  be  No. 
1 wheat,  which  he  had  taken  as  I supposed  on  this  option.  It 
turned  out  to  be  a great  deal  better  wheat  than  I supposed  was 
sold.  ' 

Q.  You  didn’t  object  to  that? 

A.  I bought  the  wheat  here  by  sample,  and  it  turned  out  to  be 
No.  1 instead  of  No.  2 wdieat. 

Q.  How  does  the  |fluctuationJ  in  the  market  affect  the  sale  of 
flour  ? 

A.  It  doesn’t  affect  materially.  For  instance  wneat  rises  in  De- 
jtroit  or  Toledo  or  Chicago  (points  we  draw  from),  the  miller  there  is 
forced  to  pay  a proportionate  price  as  we  are  here,  so  that  it  makes 
no  particular  difference  when  there  comes  these  sudden  breaks  we 
feel  the  effect  of  it. 

By  Mr.  Botd,  resuming  ; 

Q.  How  many  grades  of  wheat  are  recognized  by  the  trade? 

A.  They  are  different  in  different  markets.  I think  they  have 
three  or  four  grades  in  Chicago,  two  or  three  grades  in  Toledo,  and 
the  same  in  Detroit  and  Milwaukee.  There  is  No.  1 hard 
white  Duluth,  tliere  is  No.  2 and  No.  2 hard,  and  rejected  that  w’e 
call  merchant  wheat. 

Q.  What  is  the  difference  between  these  different  grades  ? 

A.  At  times  there  is  a very  great  difference.  Take  for  instance 
No,  1 hard  Duluth;  it  is  required  to  make  a certain  grade  of 
flour,  and  you  cannot  use  any  other,  it  would  spoil  the  flour.  So 
here.  No.  2,  red  winter  wheat,  comes  into  Chicago,  and  I want 
certain  other  kinds ; for  instance,  there  is  a kind  of  wheat  called 
May  wdieat,  and  mixed,  and  the  long  beard  Mediterranean,  that 
comes  mixed  as  No.  .2  wheat,  which  is  my  favorite  wheat,  par- 
ticularly to  buy.  There  is  another  wheat,  the  Kansas  wheat,  as  it 
is  called,  a long  beard  wdieat  and  by  merchants  thought  to  be  a 
29 


226 


superior  article  for  milling.  I saw  a sample  of  it  and  asked  my 
people  up  there  to  send  some  of  it  down.  This  Kansas  wheat  in- 
spects in  Chicago  as  Ko.  2 wheat. 

Q.  Then  is  No.  1 wheat  a more  valuable  article? 

A.  It  is  worth  from  one  to  three  cents  more  as  a rule  in  Chicago. 

Q.  Than  No.  2 ? 

A.  Than  No.  2.  Provided  you  get  the  same  kind  of  wheat.  I 
wouldn’t  take  this  Kansas  wheat  at  any  price,  although  it  sells  the 
same. 

Q.  What  is  the  objection  to  the  Kansas  wheat? 

A.  It  is  a hard,  flinty  wheat,  without  any  substance;  it  grinds  a 
corn  meal  and  there  is  no  substance  to  it. 

Q.  Then  you  are  of  the  opinion  from  your  observation  and  ex- 
perience that  tlie  system  of  making  corners  is  an  evil  and  that  it 
ought  to  be  abolished  ? 

A.  Yes,  sir. 

Q.  You  are  also  of  the  opinion  that  the  merely  speculative  or 
gambling  transactions  in  grain  ought  to  be  abolished  ? 

A.  Yes,  sir  ; if  you  can  separate  them  out. 

Q.  Have  you  any  other  suggestions  that  you  would  like  to  offer? 

A.  None  particularly  that  I know  of. 

Thomas  Thornton^  sworn  and  examined  by  Mr.  Boyd,  testified  as 
follows : 

Q.  Where  do  you  reside  ? 

A.  In  the  city  of  Buffalo. 

Q.  What  is  your  business  ? 

A.  Merchant  miller. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  About  thirty  years. 

Q.  Are  you  a member  of  a firm,  or  do  you  conduct  the  business 
yourself  ? 

A.  I am  a member  of  the  firm  of  Thornton  & Chester. 

Q.  Please  state  to  the  committee  your  opinion  in  reference  to  the 
system  of  making  corners  and  dealing  in  futures  and  options  with 
reference  to  its  effect  upon  commerce  and  its  influence  upon  the 
public  welfare? 

A.  I consider  it  has  a bad  effect,  causing  unnatural  values  at 
times  upon  the  products  of  the  country. 

Q.  How  does  it  affect  your  business? 


227 


A.  At  times  it  creates  an  unnatural  value  in  tlie  west  for  grain 
bj  being  cornered  — speculated  in  by  speculators  ; we  have  to  pay 
more  for  it  frequently  than  we  should  have  under  the  ordinary  cir- 
cumstances ; if  we  need  the  grain  we  have  to  pay  wliatever  the 
speculative  value  may  be  in  those  markets  west. 

Q.  How  does  that  affect  your  business  in  relation  to  having  a suf- 
ficent  amount  of  work  on  hand  to  do  ^ 

A.  We  are  compelled  frequently  to  pay  more  than  we  know  it 
will  be  worth  a few  days  afterward,  as  far  as  we  can  judge  from  the 
tone  of  the  market ; it  is  raised  to  an  unnatural  value  for  a few  days, 
and  if  we  need  the  grain  for  immediate  use,  we  are  frequently  com- 
pelled to  pay  more  for  it  than  we  wruld  in  the  natural  course  of 
trade,  without  these  corners  being  effected  west. 

Q.  Does  it  ever  tend  to  produce  a temporary  expansion  in  your 
business  ? 

A.  Sometimes  it  restricts  for  a few  days  at  a time  the  manufacture 
of  flour.  , 

Q.  What  effect  has  it  upon  the  price  of  flour  ? 

A.  It  generally  enhances  the  price  fo  the  consumer. 

Q.  How  much  per  barrel  do  you  know  that  it  has  enhanced  the 
price  of  flour  ? 

A.  Last  year  I think  it  was  more  affected  by  it  than  any  other 
year  that  I remember.  Last  fall  after  the  new  crop  of  wheat  it  was 
run  up  to  exorbitant  prices  by  speculations  very  much  at  the  west. 

Q.  And  how  did  that  affect  the  price  of  flour  ? 

A.  Perhaps  half  a dollar  to  a dollar  in  some  cases. 

Q.  And  how  much  was  the  price  of  wheat  per  bushel  increased  by 
reason  of  the  speculation  ? 

A.  Well,  according  to  my  judgment,  I should  say  from  fifteen 
cents  a bushel  to  twenty  cents. 

Q.  Who  receives  the  beneflt  of  this  increased  price  ? 

A.  Mostly  in  these  corners  of  grain  it  is  the  parties  who  own  the 
grain  in  large  amounts  in  Chicago,  generally. 

Q.  You  mean  the  speculators  ? 

A.  I mean  the  speculators.  Of  course  the  larmer  if  he  brings  in 
grain  during  that  corner  would  receive  a higher  price,  as  they  are 
compelled  to  receive  all  the  grain  arriving  while  this  corner  lasts. 

Q.  Upon  whom  does  the  burden  of  this  increased  price  fall  ul- 
timately ? 

A.  It  mostly  falls  upon  the  consumer. 


228 


Q.  The  whole  system  of  making  corners  and  dealing  in  futures 
and  options  has  been  characterized  by  several  witnesses  wlio  liave 
been  examined  before  this  committee  as  a system  of  gambling  — do 
you  think  that  it  is  such  ? 

A.  Yes,  sir;  I think  it  might  be  termed  gambling,  where  the  |>ar- 
ties  do  not  own  the  property  they  represent  to  sell,  or  propose  to  sell. 

Q.  And  to  those  who  make  a business  of  it  it  is  a sort  of  a busi- 
ness of  chance  ? 

A.  Yes,  sir. 

Q.  Do  you  think  that  the  public  would  be  benefited  if  the  sys- 
tem of  making  corners  and  the  dealing  in  futures  and  options  could  be 
abolished  ? 

A.  I do,  sir. 

Q.  Do  you  think  that  it  is  the  duty  of  the  Legislature  to  inter- 
fere for  the  prevention  of  that  evil  ? 

A.  Yes,  sir. 

Q.  Is  there  any  other  information  that  you  would  like  to  give  to 
the  committee  ? 

A.  I consider  it  a criminal  offense  to  offer  to  sell  that  which  he 
does  not  have.  That  is  all;  that  is  what  I base  my  opinion  on  in 
regard  to  it. 

Henry  G.  Zimmerman^  sworn  and  examined,  testified  as  follows 

Q.  Where  do  you  reside  ? 

A.  Buffalo. 

Q.  AVhat  is  your  business  ? 

A.  Milling. 

Q.  Are  you  a member  of  any  firm  ? 

A.  I am  a member  of  the  firm  of  Esser  & Zimmerman. 

Q.  How  long  have  you  been  in  that  business  % 

A.  I have  been  in  that  firm  three  years  and  a half  ; I have  been 
engaged  in  the  milling  business  for  fifteen  years. 

Q.  What  is  your  opinion  in  reference  to  the  system  of  making 
corners  and  dealing  in  futures  and  options  with  reference  to  their 
effect  upon  commerce'and  their  influence  upon  the  public  welfare  'k 

A.  I don’t  think  that  the  grain  business  can  be  carried  on  without 
dealing  in  futures;  just  as  a farmer  wants  to  sell  his  grain  and  want& 
to  know  what  he  gets  for  it  when  he  brings  it  in. 

Q.  Y on  are  now  speaking  of  the  legitimate  transactions  ? 

A.  Yes,  sir. 

Q.  Are  you  familiar  with  the  speculative  transactions  in  grain? 


229 


A.  I am,  but  still  it  will  be  very  hard  to  draw  a line  between  the 
speculative  and  what  is  not  speculative. 

Q.  Do  you  think  the  purely  speculative  system  is  beneficial  to 
the  community  or  otherwise  ? 

A.  It  will  be  hard  to  make  the  line  whether  it  is  speculative  or 
not  speculative  ; T think  if  I give  a man  an  order  to  buy,  he  does 
not  know  whether  I am  going  to  use  the  stuff  or  sell  it  again  on  a 
speculation. 

. Q.  I refer  to  the  system  where  men  buy  and  sell  something  that  they 
have  not  got  and  never  expect  to  possess  or  deliver ; take  that  side 
of  the  question,  do  you  think  that  is  injurious  to  the  public  welfare  ? 

A.  Of  course  if  you  sell  any  thing  that  you  haven’t  got  and  never 
expect  you  can  buy  it  is  injurious,  but  you  won’t  generally  accept 
any  thing  unless  you  expect  you  can  buy  it. 

Q.  We  find  no  fault  with  that,  but  our  object  is  to  find  some 
remedy  for  the  evils  which  result  from  the  gambling  speculations 
that  many  men  engage  in  and  get  rich  in  at  the  cost  and  expense  of 
the  public  ? 

A.  Just  as  many  get  poor  as  get  rich  ; I think  it  is  people  that  are 
opposed  to  the  dealing  in  futures  are  those  that  got  burned  once. 

Q.  How  has  the  system  affected  your  business  ? 

A.  I don’t  think  it  makes  to  us  any  difference  whether  there  is  a 
corner  or  not. 

Q.  Doesn’t  the  system  of  making  corners  affect  your  business  in 
any  way  ? 

A.  A corner  may  influence  the  buyers  ia  our  business  to  buy  a 
little  more.  It  gives  a kind  of  impetus  to  the  trade. 

Q.  Is  there  a corresponding  depression  succeeding  that  impetus 
that  you  speak  of  ? 

A.  Yes,  sir;  most  generally, 

Q.  Then  the  tendency  is  to  produce  unnatural  fluctuations  in 
the  trade? 

A.  Yes,  sir,  somewhat  ; it  cannot  help  it. 

Q.  And  don’t  you  think  that  these  unnatural  fluctuations  are  in- 
jurious to  legitimate  dealers  ? 

A.  I hardly  think  that  they  are,  because  it  is  just  like  a man 
who  sells  any  thing  he  wants  something  to  make  people  buy,  and 
by  having  these  fluctuations  we  can  tell  them  it  may  go  up. 

Q.  You  regard  these  fluctuations  as  a kind  of  stimulus  to  the 
trade  in  general  ? 

A.  Yes,  sir. 


230 


Q.  Then  do  you  believe  it  would  be  beneficial  to  the  public  if  the 
system  of  making  corners  could  be  abolished  ? 

A.  I don’t  think  that  it  can  be  abolished,  except  through  the 
legitimate  course  of  the  trade.  We  have  such  facilities  that  if  a per- 
son wants  to  buy  all  the  wheat  let  him  have  it,  because  I know  gen- 
erally here  in  Buffalo  that  any  man  that  can  make  a corner  here  is 
going  to  do  it  in  time  ; if  he  has  all  the  hard  wheat  he  is  going  Uj 
make  a corner  on  hard  wheat  market,  and  if  he  has  all  the  oats  he 
is  going  to  corner  the  oat  market. 

Q.  What  effect  would  that  have  upon  the  consumer? 

A.  The  consumer  would  have  to  pay  the  advance.  It  would 
come  down  again  and  balance  again. 

Q.  Who  receives  the  benefits  of  this  advance  in  the  price  that 
the  consumer  has  to  pay  ? 

A.  My  experience  is  that  those  outside — I think  that  during 
this  whole  last  year,  during  this  corner  in  Chicago  wheat,  I think 
the  farmers  were  greatly  benefited.  I think  that  the  man  that 
makes  the  corner  only  makes  one-tenth  of  the  profits  and  the  other 
nine-tenths  is  distributed  all  over  — goes  to  the  farmers. 

Q.  That  is  only  your  opinion  ? 

A.  Only  my  opinion. 

Q.  You  have  no  positive  knowledge  ? 

A.  No,  sir. 

Q.  Is  there  any  other  information  that  you  would  like  to  give  to 
the  committee  ? 

A.  No,  sir. 

By  Mr.  Browning  : 

Q.  I take  it  this  witness  is  a very  practical  man  — he  says*  when 
the  speculators  go  to  work  and  nut  un  the  price  he  pays  the  in- 
creased price  ? 

A.  Yes,  sir.  ^ 

Q.  And  you  put  it  on  the  flour  ? 

A.  Yes,  sir. 

Q.  And  the  consumer  pays  the  bill  ? 

A.  And  the  consumer  pays  the  bill. 

Christian  Klinch,  sworn  and  examined,  testified  as  follows  : 

Q.  Where  do  you  reside? 

A.  Buffalo. 


231 


Q.  What  is  your  business  ? 

A.  My  business  is  slaughtering  hogs  and  cattle,  provision  trade. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  About  twenty-five  years. 

Q.  State  if  you  please  to  the  committee  your  knowledge  and  ob- 
servation and  otliei’wise  of  the  system  of  making  corners  and 
dealing  in  futures  ? 

A.  My  opinion  is  the  system  is  very  bad.  It  has  a very  bad  in- 
fiuence  all  through  the  trade  and  very  perplexing  on  our  business. 
Sometimes  we  give  a man  the  price  of  pork  at  nine  or  ten  o’clock  in 
the  morning,  either  by  mail  or  telegraph,  and  the  parties  receiving 
it  hold  back  until  the  boards  meet  at  noon  all  througli  the  country  and 
of  course  they  take  the  advantage,  sometimes  if  it  is  a drop  of  fifty 
or  seventy -five  cents  a barrel  the  buyers  won’t  buy,  and  if  it  raises 
they  are  sure  to  take  it,  and  we  are  at  a disadvantage  at  this  business. 

Q.  That  is  all  men  engaged  in  your  business  ? 

A.  All  men  engaged  in  my  business  are  in  the  same  shape. 

Q.  Does  that  result  from  making  corners  ? 

A.  Yes,  sir,  it  results  from  these  bulls  and  bears  as  we  call  them. 

Q.  State  if  you  please  in  detail  any  particular  circumstances  in 
which  your  business  was  especially  affected  by  these  transactions  ? 

A.  I don’t  want  to  say  whenever  it  occilrs,  but  it  probably  occurs 
from  two  to  three  times  a week.  The  bulls  and  bears  in  order  to 
gain  their  points  have  to  confuse  the  public ; it  is  up  in  the  morn- 
ing and  down  in  the  afternoon.  They  keep  doing  it  for  days  so  that 
they  confuse  the  public  so  they  don’t  know  which  way  it  is  going  to 
turn,  so  that  they  gain  their  points.  It  occurs  once  or  twice  a week 
sometimes,  and  sometimes  oftener.  There  is  no  telling  when  pork 
goes  up  in  the  morning  whether  it  is  going  to  stay  up  all  day,  or 
up  two  hours. 

Q.  These  fiuctuations  are  not  caused  by  the  legitimate  results  of 
trade  ? 

A.  Xo,  sir. 

Q.  It  is  caused  by  the  manipulations  of  speculators  ? 

A.  Yes,  sir,  for  instance  yesterday  in  Chicago  raw  material  — 
hogs  — went  up  ten  to  fifteen  cents  a hundred  ; pork  dropped  fifty 
cents  at  the  same  time.  What  is  that  but  these  speculations  ? and 
that  occurs  every  week. 

Q.  Then  the  tendency  is  to  embarrass  all  legitimate  dealers  ? 

A.  Yes,  sir. 


232 


Q.  What  elTecthas  that  upon  the  coiiduinor  ? 

A.  Well,  the  consiimei-  has  got^  to  loot  the  hill.  Lo(jk  at  all  this 
lininhng  ! Who  is  going  to  pay  it ; these  robbers  in  Chicago  ; who  is 
going  to  pay  the  bill.  The  farmers  they  are  probably  paying  the 
biggest  portion  of  it.  A man  has  five  or  six  ])igs  and  he  thinks 
he  is  going  to  bid  np  the  price  of  pork  so  that  he  can  get  a little 
bigger  price  for  his  pork,  and  he  gambles  it  all  away,  and  the  first 
he  knows  he  loses  ])ork,  pigs  and  all. 

Q.  Can  you  explain  how  these  speculations  of  grain  is  carried  on 
in  the  bucket-shops  ? 

A.  I never  was  in  a bucket-shop  and  I can  only  state  what  I have 
heard. 

Q.  You  have  observed  the  effects  of  their  operations? 

A.  Yes,  sir,  l am  out  in  the  stockyards  where  these  western  men 
come;  ten  3’ears  ago  there  was  no  speculation  of  this  kind  to  any 
extent  in  Chicago.  These  bucket-shops,  they  have  got  it,  so  that  if 
a man  has  got  five  dollars  he  can  go  in  and  invest  it  ; they  couldn’t 
do  it  before,  because  if  a man  wanted  to  speculate  in  Chicago  he  had 
to  have  standing  and  money. 

Q.  How  many  such  places  exist  in  the  city  of  Buffalo  to  your 
knowledge  ? 

A.  I don’t  know  of  only  one  in  East  Buffalo  ; I am  not  acquainted 
around  ; I don’t  know  how  many  there  are  , but  there  is  one  in  East 
Buffalo  ; there  is  a man  speculating  thei’e  now  that  would  never 
think  of  speculating  if  it  were  not  for  these  facilities  they  introduce 
all  over  this  country. 

Q.  What  remedy  would  you  propose  for  the  correction  of  these 
evils  ? 

A.  I don’t  knovv  whether  you  can  check  it  all  at  once  ; but  kind 
of  put  the  (iollar  on  them  and  shut  them  up  by  the  piece ; I think  I 
should  shut  up  the  bucket-shops  first. 

Q.  You  think  it  would  be  the  duty  of  the  Legislature  to  interfere 
for  the  protection  of  the  public  from  these  evils  ? 

A.  Yes,  sir;  it  is  growing  larger  all  the  time,  and  why  not  com- 
mence to  contract  where  they  expanded  ; these  bucket-shops,  undoubt- 
edly, l)rought  on  this  business. 

Q.  Are  you  familiar  with  the  laws  of  the  Board  of  Trade  or 
Chamber  of  Commerce  ? 

A.  No,  sir. 

(^.  You  are  not  a member  of  either  of  these  bodies  ? 

A.  No,  sir;  T have  met  with  them  in  New  York,  Chicago,  Phila- 
del]>hia  and  Cincinnati. 


233 


Q.  What,  in  your  opinion,  was  the  cause  of  the  advance  in  the 
prices  of  beef  last  summer? 

A.  I think  the  price  of  beef  last  spring  — I don’t  think  there  was 
any  corner  about  tlie  price  of  beef,  but  1 think  that  the  short  crop 
of  corn  brou^^ht  that  about ; you  see  tiie  supply  of  cattle  fell  short 
nearly  thirty-three  per  cent,  and  that  shows  on  the  face  of  it  that 
there  wasn’t  much  corn  raised  for  the  beef;  I think  that  the  high 
price  in  tlie  beef  last  summer  was  because  there  was  such  a drought 
in  the  west,  and  a good  deal  of  corn  had  to  be  fed  through  the  sum- 
mer to  keep  the  cattle  alive  ; there  was  no  grass,  and  that  made  corn 
short  in  the  winter  for  cattle. 

Q.  What  effect  have  these  corners  in  pork  and  beef  upon  the 
transportation  interests  of  the  country  ? 

A.  I think  it  has  a very  great  effect ; T don’t  think  there  is  any 
thing  near  the  speculation  in  beef  to  what  there  is  in  pork ; it  is 
mostly  in  pork  ; you  never  hear  of  anybody  speculating  in  beef ; it  is 
all  barreled  pork  ; there  is  no  doubt  but  it  is  an  injury  to  transpor- 
tation, because  in  Chicago  it  is  their  interest  to  keep  all  the  pork 
there  they  can  during  the  winter  season,  and  keep  it  there  so  they 
can  have  something  to  speculate  on,  and  they  undoubtedly  pile  up 
a great  deal  of  pork ; and  what  we  call  the  grainers,  they  are  the 
worst  speculators  there  are ; when  they  get  through  with  their  farm 
work  in  the  fall  they  go  to  Chicago  and  speculate,  and  they  gener- 
ally hold  on  to  the  products.  ^ 

Q.  Do  you  say  that  there  is  any  moral  difference  between  the 
system  of  making  corners  and  dealing  in  futures  and  the  ordinary 
system  of  gambling? 

A.  I think  it  is  one  and  the  same  thing  ; if  you  can  shut  up  the 
gambling  shops  you  can  shut  up  these  bucket-shops. 

Lyman  P.  Smithy  sworn  and  examined  by  Mr.  Boyd,  testified  as 
follows : 

Q.  Where  do  you  Reside  ? 

A.  I reside  in  Dome,  Oneida  county.  I have  business  at  No.  7 
Central  wharf  in  Buffalo. 

Q.  What  is  your  business  ? 

A.  I am  in  the  forwarding  business  on  the  canal. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  Seventeen  or  eighteen  years. 

30 


234 


Q.  Are  you  familiar  with  the  canal  boat  system  ? 

A.  I think  I am. 

Q.  And  the  elevating  system  ? 

A.  I know  something  about  theeievating  system,  not  so  much  so. 

Q.  Are  you  also  familiar  with  the  system  commonly  known  as 
the  scalping  l)usiness? 

A.  Yes,  sir. 

Q.  AVill  you  please  explain  to  the  committee  what  is  meant  by  the 
scalping  business  in  connection  with  the  canal  boat  business? 

A.  Well,  we  are  scalpers  or  middlemen,  what  we  call  middle- 
men. We  act  as  agent  for  the  carrier,  for  the  boatmen,  as  their 
paid  agents.  They  pay  us  a commission  for  doing  their  business, 
and  for  instance  a cargo  of  grain  is  received  by  Mr.  Meadows  or  Mr. 
Richmond,  whoever  it  may  be,  from  the  west;  we  go  and  make  a 
trade  with  these  gentlemen  for  the  boatmen  in  the  interest  of  the 
boatmen,  and  charge  them  — get  the  best  price  we  can  when  it  is 
done  legitimately,  and  charge  the  boatmen  five  per  cent  on  what 
their  load  pays;  that  is  the  legitimate  part  of  the  business. 

Q.  You  charge  five  per  cent  on  what  the  boatmen  receive  on  the 
Ireight? 

A.  Yes,  sir. 

Q.  How  much  do  they  usually  receive  ? 

A.  If  the  freight  is  five  cents  a bushel,  if  their  cargo  is  8,000 
bushels,  their  freight  is  four  hundred  dollars,  and  we  get  twenty 
dollars. 

Q.  What  is  the  average  rate  of  freight  which  they  receive  ? 

A.  Well,  sir,  I couldn’t  tell  exactly  without  making  some  fig- 
ures on  it,  what  the  average  rate  is  this  year  ; I didn’t  have  time  to 
get  at  it. 

Q.  Well,  about,  as  near  as  you  can  ? 

(Witness  proceeds  to  read  from  a paper.) 

By  Mr.  Browning  : % 

Q.  What  do  you  hold  in  your  hand  now  ? 

A.  I hold  some  figures  that  I took  from  the  book  of  rates  of 
freiglit  from  April  27  to  November  1 ; I didn’t  get  every  day’s  fig- 
ures, I took  along  difierent  days. 

By  Mr.  Boyd,  resuming  : 

(^.  Will  you  please  read  those  figures? 


235 


A.  April  27  to  April  29,  they  were  five  cents  for  wheat. 

Q.  You  mean  the  boatmen  received  that  for  taking  a cargo  of 
wheat  from  the  city  of  Buffalo  to  New  York  ? 

A.  Yes,  sir  ; do  you  want  I should  go  clear  through  with  these  ? 

Q.  Yes,  if  you  please  ? 

A.  Five  cents  April  27  to  April  29,  May  8,  4 3-4  cents.  May  16^ 
4 1-2  cents,  and  I skip  along,  June  20,  4 1-4  cents,  June  28,  4 1-2 
cents,  July  11,  4 1-4  cents,  August  9,  5 3-4  cents,  August  29,  5 1-4 
cents,  September  2,  5 1-2  cents,  September  5,  G cents,  September 
23,  6 cents.  It  run  between  these  points  about  the  same  freight. 
September  25,  6 1-2  cents,  October  2,  6 cents,  from  October  12  to 
October  16,  it  was  8 cents,  October  23,  7' cents,  October  25,  6 1-2 
cents,  November  1,  6 1-2  cents,  how  it  is  5 3-4  cents.  You  will 
observe  there  is  a marked  difference  in  the  prices  here  right  along  ; 
those  are  caused  by  what  we  called  cornering  freights. 

Q.  Will  you  explain  that  system  ? 

A.  It  is  no  known  system.  As  it  is  cornering  grain  in  Chicago, 
it  is  only  among  scalping  men. 

Q.  How  is  it  brought  about  ? 

A.  Well,  as  I say,  these  men  act  as  agents  for  the  boatmen  ; the 
boatmen  are*  entirely  in  their  hands;  they  will  take  we  will  say  a 
large  amount  of  grain  to  arrive,  two  or  three  hundred  thousand 
bushels,  or  whatever  it  may  be,  we  will  say  at  six  cents  a bushel  for 
instance;  when  the  grain  comes  here  they  will  try  to  break  the 
market  — ■ run  the  market  down. 

Q.  Who  will? 

A.  Scalpers,  us  agents. 

Q.  How  do  they  do  that  ? 

A.  I was  going  to  explain  to  you.  They  have  got  we  will  say 
200,000  or  300,000  bushels  to  arrive,  whatever  it  maj^  be,  they  will 
go  to  a legitimate  shipper  that  has  got  stuff  on  hand  — I will  sup- 
pose that  I had  a 100,000  bushels  and  I was  anxious  for  this  market 
to  go  down  so  that  I could  make  a quarter  of  a cent,  I would  go  to  you. 
and  ask  you  — if  you  were  a shipper  — if  you  had  any  thing  to  ship, 
and  you  will  say,  yes,  and  I will  ask  you  how  much  you  pay,  and 
you  will  say  5 3-4  cents,  and  I say  very  good,  I will  take  two  loads 
of  you.  I will  pass  along  to  the  next  man  and  say  got  any  thing  ? ” 
‘‘Yes.”  “Well,  what  is  the  price  ” ? Perhaps  he  will  say  5 1-2  cents, 
or  5 3-4  cents.  That  makes  the  market,  so  you  see  the  market  is 
made  between  the  scalper  and  the  shipper,  but  the  scalper  when 


236 


he  is  acting  in  bad  faith,  when  you  have  shipped  a cargo  of  grain 
for  5 3-4  cents,  I cannot  go  to  Mr.  Richmond  and  get  any  more 
for  it  is  not  two  minutes  before  he  knows  all  about  it.  You  tele- 
graph to  Chicago  that  you  have  shipped  so  and  so  ; that  is  what  runs 
the  price  down  ; of  course  you  cannot  always  do  that,  sometimes  it 
runs  the  otlier  way. 

By  Mr.  Browning  : 

Q.  Then  the  scalper  makes  the  difference  1 

A.  Yes,  sir. 

By  Mr.  Boyd,  resuming : 

Q.  You  said  five  per  cent  was  the  legitimate  market  — you  have 
just  explained  the  illegitimate  market  ? 

A.  Yes,  sir;  1 have  known  them  to  make  a cent  a bushel  or  a cent 
and  a half  a bushel  by  running  the  freights  down.  You  will  see  from 
this  paper  I have  got  here  some  of  these  figures  are  way  below  the 
cost  price,  but  as  some  of  us  scalpers  think  it  is  caused  by  this  same 
tiling,  and  of  course  that  gives  a price  to  the  wheat  that  is  enhanced. 
For  instance  if  a bushel  of  wheat  could  be  carried  through  from 
Buffalo  to  New  York  for  five  cents,  it  should  be  carried  for  that, 
and  not  start  at  five  and  one-half  or  six  cents  and  then  run  down, 
bucause  it  enhances  the  value  of  the  wheat,  and  the  consumer  has 
to  pay  it,  and  it  comes  out  of  the  boatmen  besides,  who  are  rightly 
entitled  to  it. 

Q.  Can  you  tell  whether  the  scalpers  who  do  that  business  have 
any  connection  with  the  railroads  ? 

A.  No,  sir,  I don’t  think  they  have. 

Q.  Can  you  tell  us  what  the  railroad  freights  have  been  ? 

A.  I cannot ; I only  know  that  the  railroad  freights  have  been 
from  one  and  one-half  cents  to  two  cents  above  the  canal  rates. 

Q.  You  speak  of  your  employers — whom  do  you  recognize  as 
your  employers  ? 

A.  The  boatmen  ; we  act  as  their  agents. 

Q.  To  get  cargoes  to  them  ? 

A.  Yes,  sir. 

Q.  It  is  your  interest,  of  course,  to  get  as  high  a rate  of  trans- 
poration  as  you  can  ? 

A.  Yes,  sir. 

Q.  Of  course  if  you  get  six  cents  you  get  more  from  the  boatmen  ? 


237 


A.  Yes,  sir;  when  it  is  done  legitimately. 

Q.  Will  you  explain  the  illegitimate  way  in  which  the  business 
is  done  ? 

A.  I just  explained  it. 

Q.  That  is  by  going  to  the  shipper  and  trying  to  get  higher  rates? 

A.  No,  with  an  anxiety  to  get  lower;  I just  explained  that  for 
instance  there  is  five  or  six  of  us  in  the  pool,  and  have  we  will  say 

300.000  bushels  of  grain  on  hand  at  six  cents,  and  we  want  the  price 
at  five  and  three-quarters  and  rather  have  it  at  five  and  one-half. 

Q.  Why? 

A.  Because  we  want  to  make  the  one-half  cent  or  the  quarter  of 
accent. 

Q.  I don’t  understand  why  if  you  have  it  at  six  cents  you  should 
want  it  reduced,  because  you  are  paid  by  the  transporter,  by  the 
boatmen  ? 

A.  We  are  paid  a commission,  don’t  you  see ; we  make  both  ways, 
both  on  the  shipper  and  on  the  canal  boatmen  ; I think  this  grows 
to  a great  extent  out  of  this  speculating  business  for  instance,  this 
way,  they  say  it  is  necessary  to  have  a through  rate,  well,  it  is,  that 
is  well  enough  ; the  roads  have  a certain  price  ; the  canal  has  no  cer- 
tain price,  for  this  very  reason;  if  a Chicago  party  wants  to  lay  down 

100.000  bushels  of  wheat  in  New  York  or  Liverpool,  he  will  tele- 
graph what  he  can  sell  100,000  bushels  of  winter  wheat  in  New 
York  for  this  morning  ; he  knows  what  he  can  buy  it  for  in  Chicago 
and  the  freight  rates  are  so  much  ; he  telegraphs  to  Buffalo  and 
asks  “ what  can  you  get  canal  freights  for  100,000  bushels  of 
wheat  for?”  the  one  to  whom  he  telegraphs  goes  around  and  finds 
out  and  telegraphs  back;  if  the  freight  is  satisfactory  then  he 
can  close  his  contract  all  the  way  through  ; then  the  receiver  here 
goes  to  these  scalpers  and  says,  here,  I will  give  you  that  wheat, 
whatever  there  is  of  it,  and  then  we  have  it  on  hand,  and  we  try  to 
speculate  on  it ; mark  you  I say  they  are  not  all  alike,  they  are  not 
all  in  that  pooling  business ; and  we  consider  pools  throughout  the 
country  as  very  disastrous  to  the  business. 

Q.  How  many  scalpers  are  there  in  Buffalo  ? 

A.  Twenty-three  or'twenty-four. 

Q.  Do  they  have  their  head-quarters  ? 

A.  No,  sir  ; they  have  their  offices  right  along  together. 

Q.  How  long  has  that  illegitimate  method  of  doing  business 
existed  ? 

A.  Four  or  five  years. 


238 


Q.  How  was  it  done  before  that  ? 

A.  Well,  sir,  it  was  done  as  I have  explained,  in  a legitimate  way. 
When  the  cargoes  came  here  they  came  to  the  receivers  ; the 
legitimate  receivers  tliat  receive  the  grain  have  a percentage,  so 
much,  and  they  shipped  it  just  as  low  as  they  could,  and  the  scalpers 
took  of  them  at  just  as  high  a price  as  they  could,  and  the  scalpers 
gave  the  boatmen  the  price. 

By  Mr.  Browning  . 

Q.  In  other  words  they  were  honest  ? 

A.  Yes,  sir. 

Q.  The  scalper  is  an  agent  for  the  boatmen  ? ^ 

A.  Yes,  sir. 

Q.  He  has  a number  of  boats  on  his  list  ? 

A.  Yes,  sir. 

Q.  It  is  a saving  of  time  to  the  captain  ? 

A.  Yes,  sir. 

Q.  It  requires  capital  ? 

A.  Yo,  sir;  a man  could  start  a scalping  house  with  twenty 
shillings.  If  it  was  not  for  the  scalper  the  captain  would  have  to  go 
to  the  shipper  to  get  it,  and  the  shipper  does  not  know  these  men 
and  we  do  know  them.  I know  four  or  five  hundred  boatmen,  and 
know  the  shippers  and  they  don’t  know  any  of  them. 

Q.  You  consider  that  the  scalper  is  a necessity  k 

A.  I consider  that  a scalper  or  a middleman  — the  business  done 
legitimately  is  right  and  proper  in  its  place  and  is  a necessity  in  the 
business,  but  not  in  the  way  that  it  has  been  done  in  the  last  three  or 
four  years. 

Q.  How  could  that  be  prevented? 

A.  I don’t  know  any  way  but  by  legislation  ; I couldn’t  make  any 
simorestions  because  I am  not  familiar  enough  with  the  business. 

Q.  Would  a formal  affidavit  answer  the  purpose? 

A.  I don’t  know  whether  it  would  or  not,  there  are  so  many  ways 
they  can  do  it ; they  need  not  contract  it  themselves,  they  would 
have  the  shipper  contract  it  and  they  would  pay  him  so  much  for 
taking  it,  and  there  is  a good  many  ways  for  doing  it.  Of  course 
you  could  legislate  against  their  doing  it  so  openly  as  they 
do  it  now.  I don’t  know  as  you  can  legislate  against  my  taking 
a cargo  of  wheat  from  here  to  New  York  if  I was  a receiver 
for  six  cents  or  eight  cents  and  if  you  were  a mind  to  give  me  five  or 


239 


weight  hundred  dollars  I don’t  know  how  you  could  prevent  it.  I 
consider  the  business  very  disastrous  to  the  boatmen  and  to  the 
public  generally. 

Q.  There  has  been  a good  many  hard  stories  told  down  at  Albany 
about  scalpers  ? 

A.  There  are  a good  many  hard  men,  and  a good  many  good  men. 
I think  they  will  compare  favorably  with  any  other  class  of  men  in 
the  comnmnity. 

Q.  Have  the  low  railroad  rates  had  any  thing  to  do  with 
the  system  of  contracting  through  from  the  west  to  the  Atlan- 
tic? 

A.  Well,  I think  when  the  extreme  low  rates  of  the  road  — when 
there  is  a railroad  war,  I think  it  does.  I don’t  think  only  at 
that  time  when  they  were  carrying  extremely  low  that  it  had. 

Q.  It  is  customary  for  owners  of  propeller  lines  to  contract 
through,  is  it  not  ? 

A.  Yes,  sir.  Most  of  the  boatmen  and  boat  owners  throughout 
the  State  complain  that  the  scalpers  are  in  their  employ  and  trying 
to  speculate  on  them;  that  is,  they  act  as  agents  and  they  pay  them 
for  it  when  they  know  they  are  at  work  directly  against  them,  and 
it  has  become  very  bitter,  very,  between  the  scalpers  and  the  boat 
owners  and  the  boatmen. 

Q.  Is  there  any  difficulty  between  Ihe  shippers  and  the  boatmen 
arising  out  of  that  business  ? 

A.  No,  sir.  These  boats  are  run  probably  nine-tenths  of  them  by 
individuals  ; they  own  the  boats.  A few  men  of  the  canal  own  ten 
or  twelve  boats  apiece,  but  there  is  no  regular  lines. 

Q.  Have  the  scalpers  any  thing  to  do  with  the  handling  of  the 
grain  or  the  elevating  of  the  grain  ? 

A.  No,  sir  ; only  for  the  trimming  of  the  boat, 

Q.  Who  pays  for  that  ? 

A.  The  boatmen. 

Q.  Is  that  included  in  the  charge  for  elevating  it  ? 

A.  No,  sir. 

Q.  How  much  does  that  cost? 

A.  Ten  shillings  a thousand. 

Q.  What  do  you  mean  by  trimming  a boat  ? 

A.  When  it  is  run  in  from  the  spout  of  the  elevator  they  spread 
it  around. 

Q.  Will  you  tell  us  of  the  twenty-three  or  twenty-four  scalpers  in 
town  how  many  do  a legitimate  business  ? 


240 

A.  That  I won’t  say,  sir. 

Q.  You  wouldn’t  like  to? 

A.  No,  sir. 

By  Mr.  Boyd  : 

Q.  You  say  that  there  are  only  twenty-three  scalpers  ? 

A.  There  is  some  along  about  there. 

Q.  The  legitimate  scalpers  and  the  illegitimate  ones? 

A.  All  together  ; I don’t  say  positive  that  there  are  twenty-three  ; 
there  were  that  many  houses  ; I haven’t  counted  them  up  lately  ; of 
course,  those  who  have  charge  of  these  boats  wlien  they  go  to  an 
elevator  to  load  there  is  so  much  for  trimming  in  ; the  next  thing 
when  they  make  their  bills  is  the  canal  insurance ; the  next  thing  is 
our  commission,  and  then  is  the  tug  towing  — towing  to  the  elevator. 

By  Mr.  Browning  : 

Q.  Who  pays  all  that  ? 

A.  The  captain  of  the  boat. 

Q.  Does  the  scalper  in  any  instance  pay  it  ? 

A.  No,  sir  ; we  pay  it  all,  but  it  is  put  in  our  bill  in  our  advances. 
By  Mr.  Boy’d  : 

Q.  The  scalper  pays  it  first  and  then  charges  it  to  the  boatmarn? 
A.  Yes,  sir. 

Q.  What  is  the  first  charge  that  you  have  to  pay  ? 

A.  We  pay  the  trimming  ; that  comes  from  the  boss  trimmer  at 
the  elevator  ; he  brings  in  his  book  and  we  pay  him. 

Q.  Vvho  pays  the  elevator  charges? 

A.  The  grain  pays  it. 

Q.  That  is  the  shipper  — the  owner  ? 

A.  Yes,  sir. 

Q.  Who  ^pays  the  back  charges  — the  lake  freight  ? 

A.  AYe  pay  it. 

AVhat  is  the  next  charge  you  pay  ? 

A.  We  pay  all  this  — everything  for  the  captain — because  he 
has  no  money,  and  sends  it  into  the  office ; we  will  say  we  pay  for 
the  trimming  ten  dollars  ; insurance,  we  will  say,  twenty-two  dollars  ; 
it  is  about  that  now ; we  will  say  for  the  commission,  twenty-four 
dollars  ; it  is  about  that  now  ; s;iy  for  a tug,  five  dollars,  and  the  back 
charges,  we  will  say,  $300  ; that  we  ])ay  to  the  receiver  here  ; then  we 
advance  the  captain,  we  will  say,  $200  — call  it  $550  ; that  we  have 


241 


advanced  on  that  cargo  ; we  draw  on  our  agent  in  Xew  York  for 
twenty  days  ; make  a draft  for  this  whole  amount ; pay  these  trim- 
mers as  they  come  in,  and  yay  the  insurance  men  as  they  come  in ; 
but  it  all  conies  out  of  the  captain. 

Q.  Who  is  your  agent  in  New  York  ? 

A.  We  have  several;  we  allow  them  three  dollars  apiece  for 
receiving  and  paying;  we  deduct  that  from  the  draft,  and  when  he 
collects  the  freight  in  New  York  he  collects  the  $550. 

Q.  You  take  a bill  of  lading  from  the  captain  in  Buffalo? 

A.  We  take  a bill  of  lading  from  the  shipper  and  give  him  a bill 
of  lading. 

Q . What  does  the  captain  do  with  the  bill  of  lading  — the  cap- 
tain of  the  boat  takes  the  scalper’s  bill  of  lading? 

A.  Yes,  sir. 

Q.  And  you  take  the  original  bill  of  lading? 

A.  Yes,  sir;  signed  by  the  captain  to  us  as  shippers.  The  cap- 
tain delivers  the  bill  of  lading  we  give  him  to  the  receiver  in  New 
York. 

Q.  About  how  much  on  an  average  do  the  captains  receive  for 
themselves  for  the  transportation  of  this  cargo  ? 

A.  It  depends  altogether  upon  the  price  we  get. 

Q.  I am  speaking  of  the  average  price  ? 

A.  Do  you  mean  net  or  gross  ? 

Q.  Net. 

A.  I should  say  at  this  year’s  prices  it  would  average  from  $T5  to 
$100. 

Q.  Pie  gets  $75  to  $100  net? 

A.  I should  say  it  would  average  about  that  — net  for  his  earn- 
ings. 

Q.  Pie  gets  $75  for  his  freight  to  new  York  ? 

A.  I should  judge  it  averages  about  that  through  the  season. 

Q.  Does  he  bring  a return  freight  back  ? 

A.  Yes,  sir. 

Q.  How  much  does  he  receive  on  his  return  freight  ? 

A.  I think  it  has  averaged  about  sixty  cents  a ton. 

Q.  How  much  would  it  be  on  a cargo  ? 

A.  It  probably  would  average  about  fifty-live  or  sixty  dollars, 

Q.  How  long  does  it  take  him  to  make  a round  trip  ? 

A.  From  twenty-seven  to  thirty  days. 

Q.  Does  he  provide  his  own  power  ? 

31 


242 


A.  Most  all  the  boats  do. 

Q.  Does  he  bear  his  expenses  out  of  this  that  you  call  the  net 
profit  ? 

A.  No,  not  out  of  this  seventy-five  dollars. 

Q.  You  put  the  power  in  that? 

A.  Yes,  sir;  if  yoirwant  the  gross  that  he  run  out  of  I would 
give  you  different  figures,  but  you  asked  me  for  the  net. 

By  Mr.  Browning  : 

Q.  What  would  you  put  the  gross  figures  at  ? 

A.  Two  hundred  and  twenty-five  dollars  for  the  down  trip. 

By  Mr.  Boyd  : 

Q.  What  do  the  canal  tolls  amount  to  usually  on  the  round  trip  ? 

A.  About  a cent  a bushel  on  the  car^o. 

Q.  And  that  is  paid  by  the  captain  ? 

A.  Yes,  sir. 

Q.  Do  the  scalpers  advance  that  for  him  ? 

A.  Yes,  sir  ; we  make  all  the  advance  and  take  it  out  of  the  freight 
and  draw  against  the  consignment  in  New  York. 

Q.  Explain  about  the  canal  insurance  ; you  say  every  cargo  is 
insured  ? 

A.  For  instance,  I take  a cargo  of  wheat  to  go  by  canal  ; I make 
an  application  to  the  insurance  company  and  they  bring  in  the  cer- 
tificates and  I deliver  them  to  the  shipper. 

Q.  That  is  to  insure  the  cargo  against  loss  ? 

A.  Yes,  sir. 

Q.  In  whose  interest  is  that  ? 

A.  The  shippers. 

Q.  What  do  the  insurance  charges  amount  to  on  an  average  ? 

A.  There  is  first,  second  and  third-class  boats  ; on  a second  class 
boat  the  rate  is  about  twenty-two  dollars,  and  on  the  first  would  be 
about  eighteen  dollars  to  twenty  dollars  ; that  depends  upon  the 
rates;  they  are  not  always  alike. 

Q.  This  insurance  is  made  in  the  interest  of  the  shipper  and  is 
paid  by  the  captain  of  the  boat  ? 

A.  Yes,  sir. 

C^.  How  long  has  that  custom  been  in  vogue  ? 

A.  Ever  since  I have  been  in  Buffalo  ; that  is  seventeen  or  eiarhteen 
years. 


243 


Q.  Is  there  any  other  information  you  would  like  to  state  to  this 
committee,  Mr.  Smith? 

A.  I don’t  think  of  any  thing;  I would  say  that  in  my  opinion 
I think  this  contracting  system  by  scalpers  on  the  canal  has  been  to 
the  detriment  of  the  boatmen,  from  a cent  to  a cent  and  a lialf  a 
bushel  on  each  cargo  all  summer,  which  would  make  from  $500  to 
$600  difference  with  their  earnings,  and  had  that  price  been  obtained 
it  would  not  have  diverted  a pound  of  freight  from  the  canal. 

Recess  until  3 o’clock,  p.  m. 


Afternoon  Proceedings. 

P,  G.  Cooh,  sworn  and  examined,  testified  as  follows : 

Q.  Where  do  you  reside  ? 

A.  In  this  city. 

Q.  What  is  your  business  ? 

A.  Secretary  and  treasurer  of  the  Western  Elevating  Company. 
Q.  How  long  have  you  been  such  secretary  ? 

A.  About  three  years,  three  years  and  a half. 

Q.  Do  you  understand  fully  the  method  of  operating  the  eleva- 
tors and  the  amount  of  business  done  by  them  ? 

A.  Yes,  sir. 

Q.  How  many  elevators  are  owned  by  the  company  ? 

A.  They  don’t  own  any  at  all. 

Q.  What  connection  have  they  with  them? 

A.  They  lease  them. 

Q.  The  company  leases  all  the  elevators  ? 

A.  Yes,  sir. 

Q.  Do  these  elevators  belong  to  private  individuals,  or  a corpora- 
tion ? 

Some  of  them  are  owned  by  corporations,  and  some  by  individ- 
uals ; mostly  by  individuals  though. 

Q.  How  many  elevators  are  there  in  the  city  of  Buffalo  so  leased 
by  the  company  ? 

A.  About  thirty-six,  including  floaters  and  transfers. 

Q.  Are  all  these  leased  by  the  company  ? 

A.  There  is  one  elevator  that  is  not,  one  that  is  running  now. 

Q.  What  elevator  is  that  ? 

A,  The  Connecting  Terminal. 


244 


Q.  Who  is  that  owned  by. 

A.  It  is  owned  by  some  corporation,  and  I think  E.  T.  Evans  is 
the  manager  ; I cannot  tell  the  owners. 

Q.  Who  is  it  operated  by  ? 

A.  He  operates  it. 

Q.  Is  it  operated  in  competition  with  the  company’s  elevators? 

A.  No,  sir. 

Q.  Will  yon  explain  to  the  committee  generally  the  system  by 
which  these  elevators  are  operated  and  how  used  ? 

A.  They  all  sign  a lease  to  this  company. 

Q.  Do  they  receive  a rent  ? 

A.  Yes,  sir. 

Q.  Do  the  owners  receive  the  rent  annually  ? 

A.  Yes,  sir. 

Q.  Do  they  receive  any  thing  else  excepting  the  rents  for  the 
elevators  ? 

A.  Yes,  sir ; there  maybe  a run  of  over  grain,  and  bagging 
grain  and  delivering  grain  to  the  cars. 

Q.  How  do  you  mean,  explain  more  fully  wha*t  is  meant  by  over- 
grain and  bagging  ? 

A.  When  it  comes  into  the  house  it  sometimes  has  to  be  run  into 
the  wagons,  or  some  such  thing  as  that,  and  for  that  they  will  make 
a charge,  and  that  the  elevator  has  itself. 

Q.  AYhat  have  been  the  charges  upon  the  average  for  the  last  two 
years  for  elevating  grain  ? 

A.  It  is  pretty  hard  to  tell  the  average  for  last  year;  this  year  it 
has  been  three-quarters  of  a cent  a bushel  for  the  charge  on  the 
grain . 

Q.  That  is  a uniform  charge  ? 

A.  Yes,  sir ; last  year  the  rate  varied  from  nothing  to  three-quar- 
ters of  a cent  ; three-quarters  was  the  highest. 

Q.  You  say  from  nothing  to  three-quarters  of  a cent ; was  there 
any  grain  elevated  for  nothing? 

A.  Yes,  sir;  free  of  charge  to  the  grain  ; outside  of  that  there  was 
a charge  to  the  vessel  of  one-eighth  of  a cent. 

Q.  Can  you  state  to  the  committee  what  quantity  of  grain  was 
elevated  during  the  season  of  1881  ? 

A.  The  amount  that  went  through  our  office  was  98,902,250 
bushels  — that  is  1880. 

Q.  Eighteen  hundred  and  eighty-one? 


245 


A.  Forty-nine  millions  four  hundred  and  ninety-two  thousand 
four  hundred  and  eighty-seven  bushels. 

Q.  For  1882  this  far  ? 

A.  About  47,500,000. 

Q.  How  long  does  the  season  for  running  the  elevators  last  ? 

A.  Generally  about  seven  months. 

Q.  Through  what  months? 

A.  AVell,  from  perhaps  the  middle  of  April,  though  very  often  not 
until  the  middle  of  May,  until  the  first  of  December 

Q.  The  opening  of  the  canal  and  lake  regulates  it,  1 suppose  ? 

A.  Yes,  sir. 

Q.  Do  you  elevate  any  for  the  railroads  ? 

A.  Yes,  sir. 

Q.  Do  you  know  what  quantity  of  grain  was  elevated  for  the 
canal  boats  during  these  seasons  you  have  mentioned  ? 

A.  I could  not  tell. 

Q.  You  don’t  know  what  quantity  was  elevated  for  the  railroads 
either,  do  you  ? 

A.  No,  sir  ; I have  nothing  to  show  that. 

Q.  What  is  the  reason  the  owners  of  the  elevators  do  not  operate 
them  themselves? 

A.  Each  one  for  himself,  do  you  mean  ? 

Q.  Yes,  sir. 

A.  As  soon  as  they  do  that  the  competition  is  so  great  they  don’t 
get  any  thing. 

Q.  Then  this  company  was  formed  for  the  purpose  of  combina- 
tion, combining  the  elevators’  interests,  was  it  ? 

A.  You  might  say  so,  it  was  to  protect  themselves. 

Q.  Do  you  think  it  would  be  in  the  interest  of  the  trade  to  have 
competition  instead  of  all  the  elevators  operated  by  one  company  ? 

A.  I think  it  would  hurt  it. 

Q.  Do  you  think  the  elevators  could  be  run  profitably  at  a smaller 
charge  than  the  charge  you  have  mentioned  ?' 

A.  Not  with  the  amount  of  grain  that  was  handled  this  year  and* 
last  it  could  not. 

Q.  You  have  said  you  didn’t  recollect  the  charges  of  last  year  ? 

A.  I could  not  tell  exactly. 

Q.  How  are  the  rates  regulated  ? 

A.  They  are  regulated  by  our  company. 

Q.  And  it  is  an  arbitrary  rate  regulated  by  the  company  ? 


246 


A.  The  rate  is  made  early  in  the  spring. 

Q.  Do  you  think  of  any  improvement  that  might  be  made  to  the 
present  elevating  system  in  the  city  of  Buffalo '( 

A.  I don’t  know  of  any  thing  that  would  help  the  business  any? 

Q.  There  are  a number  of  elevators  which  are  not  provided  with 
storage  capacities,  are  there  not  ? 

A.  Yes,  sir. 

Q.  Do  you  believe  it  to  be  in  the  interest  of  trade  to  have  the 
elevators  provide  storage  room  ? 

A.  I think  they  have  plenty  of  storage  room  here  now. 

Q.  That  is  not  the  question  — the  larger  elevators  have  storage 
room  ? 

A.  No,  sir ; I mean  we  have  all  we  need. 

Q.  What  storage  capacity  have  you  ? 

A.  Probably  seven  or  eight  million  bushels. 

Q.  Is  that  storage  attached  to  all  of  the  elevators  ? 

A.  All  of  the  elevators  that  we  call  storage  elevators,  yes,  sir. 

Q.  How  many  storage  elevators  have  you  in  this  city  ? 

A.  About  twenty-three  I believe,  storage  houses,  twenty-three  or 
twenty-four . 

Q.  How  many  that  have  no  storage  ? 

A.  Twelve  or  fourteen,  taking  in  the  floaters. 

Q.  How  many  of  those  elevators  are  operated  during  the  year  ? 

A.  I believe  there  is  only  seventeen  that  run  this  year,  the  busi- 
ness has  been  very  light. 

Q.  If  the  company  had  not  to  pay  rent  for  the  elevators  that  are 
not  in  use,  or  have  not  been  used,  and  were  not  compelled  to  divide 
their  profits  with  the  proprietors  of  the  elevators  that  have  not  been 
used,  do  you  believe  they  could  have  afforded  to  have  elevated  the 
grain  at  any  less  rate  than  they  charged  ? 

A.  Yes,  sir  ; I think  they  could  make  a fair  earning  if  only  the 
houses  that  run  participated  in  it. 

Q.  How  much  do  you  think  they  might  have  reduced  their  charges 
*per  bushel  ? 

A.  That  is  something  I never  figured  on. 

Q.  About  as  near  as  you  can  judge  ? 

A.  Not  much  less  than  half  a cent  a bushel,  they  could  make  a 
fair  profit  off  from  that. 

il.  About  half  a cent  ? 

A.  Yes,  sir. 


247 


Q.  Whereas  the  charges  were  three-quarters  ? 

A.  Yes,  sir. 

Q.  Who  ultimately  bears  the  burden  of  that  extra  charge  ? 

A.  The  grain  owner. 

Q.  The  shipper? 

A.  Yes,  sir  ; the  shipper,  or  owner. 

Q.  Of  course  the  consumer  ultimately  -as  to  do  that  ? 

A.  I presume  he  does,  yes,  sir. 

By  Mr.  Browning  : 

Q.  You  say  you  maxe  the  rate  at  the  beginning  of  the  year  ? 

A.  Yes,  sir. 

Q.  Why  do  you  make  the  rate  at  the  beginning  of  the  year  ? 

A.  So  the  parties  can  know  what  to  figure  on. 

Q.  What  was  the  rate  made  last  year  ? 

A.  It  started  at  live- eighths. 

Q.  What  was  the  reason  of  its  running  down  1 
A.  There  were  some  outside  elevators  that  fell  out  and  then  com- 
petition  commenced  and  they  put  the  rate  to  nothing. 

Q.  As  soon  as  they  fell  out  the  rate  went  down  ? 

A.  Yes,  sir. 

Q.  Then  they  all  came  together  again  afterward  ? 

A.  Yes,  sir. 

Q.  This  year  ? 

A.  That  year  later,  along  in  September. 

Q.  What  was  the  rate  just  previous  to  their  coming  together  ? 

A.  I guess  it  was  nothing  as  near  as  I can  recollect. 

Q.  What  was  it  immediately  after  they  came  together  ? 

A.  Three-quarters. 

Q.  And  to-day  it  is  what  ? 

A.  Three-quarters. 

Q.  And  has  been  since  the  first  of  this  year  ? 

A.  Yes,  sir;  since  la»t  October,  I think  it  was. 

Q.  Can  you  tell  us  how  much  grain  goes  through  this  city  east, 
that  is,  aside  from  what  passes  through  the  elevators  ? 

A.  1^0,  sir,  I cannot. 

Q.  What  proportion  goes  through  by  rail  ? 

A.  I never  noticed  that. 

Q.  What  proportion  of  wheat  goes  east  ? 

A.  I could  not  tell  you,  I never  watched  that  at  all. 


248 


Q.  Were  all  of  the  elevators  employed  last  year  at  the  time  you 
speak  of 

A.  There  were  twenty-four  running  then. 

Q.  How  many  floating  elevators  have  you  ? 

A.  Seven  now. 

Q.  Do  you  think  if  those  floating  elevators  were  dispensed  with 
that  the  other  elevators  could  elevate  and  discharge  cargoes  chea})er 
than  they  do  now  ? 

A.  It  might  make  some  difference,  but  I don’t  think  any  great 
difference. 

Q.  There  was  a witness  testified  yesterday  that  if  they  were  pre- 
vented from  doing  business  that  the  other  elevators  could  accommo- 
date the  trade  at  a less  sum,  do  you  concur  with  him  in  that  ? 

A.  I don’t  think  quite  to  the  extent  that  he  figures  on. 

Q.  Do  you  know  any  thing  about  this  scalping  business  ? 

A.  Yery  little,  I am  not  much  interested  in  it. 

Q.  Are  you  familiar  enough  with  the  business  to  state  what  you 
know  about  it  of  your  own  knowledge  — have  any  complaints  ever 
been  made  to  you,  or  to  the  elevating  company  from  others  in  rela- 
tion to,  the  methods  adopted  by  some  of  the  scalpers  ? 

A.  I have  heard  complaints  about  their  contracting  the  freight. 

Q.  Whom  were  the  complaints  made  by  ? 

A.  Some  from  other  scalpers,  and  some  from  outside  parties. 

Q.  What  complaints  have  come  to  your  knowledge  from  ^ other 
scalpers  ? 

A.  They  claim  it  hurts  the  canal  business,  cuts  the  rates  down  be- 
low their  contracts. 

Q.  Have  you  ever  received  complaints  from  boatmen  ? 

A.  Hot  in  an  official  capacity. 

Q.  You  have  heard  them  make  complaints  ? 

A.  I have  heard  them  make  complaints,  yes,  sir. 

Q.  What  has  been  the  nature  of  those  complaints  ? 

A.  The  same  thing,  that  they  claim  thes#  contracts  hurt  them, 
makes  the  scalpers  that  have  the  contracts  work  to  keep  the  rates 
down. 

Q.  State  how  they  do  that,  please  ? 

A.  I think  you  can  get  at  that  by  some  of  those  canal  men. 

C2.  I understand  there  is  ii  class  of  men  doing  business  here  as 
scalj>er8,  acting  as  the  agent  of  the  shipper  and  the  canal  men,  and 
who  lias  a contract  at  a certain  ])rice,  say  six  cents  a bushel,  and  they 


249 


will  then  go  outside  and  fix  a price  by  carrying  at  a less  rate,  say  five 
cents,  and  that  is  all  they  pay  the  boatmen,  because  that  price  has 
been  fixed  for  that  day,  or  for  that  time,  is  that  a fact  ? 

A.  I suppose  it  is,  yes,  sir. 

Q.  And  have  all  the  complaints  that  has  been  made  to  you  been 
of  that  nature  ? 

A.  I have  heard  such  things  stated,  yes,  sir. 

Q.  Are  you  a member  of  the  Produce  Exchange  here? 

A.  Yes,  sir,  I think  I am. 

Q.  Are  you  an  officer  ? 

A.  ISTo,  sir. 

Py  Mr.  Boyd  : 

Q.  Can  you  teli  us  the  cost  of  construction  of  the  seventeen  eleva- 
tors which  were  in  use  during  the  present  season  ? 

A.  'No,  sir,  I cannot. 

Q.  Can  you  tell  us  how  much  it  costs  to  operate  these  elevators  ? 

A.  No,  sir. 

Q.  Do  you  know  of  anybody  that  could  give  the  committee  that 
information  ? 

A.  Some  elevator  man  might  tell  you  what  it  cost  him  to  run  his 
elevator. 

Q.  Can  you  state  to  the  committee  the  amount  of  rent  paid  by  the 
compan  y to  each  of  the  elevators  ? 

A,  No,  sir,  I could  not. 

Q.  Could  you  obtain  that  information  for  the  committee? 

A.  Yes,  sir,  I suppose  that  could  be  had. 

Q.  The  Western  Elevating  Company  is  making  money,  is  it  not  ? 

A.  Whatever  comes  into  our  office  is  paid  out  to  the  elevators 
again,  deducting  the  expenses  of  running  the  office,  that  is  all. 

Q.  The  elevator  owners  form  the  company,  do  they  not  ? 

A.  Some  do,  the  owners  of  some  are  in  the  company,  yes,  sir. 

Q.  Are  there  any  elevator  owners  who  are  not  members  of  the 
company  ? 

A.  There  are  some,  yes,  sir;  that  we  don’t  have  on  our  books  at 
all. 

Q.  Can  you  tell  us  who  constitute  the  Western  Elevating  Com- 
pany ? 

A,  No,  sir,  I don’t  know  as  I could. 

32 


250 


Q.  About  how  many  members  constitiite  the  company? 

A.  Thirty-four  or  thirty-five. 

Q.  Can  you  give  ns  the  names  of  some  of  the  prominent  mem- 
bers of  the  company  ? 

A.  Yes,  sir,  I could  give  yon  some. 

Q.  Please  name  the  names  that  you  remember  ? 

A.  William  II.  Abell,  James  W.  Whitney,  C.  F.  Sternberg,  A.  J. 
Wheeler,  C.  J.  Wells,  John  Wilkesoii ; they  are  the  most  prominent 
ones. 

Q.  Are  those  gentlemen  all  residents  of  Buffalo  ? 

A.  With  the  exception  of  Mr.  Whitney. 

Q.  Is  there  any  other  information  that  you  would  like  to  offer  to 
this  committee  ? 

A.  I don’t  think  of  any  thing  now. 

William  Thurstone^  sworn  and  examined,  testified  as  follows  : 

Q.  Where  do  you  reside  ? \ 

A.  Buffalo. 

Q.  What  is  your  business  ? 

A.  Secretary  of  the  Board  of  Trade,  and  the  commercial  editor 
of  the  Courier. 

Q.  Are  you  familiar  with  all  the  operations  of  the  Board  of 
Trade  ? 

A.  Yes,  sir,  as  a Board  of  Trade. 

Q.  You  have  attended  during  the  business  hours  at  the  office  I 
suppose  ? 

A.  Yes,  sir,  for  nearly  twenty  years  past. 

Q.  How  long  have  you  been  secretary  of  the  Board  of  Trade  ? 

A.  Twenty  years  next  May. 

Q.  What  is  its  corporate  name  ? 

A.  The  Buffalo  Board  of  Trade 

Q.  What  is  sold  on  the  floor  of  the  Exchange  ? 

A.  Grain  of  all  kinds. 

Q.  Pork  ? 

A.  No,  sir. 

Q.  Lard  ? 

A.  No,  sir. 

Q.  Petroleum  ? 

A.  No,  sir,  simply  grain.  Our  business  was  very  large,  but  since 


251 


the  changing  of  the  mode  of  doing  the  business  it  has  fallen  olf  con- 
siderably. 

Q.  Is  the  system  of  dealing  in  futures  and  options  carried  on  in 
the  Board  of  Trade  ? 

A.  We  started  a call  board  in  June,  1877,  and  it  has  been  con- 
tinued since,  but  it  is  a weak  institution  and  it  has  not  been  success- 
ful in  Buffalo  ; it  might  be  in  exciting  times. 

Q.  Will  you  explain  the  operations  in  detail  of  the  call  board  ? 

A.  We  have  a caller,  and  I act  as  the  secretary  of  the  caller  ; the 
caller  announces  the  price  of  JSTo.  1 wheat  and  offers  are  made,  a man 
will  offer  what  he  will  give  for  it,  while  another  will  offer  what  he 
will  give,  and  another  offers  what  he  will  give  until  they  come  to 
figures  that  suits  and  then  a purchase  is  made;  if  not  it  is  passed. 
We  generally  call  two  or  three  options  on  wheat  and  corn  and  oats, 
on  winter  wheat  and  spring  wheat. 

Q.  How  are  the  prices  regulated  at  your  call  board  ? 

A.  Simply  by  the  prices  offered,  simply  what  a person  has  an  idea 
the  market  value  is. 

Q.  Is  it  infiuenced  by  the  Chicago  market  and  other  markets  ? 

A.  Yes,  sir ; by  the  Chicago  market. 

Q.  But  these  other  markets  have  no  direct  influence  upon  the 
operations  of  the  Exchange  as  an  institution  ? 

A.  Ho,  sir,  not  at  all. 

Q.  Can  you  tell  us  what  quantity  of  grain  has  been  sold  under 
the  option  and  future  system  during  the  present  season  ? 

A.  The  present  season  has  been  very,  very  small.  I looked  this 
morning,  thinking  you  would  ask  that  question,  and  I found  there 
has  not  been  quite  thirty  sales  during  the  year  on  a call,  and  gener- 
ally in  options  of  5,000  bushels,  sometimes  it  is  above  that,  but 
generally  it  is  5,000  bushels. 

Q.  What  has  the  largest  quantity  been  ? 

A.  That  I could  not  say.  may  be  20,000  bushels,  if  not  more.  I 
am  speaking  of  that  from  memory. 

Q.  You  place  the  average  at  about  5,000  bushels  in  each  call? 

A.  Yes,  sir. 

Q.  And  thirty  calls  is  all  that  has  been  made  this  year  ? 

A.  Yes,  sir. 

By  Mr.  Bkowning: 

Q.  Are  they  legitimate  sales,  are  they  for  consummation,  or  purelv 
speculative  ? 


252 


A.  I could  not  tell  you. 

By  Mr.  Boyd  : 

Q.  Does  the  so-called  system  of  bucket-shops  interfere  with  the 
operation  of  your  board  ? 

A.  We  know  nothing  of  it  as  a Board  of  Trade. 

Q.  What  is  your  opinion  in  regard  to  the  effect  of  such  institu- 
tions upon  the  commerce  of  the  country  ? 

A.  I have  not  given  that  a thought,  sir.  I think,  however,  all 
bucket-shops  as  bucket-shops  are  simply  gambling  operations  — 
simply  gambling  institutions. 

Q.  Do  you  think  it  would  be  in  the  interest  of  the  public  to  have 
the  so-called  bucket-shops  abolished  by  law  ? 

A.  I have  not  given  that  a thought. 

Q.  Is  there  any  other  information  that  you  would  like  to  offer  to 
the  committee? 

A.  I don’t  know  of  any  thing  in  particular,  except  that  I have  a 
little  book  here  called  ^‘Five  minutes’  talk  about  Buffalo,”  which  will 
probably  give  you  considerable  information  you  desire.  I have 
given  10,000  of  these  away. 

(Witness  j)roduces  book  to  the  committee.) 

Q.  Will  you  offer  this  in  evidence  as  a portion  of  your  testimony 
before  this  committee  ? 

A.  Yes,  sir. 


EXHIBIT  ^^A.” 

Trade  aitd  Commerce  of  Buffalo. 

Summary . 

Annexed  will  be  found  full  statistics  of  the  trade  and  commerce  of 
Buffalo  for  1881,  with  comparisons  of  previous  years,  in  flour,  grain, 
lumber,  coal,  live  stock,  etc.  The  exhibit  on  the  whoh^  is  not  as  satis- 
factory as  that  of  1880,  but  still  the  business  transacted  wasrpiitc  large. 
The  following  is  a brief  synopsis  of  the  most  important  features  : 

The  receipts  of  flour  (reduced  to  wheat  bushels)  and  grain  in  1881 
by  lake  at  i’uffalo  aggregated  02,002,895  busliels;  by  the  Lake  Shore  & 
Michigan  Southern  railroad  85,508,400  bushels  — grand  total,  97,571,- 
295  bushels.  The  other  railroads  centering  liere  do  not  make  any  re- 
ports of  their  traffic,  otherwise  a much  larger  exhibit  would  be  shown. 

The  growth  of  the  grain  trade  of  Buffalo  is  shown  by  the  following 


253 


figures:  In  1836  the  receipts  by  lake  were  1,230,351  bushels  ; in  1846, 
13,366,168  bushels  ; in  1856,  25,753,967  bushels;  in  1866,  53,388,087 
bushels;  in  1877,  50,074,648  bushels;  in  1877,  65,109,291  bushels;  in 
1878,  84,046,052  bushels  ; in  1879,  78,805,354  bushels,  and  in  1880, 
112,042,927  bushels.  The  aggregate  receipts  by  lake  of  flour  and  grain 
from  1836  to  1881  inclusive  were  1,700,372,075  bushels. 

The  receipts  of  the  products  of  the  forest  on  the  whole  were  satisfac- 
tory; prices  of  all  kinds  were  higher  than  last  year,  and  the  stocks  of 
greater  magnitude  than  ever  before  known  at  the  close  of  navigation, 
but  not  more  than  the  business  prospects  Avarrant  from  the  demand 
manifested  ; the  trade  all  the  year  was  very  good. 

The  growth  of  the  coal  trade  is  specially  noticeable,  and  it  would 
have  been  larger  had  .the  transportation  facilities  from  the  mines  been 
adequate  to  the  requirements.  The  total  imports  of  all  kinds  aggre- 
gated 2,243,571  tons  ; against  1,813,095  tons  in  1880.  Higher  prices 
ruled  this  year  than  those  of  1880.  The  large  demand  from  manufac- 
turers and  others  indicated  the  rapid  enlargement  of  the  productive 
capabilities  in  all  branches  of  the  business  establishments  of  our  city. 

The  liA^e  stock  trade  of  Buffalo,  as  will  be  seen  from  our  full  state- 
ment of  it,  shows  a falling  off  in  receipts  this  year,  as  compared  Avith 
last,  of  7,605  cars  of  cattle,  3,222  cars  of  hogs,  and  255  cars  of  sheep. 
Yet  the  strictly  local  trade  has  been  larger,  and,  Avith  higher  prices, 
business  has  been  fully  as  remunerative  as  last  year. 

The  shipments  of  grain  from  the  elevators  by  railroads  connected 
therewith  aggregated  21,808,356  bushels,  Avhich,  considering  the  re- 
duced receipts  by  lake,  indicate  a larger  movement  than  last  year,  al- 
though not  apparent  from  the  footings. 

The  exports  by  lake  for  the  past  season  included  825,240  tons  of  coal  ; 
170,410  barrels  of  cement  and  plaster;  109,810  barrels  and  11,655  tons 
of  salt,  and  44,462  tons  and  23,100  bars  of  railroad  iron.  The  tonnage 
of  the  western-bound  freight  carried  by  propellers  Avas  large  but  fell 
far  short  of  1880. 

The  straits  of  Mackinaw  opened  May  3.  The  first  arrival  at  this 
port  by  lake  was  the  tug  Anna  P.  Dorr  on  May  1.  On  Tuesday,  a.  m.. 
May  3,  the  schooner  M.  J.  Wilcox  left  for  Racine  — the  first  of  the  sea- 
son. The  propeller  Vanderbilt,  laden  Avith  AV'heat,  flour,  pork,  etc.,  ar- 
rived here  Monday,  p.  m..  May  9 ; the  first  arrival  from  Chicago.  The 
Erie  canal  opened  May  17,  and  closed  December  6 ; number  of  days  of 
navigation,  204.  The  Welland  canal  (Canada)  opened  May  2,  and 
closed  December  19.  The  first  propeller  to  pass  through  the  Sault  Ste. 
Marie  canal  was  the  China,  May  13  ; the  last  propeller  the  Wissaliickon, 
November  29. 


254 


The  disasters  during  the  year  on  tlie  lakes  were  numerous  and  losses 
heavy;  over  sixty  persons  were  drowned. 

The  grain  and  forwarding  business  of  Central  Wharf  this  year  proved 
to  be  generally  unsatisfactory,  in  the  face  of  great  national  prosperity. 
The  competition  of  the  railroad  companies  for  freights  at  ruinous 
prices  caused  extraordinary  low  rates  of  freight  by  lake  and  canal,  the 
unsettled  condition  of  the  markets,  the  damage  to  the  crops  by  the 
weather,  and  the  wild  speculation  which  prevailed  at  different  periods 
developing  all  sorts  of  devices  for  making  the  rich  richer  and  upsetting 
the  calculations  of  the  steady-going  merchants,  were  the  chief  factors 
in  producing  the  extraordinary  features  of  the  season’s  business.  The 
principal  sufferers  were  the  boatmen  on  the  canals  of  this  State,  the 
bulk  of  whom  have  gone  into  winter  quarters  at.best  penniless  and  in 
many  cases  deeply  in  debt. 

The  approximate  ruling  rates  of  the  various  leading  articles  of  pro- 
duce on  December  30,  this  year,  as  compared  with  1880,  show  an  ad- 
vance in  flour,  wheat,  corn,  rye,  oats,  beans,  seeds,  cornmeal,  oatmeal, 
pork,  lard,  dressed  hogs,  high  wines,  potatoes,  butter,  eggs,  cranberries, 
apples,  salt,  coal,  fish,  with  a small  decline  in  barley,  malt,  millfeed, 
cheese,  lemons;  the  other  articles  enumerated  about  the  same. 

The  capacity  of  the  flouring  mills  of  the  city  and  suburbs  may  be 
estimated  at  1,250,000  barrels  annually ; all  the  modern  improvements 
have  been  added. 

The  malting  interest  is  a very  important  one;  sixty  malt-houses 
have  been  in  operation  during  the  year,  turning  out  over  3,000,000 
bushels  of  malt. 

The  amount  of  capital  invested  in  manufactures  of  all  kinds  is 
estimated  at  $27,000,000;  the  annual  value  of  the  products,  $45,000,- 
000  ; the  number  of  hands  employed,  25,000.  The  banking  capital  is 
$3,000,000,  with  resources  equally  large. 

Lake  freights  on  grain  from  Chicago  to  Buffalo  fluctuated  from  half 
a cent  per  bushel  on  wheat  and  corn  to  5^c  and  5c  respectively  ; the 
average  for  the  season  was  3^c  on  wheat  and  2fc  on  corn.  Coal  was 
carried  from  this  port  to  Chicago  at  rates  varying  from  75c  to  $1.75 
per  ton  ; the  average  was  about  $1.20  per  ton.  Many  propellers  were 
withdrawn  from  the  various  lines  before  the  close  of  navigation  for 
want  of  freight. 

Railroad  freights  opened  at  10-^c  for  wheat  and  10c  for  corn  per 
bushel,  hence  to  New  York,  and  closed  at  8c  and  7^c  respectively. 
From  the  IGth  of  June  to  the  18th  of  November,  6 cents  was  the 
nominal  rate  on  wheat. 

JJie  elevator  owners  were  at  logger-heads  nearly  all  the  season  and 
rates  ruled  from  one-eighth  of  one  cent  per  bushel  to  the  vessel  and 


255 


^‘nothing”  to  the  grain  to  three-quarters  of  one  cent  per  bushel  to 
the  grain  and  one-eighth  of  one  cent  to  the  vessel.  The  public  can- 
not complain  of  extortionate  rates  this  year  ! The  amount  of  grain 
handled  by  the  Western  Elevating  Company  was  about  49,000,000 
bushels,  a decrease  from  1880  of  nearly  50,000,000  bushels. 

Transferring  grain  from  elevator  to  cars  cost  half  a cent  per  bushel  ; 
trimming  in  lots  of  less  than  five  cars  $1  per  car  extra;  five  cars  and 
over  free. 

The  arrivals  and  departures  of  vessels  in  the  district  of  Buffalo  creek 
for  the  season  of  1881  were  6,745,  aggregating  4,535,223  tonnage  ; last 
year  10,308  vessels  of  5,995,746  tonnage  ; a decline  in  the  movement  of 
vessels  of  35  per  cent,  while  in  tonnage  it  is  only  about  24  per  cent,  show- 
ing that  the  small  craft  have  to  give  way  to  their  large  and  more  econ- 
omical rivals.  The  tonnage  of  vessels  built  and  enrolled  was  11,899.51. 
The  tonnage  of  vessels  built,  5,233.64.  Forty-nine  vessels  changed 
hands  by  total  transfer.  The  total  tonnage  of  the  port  at  the  close  of 
the  fiscal  year  ending  June  30  was  217  vessels,  of  100,815.43  tonnage^ 
exclusive  of  canal  boats  other  than  steam,  of  which  the  custom-house 
does  not  now  keep  a record.  Only  eighty-eight  vessels  of  all  kinds  are 
laid  up  here  for  the  winter  ; the  bulk  of  the  lake  fleet  is  in  Chicago, 
numbering  over  1,000  vessels. 

The  receqDts  at  the  custom-house  during  1881  were  $810,121.45, 
against  $767,628.48  in  1880,  and  $513,562.18  in  1879.  Avery  gratify- 
ing increase  in  1881,  over  1880,  of  $42,492.97.  * 

The  decline  in  the  canal  commerce  is  very  marked.  Tlie  amount  of 
tolls  collected  at  this  port  during  the  season  of  1881  aggregated  only 
$325,674.32,  as  compared  with  $736,631.10  in  1880.  The  number  of 
boats  cleared,  6,294  ; last  year,  10,623. 

The  hindrances  to  canal  navigation  during  the  season  were  few,  and 
the  breaks  and  damages  were  speedily  repaired.  The  open  weather  at 
the  close  of  the  year  enabled  all  the  boats  to  reach  tide-water  that 
Avere  laden  with  through  freight. 

The  exports  by  canal  from  Buffalo  were  4,465  barrels  of  flour  and 
30,805,949  bushels  of  grain,  a decline  of  over  15,000  barrels  of  flour 
and  about  41,000,000  bushels  of  grain.  The  total  tons  (;^rried  of  all 
articles  aggregated  1, 121,240  (less  than  half  of  1880),  of  the  values  of 
$34,782,568.  Over  45,000  tons  of  flax  seed  were  shipped  ; nearly  twice 
as  much  as  in  1880  and  four  times  that  of  1879.  The  movement  of 
coal  was  largely  in  excess  of  1880. 

Between  seven  and  eight  hundred  canal  boats  are  laid  up  here  this 
season,  a most  unprecedented  occurrence,  and  indicative  of  the  boat- 
men’s hard  lot. 

Again  the  beneflcial  results  arising  from  the.“  free  list”  is  shown  by 


256 


large  westward  moving  tonnage  on  the  canal  for  Buffalo.  Tlie  aggregate 
figures  of  the  imports  here  were  001,879  tons,  of  the  value  of  811,048,- 
980  ; the  tonnage  of  1880  was  557,604,  and  of  1879,449,453.  Coal, 
iion,  steel  blooms,  stone,  lime,  rock  and  superphosphates,  foreign  salt, 
crockery  and  coffee  were  the  principal  articles  upon  which  the  gain 
was  made.  Tliis  up-freight  movement  was  of  great  advantage  to  the 
boatmen,  as  without  it  they  would  have  been  obliged  to  discontinue 
their  business  entirely,  as  the  down-freight  loads  were  almost  always 
taken  at  a loss. 

Canal  freight  hence  to  New  York  fluctuated  from  seven  cents  on 
wheat  and  six  and  one-half  cents  on  corn  per  bushel  to  four  cents  and 
three  and  one-half  cents  respectively ; the  average  for  the  season  was 
four  and  one-fourth  cents  for  wheat  and  three  and  three-fourths  cents  for 
corn,  tolls  included.  Pine  lumber  per  1,000  feet  ranged  from  82  to 
83.50,  and  staves  81  to  1.75  per  ton  to  New  York.  Merchandise  from 
New  York  to  Buffalo  varied  from.  81.25  to  seventy  cents  per  ton ; the 
average,  eighty-five  cents  to  ninety  cents. 

The  receipts  of  flour  and  grain  at  tide-water  from  all  the  canals  this 
year  were  only  38,542,500  bushels,  as  compared  with  72,397,800  bush- 
els in  1880. 

The  export  movement  of  flour  and  grain  from  New  York  for  the 
year  1881  aggregated  about  97,508,000  bushels  (including  flour  reduced 
to  its  equivalent  wheat),  a decrease,  as  compared  with  1880,  of  38,217,_ 
009  bushels. 

The  receipts  of  flour  and  grain  at  the  western  lake  ports  of  Chicago, 
Milwaukee,  Toledo,  Detroit,  Cleveland  and  Duluth,  from  January  1 
to  December  31,  aggregate  224,684,041  bushels,  a decrease  of  about 
39,000,000  bushels  as  compared  with  the  figures  of  1880.  The  ship- 
ments for  the  same  period  from  these  places  were  212,668,447  bushels, 
showing  a decrease  of  about  30,667,000  bushels. 

The  world’s  wheat  harvest  for  1881,  as  estimated  from  crop  returns, 
aggregates  1,992,000,000  bushels. 

Comparative  Imports  by  Lake. 


The  follo'vTing  table  shows  the  imports  of  principal  articles  into  this 
port  by  lake  for  the  years  1879,  1880  and  1881  : 


AkIu^s  tons.  

1879. 

700 

1880. 

1881. 

400 

Beans,  )ja  

Barley,  bu 

jikjrw  

200 

610,740 

26,640 
335,925 
105  , 

600 

282,510 

I'.ae.dii,  l)X.s. . . 

1,320 

4,283 

600 

1,550 

Broomcorn,  bales 

ItmoiriH  jikjcM  . . 

103 

3,553 

deal,  tons 

34,648 

13,078 

7,860 

(!oni,  bn *. . . . 

32,990,993 

62,214,717 

34,434,830 

('edar  |»o>t.s,  no 

16,730 

8,865 

40,200 

257 


Cornmcal,  bbls 

Copper,  pkfj’s 

Copper,  toDS  

Copper,  cukes  and  bars 

Eggs,  pkgs 

Fish,  pkgs 

Flour,  bbls 

Flaxseed,  bags 

Flax  seed,  bu 

Feed,  tons 

Feed,  sks 

Grindstones,  tons 

Hides,  no 

Hides,  bdls 

Hops,  bales 

Hams,  tcs  

Hoops,  no 

Hoop  poles,  no 

Heading,  bbls 

Iron  ore,  tons. . 

Iron,  pig,  tons 

Iron,  tons 

Iron,  scrap,  lbs 

Lead,  tons 

Lead,  pigs 

Leather,  rolls 

Lard,  lbs 

Lard,  tcs 

Lard,  pkgs 

Lard,  bbls 

Lumber,  feet 

Lath,  pcs 

Meats,  cut,  bxs 

Oats,  bu 

Oatmeal,  bbls 

Oatmeal,  bags 

Oil  cake,  pkgs 

Oil  cake,  tons 

Oil,  bbls 

Pickets,  no 

Pork,  bbls 

Peas,  bu 

Pelts,  bells 

Rye,  bu 

Sundries,  pkgs 

Silver  ore,  pk^gs 

Seed,  bags 

Seed,  bu 

Stone,  cords 

Salt,  bbls 

Staves,  no 

Stave  bolts,  cords 

Shingles,  no 

Shooks,  bdls  

Shooks,  no 

Tobacco,  pkgs 

Tallow,  bbls 

Ties,  no 

Wool,  bales 

Wood,  cords 

Wheat,  bu 


1879. 

2,000 

12,085 

6,064 

17,791 

186 

5,120 

897,105 


8,399 


132 

952 


14,579,000 


14,471 

25,380 

8,431 

127 

256,000 

46 

6,285 

40 

804,920 

81,831 

18,568 

1,850 

202,443,612 

4,644,000 


1,104,793 

2,500 

4,443 

51,047 

379 

480 

7,190 

33,570 

25,797 

754 

1,884,802 

75,000 

536 

293,742 

344,312 

59 


12,070,597 

8.640 

59,793,700 

1,541 

767,000 

4,143 

551 

271,693 

2,427 

1,400 

37,788,501 


1880. 

7,440 

2,840 

9,971 

1,100 

820 

12,967 

1,317,911 

177,'748 

1,378,886 

67 

86,717 

280 

1,337 

6,541 

271 

1,500 

10,705,700 

170,000 

45,597 

8,468 

9,048 

2,011 

28,600 

1,220 

19,127 

1,058 

247’ 120 


214,169,352 

4,673,050 

35,770 

1,649,350 

3,886 

27,465 

89,995 

150 

3,099 


40,428 

10,775 

3,828 

743,451 

100,000 


85,828 

82,100 

534 

3,228 

7,875,884 

10,101 

33,058,000 

1,060 


6,026 

3,512 

167,994 

2,282 

893 

40,510,229 


1881. 

14,320 

410 

16,540 

1,901 

1,938 

4,750 

1,051,250 


2,178,938 
*86’ 094 


3,915 


7,964,000 


8,516 

13,747 

10,820 


53,000 

111 

17,243 

73 


25,424 


240,802,160 

2,863,000 


3,565,737 

1,660 


45,497 

80 


11,922 

6,038 

2,371 

22,210 

110,000 


23,221 


214 

’379'86, 275 
10,065 
25,249,000 
964 


9,356 

1,782 

419,842 

2,684 

2,760 

18,495,-320 


Aggregate  receipts  of  fiour  and  grain. 


1879.  1880.  1881. 

Flour,  bbls 897,105  1,317,911  1,051,250 


Wheat,  bu 37,783,501  40,510,229  18,495,320 

Corn,  bu 32,990,993  62,214,417  34,434,830 

Oats,  bu 1,104,793  1,649,350  3,565,737 


33 


258 


Barley,  bu 

Rye,  bu 

Peas,  bu 

Total  grain,  bu 
Flour  to  wheat,  bu... 

Grand  total,  bu. 


1879. 

610,740 

1,914,802 

797 

1880. 

335,925 

743,451 

10,775 

1881. 

282,510 

22,216 

6,038 

74,405,626 

105,464,147 

56,806,645 

4,482,525 

6,589,555 

5,246,250 

78,891,151 

112,053,702 

62,062,895 

Grain  Trade  of  Buffalo  for  Forty-six  Years. 

The  following  statement  shows  the  grain  trade  of  Buffalo  for  forty- 
six  years  (the  receipts  by  the  Lake  Shore  Railroad  not  included): 


Years. 
1836  . . 
1S37  . . 

1838  . . 

1839  . . 

1840  . . 

1841  .. 
184-2  . . 

1843  . . 

1844  . . 

1845  . , 

1846  . . 

1847  .. 

1848  . . 

1849  . . 

1850  . , 

1851  . . 

1852  . , 

1853  . , 

1854  ., 

1855  . , 

1856  . . 

1857  . , 

1858  . . 

1859  . , 

1860  . , 
1861  . , 
1862  . , 

1863  . 

1864  . , 

1865  . . 

1866  . , 

1867  ., 

1868  .. 

1869  . , 

1870  ., 

1871  ., 

1872  . , 

1873  ., 

1874 

1875  . , 

1876  . , 
1877* 


Flour,  bbls. 
139,178 
126,805 
277,620 
294,125 
597,142 
730,040 
734,408 
917,517 
915,030 
746,750 
1,374,529 

1.857.000 

1.249.000 
1,207,435 
1,103,039 
1,-258,224 
1,299,213 

975,557 
739,756 
936,761 
1,126,048 
845,953 
1,536,109 
1,420,333 
1,122,335 
2,159,591 
2,846,022 
2,978,089 
2,028,520 
1,788,393 
1,313,543 
1,440,056 
1,502,731 
1,598,487 
1,470,391 
1,278,077 
762,502 
1,259,205 
1,693,585 
1,810,402 
807,210 
693,044 


Wheat,  bu. 
304,090 
450,350 
933,117 
1,117,262 
1,004,561 

1,635,000 
1,555,420 
1,827,241 
2,174,500 
1,770,740 
4,744,184 
6,489,100 
4,520,117 
4,943,978 
3,681,347 
4,167,121 
5,549,778 
5,420,043 
3,510,782 
8,022,126 
8,465,671 
8,334,179 
10,671,550 
9,234,652 
18,502,645 
27,105,219 
30,435,831 
21,240,348 
17,677,549 
13,437,888 
10,479,694 

11.879.685 
12,555,215 
19,228,546 
20,556,722 
22,606,217 
14,304,942 
30,618,372 
29,778,572 

32.967.686 
19,324,612 
23,284,405 


Corn,  bu. 
204,355 
94,490 
34,148 


71,337 

201,031 

454,530 

223,966 

137,978 

54,200 

1,455,258 

2,862,800 

2,298,000 

3,321,651 

2,593,378 

5,988,775 

5,136,746 

8,065,793 

10,108,983 

9,711,430 

9,633,277 

5,713,611 

6,621,668 

3,113,653 

11,386,217 

21,024,657 

24,388,627 

20,086,912 

10,478,681 

19,840,901 

27,894,798 

17,873,638 

16,804,067 

11,549,403 

9,410,128 

26,110,769 

34,643,187 

28,550,828 

24,974,518 

22,593,891 

20,939,853 

33,362,866 


1878*  .. 

971,980 

35,419,136 

35,133,853 

Grain, 

bush. 

1879*  .. 

897,105 

37,788,501 

32,990,993 

Y ears. 

1880*  .. 

1,317,911 

40,510,229 

62,214,417 

1881*  .. 

1,051,250 

18,495,320 

34,434,830 

1836  

1837  

543,461 

Oats,  bu. 

Barley,  bu. 

Rye,  bu. 

1838  

974,751 

1836  ... 

28,640 

4,876 

1,500 

1839  

....  1,117,262 
....  1,075,883 

1 837  . . . 

2,553 

3,267 

1840  

1 838  . . . 

6,577 

909 

1841 

....  1,852,325 

1839  ... 

.... 

1842  

2,015,928 

1840  ... 

1843  

....  2,055,0-25 

1841  ... 

14’,i44 

2,150 

1844  

....  2,335,568 

Y’ears. 

Oats,  bu. 

Barley,  bu. 

Rye,  bu. 

1842  ... 

4,710 

1,268 

1843  . .. 

2,'489 

. . . • 

1,332 

1844  ... 

18,017 

1,617 

456 

1845  . . . 

23,300 

. . * . 

1846  . . . 

218,300 

28,250 

1847  ... 

446,000 

70,787 

1848  ... 

560,000 

.... 

17,889 

1849  . . . 

362,384 

1850  . . . 

357,580 

3,600 

1851  ... 

1,140,340 

142,773 

10,652 

1852  ... 

2,596,231 

497,913 

112,251 

1853  . . . 

1,580,655 

401,098 

107,152 

1854  ... 

4,401,739 

313,885 

177,066 

1855  ... 

2,693,222 

62,304 

299,591 

1856  . . . 

1,733,382 

46,327 

245,810 

1857  . . . 

1,214,760 

37,844 

48,53() 

1858  ... 

2,275,231 

308,371 

125,214 

1859  .. . 

394,502 

361,560 

124,693 

1860  ... 

1,209,594 

262,158 

80,822 

1861  ... 

1,797,905 

313,757 

337,764 

1862  ... 

2,624,932 

423,124 

791,564 

1863  ... 

7,322,187 

641,449 

422,309 

1864  . . . 

11,682,637 

465,057 

633,727 

1865  ... 

8,494,799 

820,563 

877,676 

1866  ... 

10,227,472 

1,606,384 

1,245,485 

1867  . . . 

10,933,166 

1,80-2,598 

1,010,693 

1868  ... 

11,492,472 

637,124 

947,323 

1869  ... 

5,459,347 

651,339 

126,093 

1870  . . . 

6,846,983 

1,8-21,154 

6-26,154 

1871  ... 

9,006,409 

1,946,923 

1,095,039 

1872  . . . 

6,050,045 

3,088,925 

301,809 

1873  ... 

5,972,346 

1,232,507 

906,947 

1874  ... 

5,396,781 

1,154,948 

167,301 

1875  . . . 

8,494,124 

916,889 

222,1-26 

1876  ... 

2,397,257 

2,616,081 

761,795 

1877*  . . 

4,-279,229 

1,652,568 

1,155,003 

1878*  . . 

5,122,972 

1,375,184 

2,135,007 

1879*  .. 

1,104,793 

610,740 

1,884,80-2 

1880*  .. 

1,649,350 

335,925 

743,451 

1881*  .. 

3,565,737 

282,510 

22,-210 

Grain,  including 
flour,  bush. 
1,239,351 
1,184,68^ 
2,587,887 
2,362,851 
4,061,598 
5,59-2,2-25 
5,687.468 
6, 642, 6 1C 
6,910,718 


259 


Grain, 

Grain,  including 

Y"  ears. 

bush. 

flour,  bush. 

1845  .... 

1,848,040 

5,581,790 

1846  .... 

6,491,522 

13,366,167 

1847  .... 

9,868,187 

19,153,187 

1848  .... 

7,396,012 

14,641,018 

1849  .... 

8,628,013 

14,665,189 

1850  .... 

....  6,618,004 

12,059,551 

1851  .... 

11,449,621 

17,740,784 

1852  .... 

. ...13,392,937 

20,390,506 

1853  .... 

11,078,741 

15,956,525 

1854  .... 

...  .18,553,455 

22,252,238 

1855  .... 

....  19,788,473 

24,472,277 

1856  .... 

20,123,667 

25,753,965 

1857  

15,348,930 

19,578,690 

1858  

20,202,444 

26,812,982 

1859  

14,429,069 

21,530,722 

1860  

31,441,440 

37.053,115 

1861 

50,662,646 

61,460,601 

1862  

58,642,344 

72,872,454 

1863  

49,845,065 

64,735,510 

1864  

42,044,496 

51,177,146 

1865  

....  .42,473,223 

51,415,188 

1866  

51,820,342 

53,388,087 

1867  

, . . . 43,499,780 

50,700,060 

1868  

42,436,201 

49,949,856 

1869  

37,014,728 

45,007,163 

1870  

39,261,141 

46,613,096 

1871 

60,765,357 

67,155,742 

1872  

62,260,332 

1873  

67,340,570 

73,636,595 

1874  

61,562,627 

70,030,552 

1875  

65,194,716 

74,246,726 

1876  

46,038,598 

50,074,648 

1877*  . . . . 

61,734,071 

66,199,291 

Grain,  Grain,  including 
Years.  bush.  flour,  bush. 

1878* 79,176,152  84,046,052 

1879* 74,379,829  78,865,354 

1880* 105,453,372  112,042,927 

1881* 56,806,645  62,062,895 

COMPARED  BY  DECADES. 

Grain,  Grain,  including 
Years.  bush.  flour,  bush. 

1836  543,461  1,239,351 

1846  6,491,522  13,366,167 

1856  20,123,667  25,753,966 

1866  51,820,342  53,388,087 

1876  46,038,598  50,074,648 


AGGREGATE  RECEIPTS  COMPARED. 


Decades. 

1836  to  1845.. 
1846  to  1855.. 
1856  to  1865.. 
1866  to  1895.. 

1876  

1877* 

1878* 

1879*  

1880*  

1881* 


Grain,  Gram,  including 
bush.  flour,  bush. 


14,368,908 

113,766,005 

344,213,324 

526,976,775 

46,038,598 

61,734,071 

79,176,152 

74,379,829 

105,453,372 

56,806,645 


41,851,483 

174,717,437 

432,390,318 

597,121,670 

50,074,648 

66,199,291 

84,046,052 

78,865,354 

112,042,927 

62,002,895 


Total  66  yrs  . 1,424,695,728  1,700,372,075 


* Canadian  receipts  through  custom  house 
not  included  in  1877,  1878,  1879,  1880  and 
1881. 


Keceipts  by  the  Lake  Shore  & Michigan  Southern  Eailroad. 


The  following  table  shows  the  principal  receipts  at  Buffalo  by  the 
Lake  Shore  & Michigan  Southern  Eailroad  for  the  year  ending  De- 
cember 31,  1881,  as  compared  with  those  of  1880  and  1879  : 


Flour,  bbls 

Wheat,  bu 

Corn,  bu 

Oats,  bu 

Barley,  bu . , 

Rye,  bu 

Total  grain,  bu  . . 
Flour  to  wheat,  bu 

Grand  total,  bu. . 


Beef,  bbls  and  tcs 

Butter,  lbs 

Bacon,  lbs 

Broomcorn,  bales 

Coal,  tons 

Cattle,  cars 

Cheese,  bxs 

Cotton,  bales 

Cornllieal,  bbls. . . 

Eggs,  pkgs 

Fish,  pkgs 

Grindstones,  no.. 


1879.  1880.  1881. 


1,187,700 

925,100 

889,800 

12,916,700 

15,947,800 

8,869,100 

753,000 

776,200 

11,084,000 

13,949,400 

6,905,000 

710,300 

913,600 

8,343,400 

16,761,200 

5,409,000 

235,800 

340,000 

39,262,800 

5,938,500 

33,562,300 

4,625,500 

31,059,400 

4,449,000 

45,201,300 

38,187,800 

35,508,400 

183.100 

17.538.000 

94.540.000 
14,047 
70,808 
36,146 

121.100 
119,572 
212,700 

26,590 

26,420 

21,170 

124,920 

30.210.000 

38.530.000 
12,690 
75,721 
38,413 

130,150 

96,000 

254,100 

32,030 

26,725 

37,210 

79,510 

20,100,000 

31,950,000 

14,895 

88.949 
30,799 
85,860 

73.950 
242,000 

35,745 

16.950 
23,970 

260 


Hides,  no 

Horses,  cars 

Hops,  bales 

Hogs,  cars 

Hemp,  bales 

Hams,  tcs 

Iron,  plates,  no 

Iron,  pig,  tons 

Leather,  rolls 

Lard,  lbs 

Lumber,  cars 

Oil  cake,  pkgs 

Oil,  refined,  bbls. . . . 

Oil,  crude,  bbls 

Pork,  bbls 

Pelts,  bdls 

Seed,  bags  

Stones,  tons 

Staves,  cars 

Sheep,  cars 

Tobacco,  pkgs 

Tobacco,  hhds 

Tallow,  bbls  or  pkgs 

Tanbark,  cars 

Whisky,  bbls 

Wool,  bales 


for  this  city  : 

Flour,  bbls 

Wheat,  bu 

Corn,  bu 

Oats,  bu 

Barley,  bu 

Rye,  bu 

Hides,  no 

Fish,  pkgs 

Lumber,  cars, , . . , 
Oil,  refined,  bbls. 
Oil,  crude,  bbls. . . 
Coal,  tons  


1879. 

1880. 

1881. 

305,997 

289,905 

304,535 

1,061 

1,015 

830 

1,400 

555 

1,295- 

12,503 

15,381 

14,369 

9,133 

6,871 

6,080- 

185,730 

204,590 

108,500 

26,280 

29,120 

23,920 

10,166 

6,620 

7,726 

12,702 

10,760 

6,016 

20,270,000 

40,100,000 

28, 80(1, 000’ 

2,625 

4,670 

5,073 

156,630 

201,160 

128,370 

1,156,745 

499,660 

445,760 

331,165 

452,571 

497,240 

238,450 

233,200 

201,140 

■ 14,370 

16,355 

12,950 

41,300 

66,590 

51,180 

8,651 

9,536 

7,624 

440 

814 

921 

2,997 

3,367 

3,466 

27,910 

35,292 

29, 980' 

5,623 

5,378 

5.224 

7,080 

10,050 

1 1,630' 

455 

680 

677 

73,650 

81,200 

70,900 

27,755 

35,440 

26,090- 

and  1881 

the  following  were 

31,400 

20,700 

31,500 

126,200 

46,400 

50,400 

136,800 

176,800 

,150,100 

130,000 

34,200 

82,100 

22,000 

64,000 

6,400 

2,400 

1,600 

400 

108,182 

95,595 

117,283 

7,585 

4,720 

4,894 

1,145 

2,182 

2,211 

36,030 

17,120 

2,880 

905 

53,118 

58,696 

66,549 

5E  AND  THE  LaKE 

Shore  &. 

Michigan"  Southern"  Railroad. 


The  following  statement  shows  the  receipts  of  flour  and  grain  by 
lake  and  the  Lake  Shore  & Michigan  Southern  Railroad  for  three 


years : 

Flour,  bbls 

Wheat,  bu 

Corn,  bu 

Oats,  bu 

Barley,  bu 

Rye,  bu 

Peas,  bu 

Total,  bu 

Flour  to  wheat,  bu... 

Grand  total,  bu 


1879. 

2,084,805 

1880. 

2,243,011 

1881. 

1,941,050 

50,705,201 

48,938,793 

9,973,893 

1,363,740 

2,661,002 

25,797 

51,594,229 

76,163,817 

8,554,350 

1,046,225 

1,657,051 

10,775 

26,838,720 

51,166,030 

8,974,737 

518,310 

362,210 

6,038- 

113,668,426 

10,324,025 

139,026,447 

11,215,055 

87,866,045 

9,705,250 

123,992,451 

150,241,502 

97,iyi,295 

26 


Lumber  Trade  of  Buffalo. 


Th6  following  table  shows  the  receipts  and  shipments  of 
etc.,  for  three  years: 

Imports  by  Canal. 


Lumber,  feet 

Timber,  cubic  feet, 
Shingles,  no 


1879.  1880. 

1,703,849  3,815,886 

82,862  

30,000  264,000 


Exports  by  Canal. 


Lumber,  feet 107,158,316 

Staves  and  heading,  lbs 56,029,617 

■Shingles,  no 34,600,000 


75,243,821 

58,022,758 

17,966,000 


Heading,  bbls 

Hoops,  no 

Hoop  poles,  no 

Lumber,  feet 

Lath,  pieces 

Railroad  ties,  no. . . 

Staves,  no 

Staves  bolts,  cords 

Shingles,  no 

Shooks,  bundles. . . 

Pickets,  no 

Cedar  posts,  no 


Imports  by  Lake. 

14,471 

14,579,000 


202,443,612 

4,644,000 

271,693 

12,070,597 

8,640 

59,793,700 

1,541 

7,190 

16,730 


45,597 

10,765,700 

170,000 

214,169,352 

4,673,050 

167,994 

7,875,884 

10,101 

33,058,000 

1,060 


8,865 


Lumber,  feet, 


Other  imports  by  Railroads  and  Teams.*  ' 

90,000,000  87,500,000 


lumber, 


1881. 

. 2,357,066 

’172,666 


74,865,668 

61,652,021 

12,253,000 


8,516 

7,964,000 


240,802,160 

2,863,000 

419,842 

3,986,275 

10,065 

25,249,000 

964 


40,200 


97,000,000 


Average  Prices. 

The  prices  at  the  yards  during  1881  were  about  as  follows,  per  1,000 

feet : 


Basswood. . 

Pine 

Ash 

White  wood 

Oak......... 

Cherry 


$15  00at24  00 
11  00at53  00 
15  00at38  00 
15  00at36  00 
25  00at45  00 
32  00at65  00 


Chestnut 

Walnut 

Maple 

Hickory 

Lath,  per  M. . . . 
Shingles,  per  M 


$25  00at40  00 
40  OOatlOO  00 
22  00at35  00 
30  00at50  00 

1 75at  2 25 

2 75at  4 25 


Coal  Trade  of  Buffalo. 

The  anthracite  and  bituminous  coal  trade  of  this  city  is  shown  by 


the  following  figures  : 

Anthra.cit.p  tons  

Imports  ly  Canal, 

1879. 

92,134 

1880. 

83,240 

1,777 

1881. 

181,292 

500 

Blossburg,  tons 

2,000 

Bituminous,  tons 

Exports  by  Canal. 

28,290 

25,361 

29,222 

Bituminous,  tons 

Imports  by  Lake. 

34,648 

13,078 

7,860 

Anthracite,  tons 

Blossburg,  tons 

Exports  by  Lake, 

550,646 

30,000 

554,670 

35,000 

825,240 

30,000 

*Partlv  estimated. 


262 


Imports  hy  Railroads  * 


1879. 

Anthracite,  tons 1,000,000 

Bituminous,  tons 037,022 

Blossburg,  tons 00,000 


1880 . J881 . 

850.000  1,005,000 

800.000  923,019 

65,000  05,000 


Exports  hy  Railroads. 

No  estimate  to  hand  of  the  movement  in  detail. 


Total  imports,  anthracite,  tons.. 
Total  imports,  bituminous,  tons 
Total  imports,  Blossburg,  tons. . , 
Total  exports,  bituminous,  tons 
Total  exports,  anthracite,  tons., 
Total  exports,  Blossburg,  tons. . 


Recapitulation. 


1,092,134 

933,240 

1,246,292 

673,670 

813,078 

931,779 

62,000 

66,777 

65,500 

28,290 

25,361 

29,222 

550, G4G 

554, G70 

825,240 

30,000 

35,000 

30,000 

The  retail  prices  of  anthracite  per  2,000  pounds,  delivered  in  city 
limits,  during  the  year  were  as  follows: 


Bloss- 

1881.  Grate.  Egg.  Stone.  Nut.  burg. 

January  1 $5  70  $5  70  $5  95  $6  20  $4  25 

April  25 5 25  5 25  5 45  5 45  4 25 

July  1 5 35  5 35  5 70  5 50  4 25 

August  1 5 35  5 35  5 70  5 70  4 25 

October  1 5 35  5 GO  5 90  5 90  4 25 

Dec.  31  5 35  5 60  5 90  5 90  4 25 


The  range  of  prices  during  1881,  for  bituminous,  delivered  to  manu- 
factories, gas-works,  propeller  lines,  etc.,  were  from  $2.50  to  $4.25 
per  ton,  according  to  description.  The  price  at  retail  varied  from 
$5.00  to  $6.00  delivered  per  ton,  according  to  quality,  for  family  use. 

About  200,000  tons  of  anthracite,  and  10,000  tons  of  bituminous 
coal  were  comsumed  by  families  in  this  city  during  1881. 

COMPAKATIVE  PRICES  OF  LeADIXG  ARTICLES. 

The  following  statement  shows  the  approximate  ruling  rates  of  the 
various  articles  enumerated  at  Buffalo,  December  31,  1881,  and  the 
corresponding  periods  in  1880  and  1879. 


Flour,  bbl.—  1879.  1880.  1881. 

City  gr.  sp.  No.  1 $6  75  at  7 25  $5  25  at  5 75  $7  00  at  7 75- 

City  gr’d  amber 7 25  at  7 75  5 50  at  6 GO  7 00  at  7 75 

City  gr’d  white 7 50  at  8 00  5 75  at  6 25  7 25  at  7 75 

City  gr’cl  new  process 8 25  at  9 00  7 75  at  8 25  8 00  at  8 75 

Western  spring 6 00  at  7 50  5 00  at  6 00  7 00  at  7 75 

Western  bakers 7 00  at  7 50  6 25  at  6 75  7 25  at  8 00 

Western  aniber 7 50  at  8 00  5 50  at  6 00  7 50  at  8 00 

Western  white 7 75  at  8 25  5 75  at  G 25  7 50  at  8 00 

Westei  n new  process 8 75  at  9 75  7 50  at  8 25  8 25  at  9 25 

Rye 5 50  at  G 00  5 25  at  5 75  6 25  at  6 50 

Buckwh(iat,  cwt 3 00  at  3 30  2 50  at  2 75  4 00  at  4 50 

Wlieat,  bush  — 

No.  1 Duluth,  sp 1 43  

•No.  1 h’d  Duluth,  sp 1 45  1 24  1 54 

Red  and  amber 1 38  at  1 45  1 07  at  1 10  1 43 

White 1 40  at  1 47  1 08  at  1 10  1 42 

Corn,  bush — 

No.  2 Westein 53 J 50  671  ^§1 

Oat.'^,  bu.  Western 45  40  49  at  50 

Rye,  bu.  We, stern 90  95  1 05 


* Parflv  estimated. 


263 


Barley,  bush  — 

1879. 

1880. 

1881 

West,  and  Can 

70 

at 

90 

1 

10  at 

1 

30 

95 

at 

1 

10 

State 

65 

at 

80 

90  at 

1 

05 

85 

at 

1 

03 

Barley  malt,  bu 

1 

05 

at 

1 

25 

1 

10  at 

1 

47 

1 10 

at 

1 

25 

Peas,  bu.  (free  of  duty). 

Canada 

y5 

at 

1 

00 

1 

00 

1 

00 

Beans,  bu.,  bbls.,  fr  .... 

1 

50 

1 

35  at 

1 

80 

2 75 

at 

3 

25 

Seed,  clover,  bu 

5 

50 

at 

5 

75 

5 

50  at 

6 

00 

5 50 

at 

5 

75 

Seed,  Timothy,  bu 

2 

90 

2 

75 

2 75 

at 

3 

00 

Millfeed,  ton  — 

Coarse 

. 16 

00 

at 

17 

00 

19 

00 

16  00 

at 

17 

00 

Fine 

16 

00 

at 

17 

00 

19 

00 

17  00 

at 

18 

00 

Finished  

. ir 

00 

at 

18 

00 

20 

00 

21  00 

at 

22 

00 

Cornmeal,  100  lb 

1 

05 

at 

1 

15 

1 

10  at 

1 

25 

1 40 

at 

1 

60 

Oatmeal,  bbl 

. 6 

00 

at 

7 

00 

6 

00  at 

6 

75 

7 50 

at 

8 

00 

Mess  pork,  bbl  — 

Heavy 

13 

50 

13 

50 

17 

50 

Short  cut 

13 

50 

13 

50 

17 

50 

Lard,  lb 

8 

at 

84 

at  9>^ 

114 

at 

12V 

Dressed  hogs,  cwt 

6 

00 

5 

75 

7 25 

at 

7 

50 

Highwines,  gal 

1 

12 

1 

12 

1 

19 

Potatoes,  bu 

40 

at 

45 

50  at 

60 

90 

at 

1 

00 

Butter,  lb 

18 

at 

27 

24  at 

30 

26 

at 

33 

Cheese,  dairy,  lb 

11 

12  at 

13 

11 

at 

12 

Cheese,  factory,  lb 

12 

12  at 

13 

lU 

at 

13-4 

Hops,  lbs 

30 

at 

35 

18  at 

24 

20 

at 

26 

Eggs,  doz  

20 

at 

23 

23  at 

28 

28 

at 

30 

Cranberries,  bbl 

8 

00 

7 

00  at 

8 

00 

11  00 

at 

12 

00 

Apples,  dried,  lb 

7 

at 

8 

3 at 

5 

4 

at 

6 

Apples,  green,  bbl 

. 1 

75 

at 

2 

50 

1 

25  at 

1 

75 

2 25 

at 

3 

50 

Oranges,  case 

. 5 

00 

at 

5 

50 

4 

00  at 

6 

00 

5 00 

at 

6 

00 

Lemons,  box 

4 

00 

4 

00  at 

5 

00 

2 25 

at 

4 

25 

Salt,  coarse,  bbl 

Salt,  fine,  bbl 

1 

40 

1 

00 

1 

10 

1 

40 

90 

1 05 

at 

1 

10 

Coal,  anthracite,  retail  price,  delivered, 

, ton 

Grate 

4 

65 

5 

55 

5 

35 

Egg 

4 

35 

5 

55 

5 

60 

Chestnut 

5 

10 

5 

80 

5 

90 

Stove 

4 

85 

5 

80 

5 

90 

Coal,  bituminous 

. 5 

00 

at 

6 

00 

5 

00  at 

6 

00 

5 00 

at 

6 

00 

Hides,  green,  lb 

94 

at 

10 

9 at 

114 

94 

at 

114 

Hides,  cured 

16 

at 

17 

at 

18i 

15 

at 

18 

Leather,  lb  — • . . . . 

Best  slighted  sole 

31 

31 

29 

at 

31 

No.  2 do  

29 

29 

27 

at 

29 

Cement,  bbl 

80 

at 

1 

00 

1 

20 

1 

20 

Refined  Petroleum 

, gallon,  fire  test  — 

112  at  120 

8 

at 

9 

9i  at 

10 

8 

at 

9 

Pease’s  Pr’m  oil 

35 

30  at 

35 

30 

at 

35 

Pease’s  H’d  light 

Lard  Oil  - 

25 

20  at 

25 

20 

at 

25 

Extra  winter,  gal 

60 

70 

95 

Do.,  No.  1,  do 

58 

65 

90 

Linseed  oil,  raw 

75 

57 

65 

Do.,  boiled,  gal 

78 

60 

68 

W.  V.  oil,  black,  gallon  . 

23 

23 

23 

Do.,  gal.,  in  bbl 

25 

25 

25 

Sperm  oil,  gal 

1 

00 

1 

10 

1 

15 

Fish,  half  bbl—.., 

White 

00 

at 

5 

50 

5 

75 

7 

00 

Trout 

00 

at 

4 

25 

5 

50 

6 

0''> 

Siscoes  

. 3 

00 

at 

3 

25 

3 

75 

4 

50 

Codfish,  George’s  Bank, 

cwt 

5 

00 

at 

5 

50 

5 

00  at 

5 

50 

5 

50 

Halibut,  cwt 

11 

00 

11 

00 

11 

00 

Mackerel,  kit 

. 1 

20 

at 

3 

75 

1 

10  at 

2 

80 

1 10 

at 

2 

80 

Do.,  bbl 

00 

at 

22 

00 

9 

50  at 

14 

50 

8 60 

at 

13 

50 

Sterling  Exchange...,., 

. 481 

at 

484 

480J  at 

483J 

481 

at 

485 

Exports  from  Elevators  by  the  Erie  and  Central  Railroads. 

The  following  statement  shows  the  exports  of  grain  from  the  ele- 
vators of  this  city,  by  the  Erie  and  Central  railroads  for  the  months 
of  — 


1881. 

Jamiiirv 


April , 


Wheat, 

Corn, 

Oats, 

Barley, 

bu. 

1>U. 

bu. 

bu. 

50,250 

55,500 

3,200 

, 104,080 

42,000 

1,275 

28,200 

3,700 

4,330 

3,991 

800 

1,590 

1,002,783 

090,119 

1,550 

882,213 

2,070,220 

632,002 

0,000 

567,740 

3,904,229 

4,200 

514,937 

2,491,521 

816,495 

472,527 

1,989,278 

95,171 

, 135,093 

1,996,000 

209,020 

1,264,876 

8,000 

280,500 

200,000 

1,000 

28,000 

4,802,973 

15,265,794 

1,588,068 

57,521 

. 9,677,469 

20,319,376 

469,689 

32,960 

8,575,129 

7,309,007 

188,329 

94,230 

, 9,173,439 

9,300,050 

254,057 

185,212 

9,323,348 

3,854,034 

020,009 

348,082 

5,984,722 

6,581,929 

715,049 

112,741 

6,198,393 

6,433,717 

1,091,327 

00,437 

4,658,080 

5,209,202 

1,318;097 

191,277 

Uye, 

bu. 


3,7.00 

1.259 


2,000 


.000 


259,433 

81,831 

223,310 

90,332 

278.291 

10,781 

10,318 


Grand  total,  bushels,  1874 
“ “ 1875. 

“ “ 1876 

“ “ 1877 

“ “ 1878 

“ “ 1879 

“ “ 1880 

“ “ 1881 


11,386,974 

14,800,600 

13,672,732 

14,235,805 

19,130,668 

16,308,520 

30,758,927 

21,808,350 


Decrease  1881  under  1880,  bushels 


8,950,571 


Elev'atixg  and  Storage  Eates. 

The  following  shows  tlie  current  rates  as  published  by  the  Western 
Elevating  Company,  during  the  days  specified  in  1881  ; 

January  1 to  May  17. — On  the  20th  day  of  November,  1880,  the 
following  card  was  issued  : ‘^Elevating,  including  ten  days’  storage, 
seven-eighths  of  one  cent  per  bushel.  Storage,  each  succeeding  ten 
days  or  parts  thereof,  one-quarter  of  one  cent  per  bushel.  The  vessel 
pays,  in  addition  to  the  above,  one-eighth  cent  per  bushel.  On  all 
grain  in  store  at  that  date  or  after,  the  charge  for  winter  storage  will  bo 
one- quarter  of  one  cent  per  bushel  for  each  ten  days  or  parts  thereof, 
until  such  charge  (accumulated  after  November  20,  18.S0)  shall 
amount  to  two  cents  per  bushel ; then  the  grain  shall  be  free  of  storage 
until  ten  days  after  the  opening  of  canal  navigation  in  1881.” 

May  4 to  May  27. — The  rates  from  the  opening  of  navigation  on  all 
grain  received  was  five-eighths  of  one  cent  per  busliel^for  elevating,  in- 
cluding five  days’  storage;  storage  each  succeeding  ten  days  or  pai-ts 
thereof  one-quarter  of  one  cent  per  bushel ; the  vessel  paid  in  addition 
to  the  above  one-eighth  of  one  cent  per  bushel. 

May  28  to  June  7.  — Nominal  from  one-quarter  of  one  cent  per 
bushel  to  nothing”  for  elevating  with  days  of  storage  uncertain  ; the 
vessel  paid  in  addition  to  the  above  one-eighth  of  one  cent  per  bushel. 

Jana  8 to  July  2. — One-quarter  of  one  cent  per  bushel  for  elevating, 
including  five  days’  storage  ; storage  each  succeeding  ten  days  or  ]')arts 
thereof  one-qu!irt(‘i*  of  one  cent  })er  buslud  ; the  vessel  paid  in  addition 
to  tlie  iibove  one-eighth  of  one  cent  per  bushel. 


265 


July  3 to  August  3. — Rates  nominally  from  one-eighth  of  one  cent 
to  nothing.  Storage  as  per  special  agreement.  The  vessel  paid  in  ad- 
dition to  the  above  one-eightli  of  one  cent  per  bushel. 

August  4 to  August  10. — Transferring  grain  nothing.  Storage  one- 
half  of  one  cent  first  five  days  and  one-quarter  of  one  cent  for  each  suc- 
ceeding ten  days  or  parts  thereof.  Th-e  vessel  paid  iif  addition  to  the 
above  one-eighth  of  one  cent  per  bushel. 

August  11  to  Sejdember  4. — Elevating,  including  five  days’  storage, 
one-quarter  of  one  cent  per  bushel.  Storage  next  succeeding  five  days 
or  parts  thereof  one-quarter  of  one  cent  per  bushel,  and  then  one- 
quarter  of  one  cent  per  bushel  each  succeeding  ten  days  or  parts  thereof. 
The  vessel  paid  in  addition  to  the  above  one-eighth  of  one  cent  per 
busliel. 

Seytooiher  5 to  September  30. — Elevating,  including  five  days’  storage, 
one-half  of  one  cent  per  bushel ; storage  each  succeeding  five  days  or 
parts  thereof  one-quarter  of  one  cent  per  bushel  ; storage  each  succeed- 
ing ten  days  thereafter  or  parts  thereof  one-quarter  of  one  cent  per 
busliel;  the  vessel  paid  in  addition  to  the  above  one-eighth  of  one  cent 
per  bushel. 

October  1 to  Close  of  Navigation. — Elevating,  including  five  days’ 
storage,  three-quarters  of  one  cent  per  bushel ; storage  each  sncci^eding 
ten  days  or  parts  thereof  one-quarter  of  one  cent  per  bushel;  the  vessel 
pays  in  addition  to  the  above  one-eighth  of  one  cent  per  bushel.  On 
all  grain  in  store  November  25  or  after,  the  charge  for  winter  storage 
will  be  one-quarter  of  one  cent  per  bushel  for  each  ten  days  oi-  parts 
thereof  until  such  charge  (accumulated  after  November  25, 1881)  shall 
amount  to  two  cents  per  bushel ; then  the  grain  shall  be  free  of  storage 
until  five  days  after  the  opening  of  canal  navigation  in  1882. 

Note. — The  amount  of  grain  handled  by  the  Western  Elevating 
Company  was  about  49,000,000  bushels  against  99,000,000  bushels  in 
1880,  a decrease  in  1881  of  50,000,000  bushels. 


Transferring  and  Trimming  Railroad  Grain. 
Transferring  from  elevator  to  cars  half  a cent  per  bushel ; trimming 
in  lots  of  less  than  five  cars  $1  per  car  extra  ; five  cars  and  over  free. 


Lake  Exports. 

The  following  statement,  collated  from  the  clearances  issued  during 
the  season  of  navigation  at  the  custom-house  of  this  port,  shows  the 
exports  of  the  articles  named  during,  the  seasons  of  navigation  in  18T9, 
1880  and  1881  westward  by  lake  : 

i879,  1880.  1881. 

€oal,  tons 580,646  589,670  825,24(t 

Cement  and  plaster,  bbls 103,858  144,125  170,410 

Salt,  bbls 222,778  225,982  109,810 

Salt,  tons 26,327  17,725  11,655 

Railroad  iron,  tons 525  35,941  44,462 

Railroad  iron,  bars 21,084  23,100 


34 


26G 


Lake  Freights  from  Chicago  to  Buffalo  on  Wheat  and  Corn. 

The  following  statement  shows  the  ruling  rates  of  lake  freights  on 
wheat  and  corn  from  Chicago  to  Buffalo  on  the  dates  specified  in  1881  : 


Wheat, 

Corn, 

Wheat, 

Corn, 

1881. 

bu. 

bu. 

1881. 

bu. 

bu. 

May  9.. 

• 

5 

4X 

July  23  . . 



2 

May  14.. 

53^ 

5 

July  30  . . 

23^ 

May  21.. 

4 

3)^ 

Aug.  6... 

2% 

2X 

Mav  28.. 

5 

4X 

Aug.  13. . 

334' 

3 

June  4.. 

4% 

43^ 

Aug.  20.. 

2^ 

.June  11 . . 

4K 

4 

Aug.  27 . . 

Wa 

33< 

June  18.. 

43^ 

4% 

Sept.  3.. 

3^ 

33^ 

June  25. . 

33^ 

3 

Sept,  10. . 

33^ 

3 

Julv  2.. 

4 

3K 

Sept.  17. . 

4 

33^ 

July  9.. 



3>^ 

Sept.  24. . 

2>^ 

2 

.Tulv  16. . . 

33^ 

3 

Sept.  29. . 

1 

October 

1* 

....  i 

i 

October 

29 

2i 

2 

October 

6 . ., 

0 

li 

Nov. 

5 

2 

n 

October 

8 . .. 

3i 

3 

Nov. 

12 

2i 

2 

October 

15  . . . 



Nov. 

19 

2i 

2 

October 

22  ... 

3i 

2| 

Nov. 

26 

0 

2 

Average  Lake  Freights. 

The  following  statement  shows  the  average  ratfes  of  lake  freights  on 
wheat  and  corn,  between  Chicago  and  Buffalo,  during  each  month  in 
the  past  ten  years  ; the  highest  rate  on  wheat  in  each  year,  and  the 
average  rate  on  wheat  in  each  year: 


1872 


1873 


1874 


1875 


Wheat, 
Corn.  . 


Wheat. 
Corn . . 


Wheat. 
Corn.  . 


j Wheat. 
/ Corn.  . 


1 Q'-r  3 Wheat. 

’^'Ccorn.  . 


187 


j Wlieat 

i Corn 

Tliuliest  rate  wheat, 


-1070  3 Wheat. 
/ Corn.. 


1870  ^ 

I Corn . . 


May 

cts. 

June  July 
cts.  cts. 

Aug. 

cts. 

Sept. 

cts. 

Oct. 

cts. 

Nov.^ 

cts. 

8.1 

8.3  8.2 

9.6 

14.8 

16.5 

12.4 

7.4 

7.8  7.7 

8.8 

13.8 

15.5 

11.4 

1872,  19c; 

average  for  the  season, 

11.1c. 

7.4 

6.5  6.1 

6.5 

12.6 

7.8 

7.4 

6.5 

5.8  5.6 

5.7 

11.6 

6.9 

6.9 

1873,  14c; 

season,  7.8c. 

4.5 

4.2  3.3 

3.1 

3.5 

4.1 

4.6 

4.0 

3.9  3.0 

2.1 

3.2 

3.8 

4.2 

1874, 

6c;  season,  3.9c. 

3.9 

3.0  2.8 

2.5 

2.4 

3.7 

5.9 

3.6 

2.6  2.6 

2.2 

2.2 

3.4 

5.5 

1875, 

61c; 

season,  3.5c. 

3.0 

2.5  1.9 

2.2 

2.6 

4.4 

3.7 

2.7 

2.3  1.7 

1.8 

2.3 

4.0 

3.3 

1876, 

5c;  season,  2.9c. 

3.5 

2.4  2.6 

4.0 

4.0 

4.9 

4.5 

2.9 

1.9  2.2 

3.6 

3.4 

4.4 

3.9 

1877, 

Oc;  season,  3.7c. 

2.5 

2.1  1.7 

3.2 

4.4 

3.6 

4.5 

2.2 

1.8  1.5 

3.0 

4.1 

3.3 

4.1 

1878,  7c;  season,  3.1c. 

3. 1 

2.1  2.5 

4.9 

5.3 

7.7 

7.0 

2.8 

1.8  2.3 

4.5 

4.8 

7.1 

6.5 

1879, 

8.5c; 

season,  4.7c. 

Doinorallzod;  KraOi  taken  for  ballast. 


2G7 


May 

June 

July 

Aug. 

Sept. 

Oct. 

Nov. 

cts. 

cts. 

cts. 

cts. 

cts. 

cts. 

cts. 

«8<>| 

5.0 

7.1 

5.8 

5.6 

4.4 

6.8 

7.1 

4.3 

6.6 

4.3 

5.1 

3.9 

6.3 

6.5 

Highest  rate  wheat. 

1880,  81c; 

season, 

5.7c. 

\ Wheat 

Corn 

4.7 

4.1 

2.6 

3.1 

3.2 

2.5 

2.2 

4.2 

3.6 

2.2 

2.8 

2.9 

2.2 

1.9 

Highest  rate  wheat,  1881,  5Jc;  season,  3.2c. 


Lake  Freights  from  Buffalo  to  Chicago  ahd  Milwaukee 

OH  Coal. 

The  following  statement  shows  the  ruling  rates  of  freight  on  coal 
per  ton,  free  from  Buffalo  to  Chicago  and  Milwaukee,  during  the 
season  of  1881: 


1881. 

Coal, 

ton. 

1881. 

Coal,  ton. 

May 

Ito  29....... 

$0 

75 

Sept. 

24 

$1 

30 

May 

30 

80 

Sept. 

29 

....  1 

40 

June 

4 

871 

Oct. 

12 

....  1 

45 

June 

8 .’ 

85 

Oct. 

15 

....  1 

40 

June 

13 

90 

Oct. 

22 

....  1 

45 

June 

27 

1 

00 

Nov. 

1 

....  1 

40 

July 

28 

1 

10 

Nov. 

5 

....  1 

20 

July 

29 

1 

25 

Nov. 

8 

....  1 

30 

Aug. 

6 

1 

40 

Nov. 

14 

....  1 

35 

Aug. 

13 

1 

25 

Nov. 

17 

1 

40 

Aug. 

17 

1 

20 

Nov. 

19 

....  1 

50 

Aug. 

21 

1 

10 

Nov. 

23 

....  1 

75 

Sept. 

21 

1 

15 

The  dates  given  are 

! the  days  on 

which  the 

changes  were  made. 

Kailroad  Freights  from  Buffalo  to  New  York  oh  Wheat 

AHD  CORH. 

The  following  statement  shows  the  nominal  rates  of  freight  on 
wheat  and  corn  by  railroad,  from  Buffalo  to  New  York,  during  the 


year  1881 : 

Wheat,  Corn. 

1881.  bu.  bu. 

January  1 to  April  4 10^  10 

April  5 to  June  9 9 8^ 

June  10  to  June  15 8 7i 

June  16  to  November  18 *61  61 

November  19  to  December  31 : . . 8 71 


Late  Arrivals  ahd  Departures. 

The  following  is  a summary  statement  of  the  arrivals  and  depart- 
ures of  vessels,  with  their  tonnage,  in  the  district  of  Buffalo  creek, 
for  the  season  of  1881;  also  a comparative  statement  showing  the 
aggregate  figures  for  thirty  years : 

♦This  was  the  published  rate,  although  private  reports  indicated  that  6c.  was  paid  for 
wheat  nearly  all  the  time  stated. 


268 


Arrivals. 

No.  vessels.  Tonnage. 

American  vessels  in  coastwise  trade 2,693  2,249,595 

American  vessels  from  foreign  ports 114  14,955 

Foreign  arrivals  from  foreign  ports 496  82,261 


Totals,  1881 3,303  2,346,911 

Totals,  1880 5,142  3,022,312 


Decrease,  1881 1,839  675,401 


Departures. 

No.  vessels.  Tonnage. 

American  vessels  in  coastwise  trade 2,877  2,102,252 

American  vessels  to  foreign  ports 106  10,331 

Foreign  clearances 469  75,729 


Totals,  1881 3,442  2,188,312 

Totals,  1880 5,166  2,983,434 


Decrease,  1881 1,724  . 785,122 


Comparative  table  for  thirty  years. 


No.  vessels. 

Tonnage. 

Men. 

No  vessels. 

Tonnage. 

Men. 

1852  . 

. . . 9,441 

3,092,247 

127,491 

1867  ., 

. ..  12,826 

5,806,960 

129,300 

1853  . 

. . . 8,298 

3,252,978 

128,112 

1868  . 

. ..  11,812 

4,254,339 

116,320 

1854  . 

. ..  8,942 

3,990,284 

120,838 

1869  . 

. ..  10,201 

4,007,496 

103.673 

1855  . 

. . . 9,211 

3, 360,233 

111,575 

1870  .. 

. . . 10,625 

4,157,793 

105,798 

1856  . 

. ..  8,128 

3,018,589 

112,051 

1871  . 

. ..  10,894 

4,832,641 

115,299 

: 857  . 

. ..  7,581 

3,226,806 

132;  183 

1872  . 

. ..  10,303 

4,678,058 

106,291 

1858  . 

. ..  8,838 

3,329,246 

86,887 

1873  ., 

. ..  9,959 

4,886,733 

107,785 

1859  .. 

. . 10,521 

5,952,626 

118,119 

1874  . 

. . . 7,447 

3,641,019 

82,862 

1860  .. 

..  11,517 

4,710,175 

120,497 

1875  . 

. ..  6,278 

3,259,839 

70,392 

1861  .. 

..  13,866 

5,963,896 

144,173 

1876  . 

. . . 4,624 

2,757,986 

55,459 

1862 

. ..  16,390 

6,689,191 

166,133 

1877  . 

. ..  6,785 

3,539,219 

73,893 

1863  .. 

. ..  15,376 

6,757,903 

157,415 

1878  ., 

, ..  8,743 

4,668,688 

No. rep. 

( ( 

1864  ., 

. ..  14,105 

6,891,348 

148,161 

1879  . 

. . . 8,447 

4,442,717 

1865  .. 

..  13,746 

7,032,593 

145,074 

1880  .. 

, ..  10,308 

5,995,747 

< ( 

1866  .. 

..  13,682 

6,954,859 

144,622 

1881  . 

. ..  6,745 

4,535,223 

( ( 

Opening  and  Closing  of  Navigation. 

Statement  showing  the  dates  at  which  navigation  opened  and  closed 
at  Buffalo  for  ten  years  : 


Lake 

Canal 

Canal 

No.  days 
Canal 

Year. 

opened. 

opened. 

closed. 

open. 

1872  

..  May  13..  . 

. , . Noy.  30  . . 

...  202 

1873  

April  29 

. . May 

15..., 

. . . Noy.  24*. . 

....  208 

1874  

5.. . 

. . . Dec.  5 . . 

215 

1875  

May  12. . . . 

. . May 

18.... 

. . Noy.  30  . . 

....  197 

1876  

May  4 . . . . 

..  May 

4..., 

....  209 

1877  

A])ril  17.... 

. . May  8 . . . . 

. ..  Dec.  7 .. 

....  213 

1878  

Marcli  16 , 

..  April  15.... 

. ..  Dec.  7 . 

....  237 

1879  

A])ril  24 

..  May 

8.... 

, . . Dec.  6 . . 

....  212 

1880  

. ..  Noy.  20t.. 

215 

1881 

May  1 . . . . 

..  May 

17. .. 

. Dec.  6 . . 

....  204 

♦NavlgMllon  unimpeded  here  lor  several  days  after  this  date,  hut  no  shipments  made 
exf.ept  to  Lr)(:k[)ort ; navigation  (dosed  l)y  icteeast  of  Koine  about  tlie  ;34th;  re-opened  from 
Dijcemljer  i:!th  to  J^itli , imdusivo. 

^ d'lie  K(^v(!re  weather  cdosiul  navigation  twelve  days  before  the  olliclal  time.  An  immense 
amount  of  property  was  “frozen  In.’’ 


Tonkaqe  of  Vessels. 


T!ie  tonnage  of  the  port  of  Buffalo,  N.  Y.,  for  the  fiscal  year  end- 
ing June  30,  1881,  is  shown  by  the  following  statement: 

Sail  Vessels. 

Schooners 60  Sloop 1 

Bark 1 


Total . . . 
Total  tonnage 


62 

30,219.28 


Iron  steamers 


Steam  Vessels. 

5 Iron  yachts 


3 


Total 

Total  tonnage 

Tug  propellers 49 

Steam  yachts 12 

Steam  canal  boats 5 


8 

6,408.96 


Propellers 49 

Sidewheel  steamer 1 


Total 

Total  tonnage 


116 

56,975.10 


Barges. 


Barges 31 

Total  tonnage 7,212.09 

Grand  total,  1881 217  vessels;  tonnage  100,815.43 

Grand  total,  1880 212  vessels;  tonnage  99,543.69 

Grand  total,  1879 211  vessels;  tonnage  97,734.46 


Increase  in  1881  over  1880 


5 vessels;  tonnage  1,271.74 


Vessels  Built  and  Enrolled. 

. The  following  is  the  list  of  new  vessels  built  here  and  elsewhere,  but 
documented  in  the  District  of  Buffalo  creek  during  the  year  1881  : 


Propellers. 

Tonnage. 

Oceanica 

...  1,490.40 

Clyde  

...  1,306.76 

Cumberland 

...  1,601.31 

Queen  of  the  West 

818.24 

John  B.  Lyon 

...  1,710.33 

City  of  Rome 

...  1,908.10 

Robert  A.  Packer 

921.64 

Albert  J.  Wrigbt 

258.48 

Tug  propellers. 

0.  W.  Cheney 

41.91 

Maud  S 

George  R.  Hand. . . . . . . 

34.90 

Samuel  Darling 

13.79 

General  Weitzel 

38.78 

Charles  S.  Parnell 

30.43 

J.  J.  Evans 

14.93 

A.  C.  Adams 

Tug  propellers.  Tonnage. 

R.  Porter  Lee 13.79 

C.  A.  Shaw 75.6 

Belle  Sparks 45.66 

George  H.  Notter. 12.67 

William  F.  Logie 15.24 

Charles  N.  Armstrong 15.30 

Steam  yacht. 

Julie 6.90 

Steam  canal  boats. 

E.  P.  Cook 135.55 

S.  G.  Smith.. 148.38 

Stranger 135.00 

Win.  Spencer 131.76 

Schooner-barge. 

L.  W.  Drake 456.11 

Barge. 

Hamilton  J.  Mills 508.88 


270 


Total  new  tonnage,  1881. . 11,899.51 
“ “ 1880..  6,153.30 

“ 1879..  5,800.00 

“ “ 1878..  3,685.12 


Total  new  tonnage,  1877. . 1,844.02 
“ “ 1876..  871.73 

“ “ 1875..  4,417.06 


Vessels  Built. 


The  following  is  the  list  of  vessels  built  in  the  District  of  Buffalo 
creek  and  on  record  at  the  custom-house  during  the  year  1881 : 


Propellers. 

Tonnage. 

Jolm  C.  Gault 

..  1,212.71 

Bussell  Sage 

..  1,224.25 

Albert  J.  Wright 

. . 258.48 

'fug  propellers. 

George  R.  Hand 

34.90 

A.  C.  Adams 

41.76 

B.  Porter  Lee  

13.79 

0.  W.  Cheney 

41.91 

0 . A.  Shaw 

7.65 

Maud  S 

33.39 

Belle  Sparks 

45.66 

George  H.  Hotter 

12.67 

William  F.  Logie 

16.24 

Charles  N.  Armstrong  . . . 

15.30 

A.  W.  Colton 

92.61 

General  Weitzel 

38.78 

Mary  E.  Pierce' 

20.22 

Charles  S.  Parnell 

50.43 

J.  J.  Evans 

14.03 

J).  P.  Hall 

54.33 

Thomas  Hood 

39.46 

Tug  propellers.  Tonnage. 

. V.  Taylor 40.25 

Steam  yachts. 

Lena  Knobloch 87.92 

Julie 6.90 

Massassauga 96.46 

CoraK.  D 21.65 

Steam  canal  boats. 

E.  P.  Cook 135.55 

S.  G.  Smith 148.38 

Stranger 135.00 

Free  Canal 125.05 

Barges. 

Hamilton  J.  Mills 508.88 

Cyclone 457.30 

Schooner. 

Highland  Maid 17.83 


Total  new  tonnage 5, 233. 64 


Transfers  of  Vessels. 

The  following  statement  shows  the  number  and  description  of  the 
vessels  changing  owners  by  entire  transfers  at  Buffalo  during  the  year 
1881 : 

Propellers 7 Steam  yacht, . . 1 Total  transfers,  1880  14 

Barges 6 Tugs  12  Total  transfers,  1879  24 

Schooners 22  — — 

Total  transfers,  1881 48  Increase  1881  over  1880  34 


Vessels  in  Winter  Quarters. 

The  following  is  a list  of  the  vessels  of  all  descriptions  (exclusive  of 
canal  boats;  laid  up  at  this  port  at  the  close  of  navigation  in  1881  : 

Recapitulation. 

Propellers 30  Barges 11 

Schooners  10  Tugs 37 

Total  1881 

Corresj)oridi ng  period  in  1880 


Notk  — 'I'lic  tmmber  of  canal  boats  laid  up  here  is  unusually  large— between  seven  and 
eight  hundred. 


88 

167 


271 


Customs  Receipts. 

The  following  statement  shows  the  receipts  at  the  Buffalo  custom 
house  during  each  month  and  the  totals  for  the  past  three  years  : 


1879. 

1880. 

1881. 

January 

130,940 

58 

$46,339 

33 

$64,418 

16 

February 

29,480 

51 

07,361 

43 

50,224 

32 

March 

36,027 

02 

06,938 

92 

69,842 

71 

April 

41,213 

85 

59,824 

92 

65,382 

79 

May < 

25,094 

94 

47,680 

00 

65,102 

27 

June 

14,879 

99 

43,169 

74 

56,124 

06 

July 

27,580 

00 

39,530 

54 

35,513 

87 

August 

45,510 

30 

62,110 

89 

61,130 

08 

September 

47,124 

62 

05,220 

94 

61,391 

28 

October 

65,125 

55 

90.456 

73 

78,220 

32 

November 

61 

02,308 

04 

128,073 

51 

December* 

62,450 

02 

87,159 

00 

68,541 

19 

Total 

$513,562 

18 

$767,628 

48 

$810,121 

45 

Comparative  Receipts  akd  Shipme^^ts  and  Cereal  Crop  Move- 
ment AT  Lake  Ports. 


Comparative  Receipts  at  Six  Western  Lake  Ports  — Chicago,  Mil- 
waukee, Toledo,  Detroit,  Cleveland  and  Duluth,  from  January  1 to 


December  31 : 

Flour,  bbls 

Wheat,  bushels 

Corn,  bushels  

Oats,  bushels 

Barley,  bushels 

Rye,  bushels 

Total  grain,  bushels 
Flour  to  wheat,  bushels  . . . 

Grand  total,  bushels 


1881. 

9,143,463 

1880. 

6,392,316 

1879.  • 
6,569,490 

43,270,112 

92,123,215 

30,433,478 

9,814,285 

3,325,636 

71,503,652 

120,889,601 

27,083,840 

9,503,497 

2,974,495 

86,139,146 

74,980,433 

21,403,837 

9,306,150 

3,365,831 

, 178,946,726 
45,717,315 

231,954,995 

31,961,580 

195,195,397 

32,847,450 

224,084,041 

263,916,575 

228,042,847 

Comparative  Shipments  at  Six  Western  Lake  Ports — Chicago,.  Mil- 
waukee, Toledo,  Detroit,  Cleveland  and  Duluth,  from  January  1 to 


December  31: 

Flour,  bbls 

Wheat,  bushels  

Corn,  bushels 

Oats,  bushels 

Barley,  bushels 

Rye,  bushels 

Total  grain,  bushels 
Flour  to  wheat,  bushels 


1881. 

9,694,182 

1880. 

6,137,011 

1879. 

6,767,279 

43,824,639 

85,810,176 

26,356,266 

5,858,530 

2,347,926 

63,960,861 

115,573,454 

24,075,422 

6,140,933 

2,900,407 

75,036.746 

74,010,330 

16,660,206 

6,860,019 

3,416,228 

164,197,537 

212,650,177 

175,983.529 

48,470,910 

30,685,055 

33,836.395 

212,668,447 

243,335.232 

209,819,924 

Grand  total,  bushels. 


272 


Cereal  Crop  Movement  at  Lake  Ports  Compared — Including  i-b 
ceipts  at  Chicago,  Milwaukee,  Toledo,  Detroit,  Cleveland  and  DuluMi, 
from  August  1 to  December  31,  in  the  years  named: 

1881.  1880.  18TV. 

Flour,  bbls : 3,708,707  3,453,731  2,85‘^,8G/> 


AVliefit,  bushels 21,108,721  44,705,740  51,354,049 

Corn,  bushels 45,949,530  52,4:50,402  33,411,005 

Oats,  bushels 10,782,909  14,759,059  9,709,588 

Barley,  bushels 0,559,971  7,009,228  7,200,400 

Hye,  bushels 2,526,492  1,883,449  2,183,200 


Total  grain,  bushels 80,986,089  121,29:3,929  103,858,968 

Flour  to  wheat,  bushels 19,543,535  17,268,055  14,204,325 


Grand  total,  bushels 100,531,224  138,562,584  118,123,293 


Exports  of  Breadstuffs  from  New  York. 

The  following  statement  shows  the  foreign  exports  of  flour  and  grain 
from  New  York  for  ten  years  : 

Flour,  bbls.  Wheat,  bu.  Corn,  bu. 

1872  1,216,082  13,144,400  25,292,209 

1873  1,645,331  27,861,800  15,587,500 

1874  2,177,608  34,791,249  19,000,995 

1875  1,954,100  20,192,700  12,988,700 

1876.. .. 1,887,309  24,135,233  16,677,082 

1877  1,476,771  20,712,442  26,174,276 

1878  r,  2,557,709  55,062,873  26,680,871 

1879  3,399,793  62,239,144  33,770,8:38 

1880  4,215,415  61,908,029  49,875,490 

1881=^..,. 4,500,000  42,000,000  31,500,000 

Oats,  bu,  Barlej",  bu.  Rye,  bu. 

1872.. ..... 31,739  22,066  668,031 

1873  49,700  10,400  1,069,100 

1874  122,528  3,560  641,660  ' 

1875  138,800  1,500  206,900 

1876  620,536  87,883  1,336,423 

1877  25(|063  2,302,022  2,051,563 

1878  : 5,690,782  1,618,667  2,998,053 

1879  • 502,224  156,902  3,558,240 

1880  427,959  254,883  2,191,183 

1881* 450,000  8,000  1,050,000 

Reducing  flour  to  grain  bushels,  the  totals  compare  as  follows: 

1872  45,238,845  1877 58,871,221 

1873  52,808,355  1878 104,740,191 

1874.  . 65,448,033  1879 117,226,312 

1875  49,249,100  1880 135,725,009 

1876  52,29:3,655  1881* 97,508,000 


♦Partly  estimated. 


273 


The  World’s  Wheat  Harvest. 

Agricultural  survey  of  the  world’s  wheat  harvest — Crop  in  eaeh 
country,  1881,  estimated  by  Mr.  H.  Kains- Jackson,  of  London,  Eng- 


land. 

United  Kingdom. 

United  States 

British  India 

Russian  Empire . . 

France 

Germany 

Spain 


Quarters.  Quarters. 

10.000. 000  Italy 15,000,000 

50.000. 000  Anstro-Hungary 10,000,000 

42,000^000  Turkey 12,000,000 

40.000. 000  Holland  and  Belgium, . . 2,500,000 

28.000. 000  Australia 3,500,000 

14.000. 000  Canada 4,000,000 

18.000. 000 


Total. . . . 
Equal  in  bushels 


249,000,000 

1,992,000,000 


CANAL  COMMERCE. 
imports. 

Statement  of  property  left  at  Buffalo,  on  the  Erie  canal,  or  which 
was  left  between  that  place  and  the  Collector’s  office  next  in  order 
on  the  canal  ; showing  the  quantity,  tons  and  average  value  of 
each  article  during  the  year  1881  ; also  quantity,  tons  and  average 
value  of  each  article  on  the  free  list,  for  1881,  going  to  the  West- 
ern States,  Canada  and  New  York  : 


The  Forest. 


Articles. 

Product  of  Wood. 

Quantity. 

Reduced 
to  tons  of 
2,000  lbs. 

Value 
of  each 
article. 

Boards  and  scantling,  feet 

2,357,066 

3,929 

$40,070 

Shingles,  M 

172 

22 

688 

Wood,  cords 

2,877 

8,056 

8,631 

Total 

Agriculture. 

Vegetable  food. 

12,007 

$49,389 

Wheat,  bushels 

3,317 

100 

$4,478 

Corn,  bushels 

Barley,  bushels 

4,000 

19,226 

112 

2,400 

461 

22,110 

Barley  malt,  bushels . . 

211 

4 

253 

Bran  and  shipstutf,  pounds 

20,940 

10 

209 

Peas  and  beans,  bushels 

9,846 

295 

29,538 

Total 

982 

$58,988 

Manufactures. 


Furniture,  pounds 

21,000 

11 

$2,100 

Iron,  pig,  pounds 

39,094,369 

19,997 

799,887 

Bloom  and  bar  iron,  pounds 

770,560 

385 

38,528 

Castings  and  iron  ware,  pounds 

5,565,578 

4,783 

556,558 

Foreign  salt,  pounds  

17,898,058 

8,949 

178,981 

Total 

32,125 

$1,576,054 

35 


274 


, Merchandise. 

Sugar,  pounds 

Molasses,  pounds 

Nails,  spikes  and  Iiorse  slioes,  pounds. 

Iron  and  steel,  pounds 

Railroad  iron,  pounds 

Flint,  enamel,  crockery,  glassware, 

pounds 

All  other  merchandise,  pounds  

Total 


Other  articles. 

Stone,  lime  and  clay,  pounds 

Anthracite  coal.  ])ounds 

Sundries,  pounds 

Total 


35,873,040 

17,937 

$3,587,305 

9,042,540 

4,821 

034,104 

3,505,481 

1,753 

140,219 

240,078,289 

123,039 

7,382,340 

158,058,431 

79,329 

4,759,753 

11,545,405 

5,773 

923,033 

150,404,310 

78,232 

7,823,215 

310,884  $25,098,598 


151,794,020  75,897  $758,970 

303,584,090  181,793  908,902 

19,431,405  9,710  971,573 


207,400  $2,039,505 


Total  of  all  of  above  articles 


023,404  $29,422,534 


FREE  LIST. 


Agriculture. 

Product  of  Animals. 


Lard,  tallow  and  lard  oil,  pounds.  . . . 
Cheese,  pounds 

8,227 

83,487 

4 

42 

$987 

11,088 

Total 

40 

$12,075 

Vegetable  food. 

Flour,  barrels 

Dried  fruit,  pounds 

0,900 

9,351,998 

740 

4,070 

$48,342 

1,402,800 

Total 

5,422 

$1,451,142 

All  other  agricultural  products. 

Hemp,  pounds 

1,281,099 

041 

$128,170 

Total 


041 


$128,170 


Total  of  agricultural  i;)roducts 


0,109  $1,591,987 


Manufactures. 

Domestic  spirits,  gallons  

Domestic  woolens,  pounds 

Domestic  cottons,  pounds 

Domestic  salt,  pounds 

'I'otal 


409,473 

1,878 

$704,210 

8,3u4,240 

4,152 

4,152,123 

11,221,245 

5,011 

3,300,374 

78,294,019 

39,147 

391,473 

50,788 

$8,014,180 

275 


Merchandise. 


Coffee,  pounds 

5,208,622 

2,654 

$1,061,724 

Total . 

2,654 

$1,061,724 

Other  articles. 

Live  cattle,  hogs  and 'sheep 

Rock  phosphates,  and  super-phos- 
phates, pounds 

20,000 

17,827,848 

10 

8,914 

82,000 

356,555 

Total 

8,924 

8358,555 

Total  of  free  list 

68,475 

$11,626,446 

Grand  total  tons 

Grand  total  value 

691,879 

841,048,980 

EXPORTS. 

Statements  of  property  first  cleared  at  the  Collector’s  office  at 
Buffalo  on  the  Erie  canal  during  the  year  1881,  showing  the 
quantity,  tolls  and  average  value  of  each  article,  and  also  the 
whole  amount  of  tolls  received  at  that  office  on  each  article  of 
property  during  the  same  period ; also  quantity,  tons  and  tolls 
and  average  value  on  each  article  on  the  free  list  for  1881  coming 
from  the  Western  States,  Canada  and  New  York  : 


The  Forest. 


Articles. 

Quantity. 

Reduced 
to  tons  of 

Value 
of  each 

Boards  and  scantling,  feet 

. 74,865,668 

2,000  lbs. 

124,776 

article. 

$1,272,716 

Shingles,  M 

12,253 

1,532 

49,012 

Total  of  the  forest,  tons 

Total  value  

126,308 

81,321,728 

Total  tolls 

32,919 

Agriculture. 

Vegetable  food. 

Wheat,  bushels 

♦ 

. 12,886,762 

386,603 

817,397,129 

Rye  bushels 

3,827 

107 

4,210 

Corn,  bushels 

. 16,368,436 

458,316 

9,821,062 

Barley  malt,  bushels 

345,812 

5,879 

414,974 

Oats,  bushels 

. 1,546,924 

24,751 

696,116 

Bran  and  shipstuffs,  pounds 

. 1,571,460 

786 

15,715 

Peas  and  beans,  bushels 

3,533 

106 

10,590 

Total  vegetable  food,  tons 

Total  value 

876,548 

$28,359,805 

Total  tolls 

290,444 

276 


Merchandise. 

Articles.  Quantity. 

All  other  merchandise,  pounds.. 9,433,358 

Reduced 
to  tons  of 
2,000  lbs. 

4,717 

Value 
of  each 
article. 

$471,668 

Total  merchandise,  tons  

Total  value 

Total  tolls 

4,717 

$471,668 

440 

Other  Articles. 

Bituminous  coal,  pounds 58,444,132 

Petroleum  or  earth  oil,  crude  and  ref.,  bbls.  2,514 

29,222 

440 

$146,110 

5,028 

Total  other  articles,  tons 

Total  value 

Total  tolls 

29,662 

$151,138 

1,700 

Total  of  all  of  the  above  articles,  tons 

Total  value 

Total  tolls 

1,037,225 

$36,304,330 

325,674 

FREE  LIST. 

Boats. 

Total  miles  boats  cleared 

— 

1,623,604 

The  Forest. 

Staves  and  headings,  pounds 61,652,021 

Ashes,  leached,  bushels 15,666 

30,326 

470 

$616,520 

1,567 

Total - 

31,296 

$618,087 

Agriculture. 

Product  of  Animals. 

Lard,  tallow  and  lard  oil,  bbls 6,603,405 

Total  . . 

Vefjetable  Food. 

Flour,  bbls 4,465 

Cornmeal,  bbls. 4,370 

Total  

All  other  Agricultural  Products. 

Clover  and  "rass  seed,  pounds 918,634 

Flax  seed,  pounds 90,896,726 

Total 


1 Manufactures. 


Domestic  spirits,  gallons 

56,280 

226 

$84,420 

Di lineal  and  cake,  pounds 

4,221,000 

2,111 

126,660 

Domestic  salt,  pounds 

27,000 

14 

135 

Total 

2,350 

$211,215 

3,302  $792,409 

3,302  $792,409 

482  $31,225 

472  13,110 

954  $44,365 

459  $73,491 

45,448  2,800,393 

45,907  $2,800,393 


I 


277 


Other  Articles, 


Rock  phosphates  and  super-phosphates,  lbs.  392,000 

Totals  of  other  articles 

Totals  of  free  list 

Grand  total  tons 

Grand  total  value 


196 

$11,760 

196 

$11,760 

84,005 

$4,478,229 

1,121,240 

$34,782,568 


Imports  an^d  Exports  Compared. 


Lumber,  feet 

Imports. 

1879. 

1,703,849 

1880. 

3,815,886 

1881. 

2,357,066 

Timber,  cubic  feet 

82,852 

• • • • 

• • • • 

Shingles,  M 

30 

264 

172 

Wood,  cords 

253 

1,232 

2,877 

Cheese,  pounds 

66,492 

11,889 

83,487 

Hides,  pounds 

19,856 

6,792 

.... 

.... 

Flour,  bbls 

3,270 

6,906 

Wheat,  bushels 

38,516 

• • • • 

3,317 

Barley,  bushels 

33,329 

12,000 

19,226 

Corn,  bushels 

^ • 

500 

4,000 

Bariev  malt,  bushels.  

• • • • 

411 

Oats,  bushels 

200 

356 

• • • • 

Bran,  etc.,  pounds 

71,836 

141,350 

20,940 

Beans  and  peas,  bushels 

11,433 

9,560 

9,846 

Corn  meal,  bbls 

570 

» • • • 

• • • • 

Hemp,  pounds 

1,448 

1,180,437 

1,281,699 

Apples,  bbls 

2,498 

1,772 

• • • « 

Dried  fruit,  pounds 

22,291,225 

10,201,087 

9,351,998 

Unmanufactured  tobacco,  lbs. . 

544,666 

330,896 

Domestic  spirits,  gallons 

3,765 

258.782 

469*475 

Lard,  tallow  and  Urd  oil,  lbs. . 

16,472 

44,074 

8,227 

Live  cattle,  hogs  and  sheep,lbs. 

• • • • 

< • • • 

20,000 

Cotton,  pounds . . . . 

33,410 

• • • • 

• • • • 

Hops,  pounds 

30,000 

• • • • 

• • • • 

Domestic  woolens,  pounds. . . . 

20,767,817 

4,715,186 

8,304,246 

Domestic  cottons,  pounds 

30,335,374 

8,048,820 

11,-221,245 

Furniture,  pounds 

63,640 

24,583 

21,000 

Pig  iron,  pounds 

77,026,917 

95,046,894 

39,994,369 

Castings,  etc.,  pounds 

717,269 

2,598,564 

5,565,578 

Bl’m  and  bar  iron,  pounds. . . 

323,147 

5,282,600 

770,560 

Bar  and  pig  lead,  pounds 

286,674 

129,828 

• • • • 

Rock  and  super-phosphate,  lbs. 

.... 

200,000 

17,827,848 

Leather,  pounds 

202,094 

317,339 

• • • • 

Domestic  salt,  pounds 

130,445,522 

119,444,200 

78,294,619 

Foreign  salt,  pounds 

1,273,608 

' 3,724,800 

17,898,058 

Sugar,  pounds *. 

Molasses,  pounds 

101,209,371 

70,727,626 

35,873,046 

25,192,643 

12,682,083 

9,642,546 

Coffee,  pounds 

3,977,021 

2,010,131 

5,308,622 

278 


• 1879.  1880.  1881. 

.Nails  and  spikes,  pounds 2,120,903  1,468,712  3,505,481 

Iron  and  steel,  pounds 11;308,043  85,244,728  246,078,189 

Kailroad  iron,  pounds 27,705,443  152,389,434  158,658,431 

Crockery,  etc.,  pounds 9,626,003  9,372,347  11,545,405 

All  other  merchandise,  lbs. . ..  142,270,775  149,043,279  156,464,316 

Stone,  limo  etc.,  pounds 90,950,292  87,880,451  151,794,026 

Gypsum,  pounds 1,246,100  1,194,900  

Anthracite  coal,  pounds 184,267,574  166,480,796  363,584,690 

Bituminous  coal,  pounds 4,000,000  3,553,420  

Sundries,  pounds 91,481,855  76,155,441  19,431,465 

Iron  ore,  pounds 16,322,722  21,647,754  


Total  tons  of  articles  carried . . 499,453  557,604  691,879 

Total  value  of  articles  carried.  $43,554,185  $33,692,510  $41,048,980 


Exports. 

1879. 

Lumber,  feet 107,158,316 

Staves,  pounds 56,029,617 

Shingles,  M 34,600 

Wood,  cords 

Pork,bbls 2,131 

Lard,  tallow,  etc.,  pounds 35,500 

Hides,  pounds 10,000 

Ashes,  leached,  bushels 39,502 

Flour,  bbls 4,750 

Wheat,  bushels 29,708,699 

Eye,  bushels 1,445,401 

Corn,  bushels 21,506,162 

Barley,  bushels 299,757 

Barley  malt,  bushels 295,683 

Oats,  bushels 908,373 

Peas  and  beans,  bushels 22,441 

Bran,  etc.,  pounds 318,460 

Cornmeal,  bbls.. 1,939 

Clover  and  grass  seed,  pounds.  108,240 

Flax  seed,  pounds 22,238,587 

Hops,  pounds 

Domestic  spirits,  gallons....  46,950 
Oil  meal  and  cake,  pounds. . . . 720,549 

Furniture,  pounds 8,500 

Pig  iron,  pounds 1,845,800 

Bl’m  and  bar  iron,  pounds. . . . 5,250 

Castings,  etc.,  pounds 900 

Bar  and  pig  lead, pounds 179,493 

Domestic  salt,  pounds 

Sugar,  pounds 41,100 

Coll'ee,  pounds 300 

Crockery,  pounds 1,050 

Other  merchandise,  })ounds  . . 1,160,830 

)Stone,  lime,  clay,  pounds  ....  8,000 


1880. 

75,243,821 

58,022,785 

17,960 

400 

37,170 

8,772,909 

20,000 


19,886 

29,877,017 

433,461 

40,410,117 

18,067 

162,179 

1,009,123 


39,200 

6,357 

2,532,067 

46,040,193 

3,500 

24,000 

3,012,755 


10,098,420 


1881. 

74,865,668 

61,652,021 

12,253 


6,603,405 


15,666 

4,465 

12,886,762 

3,827 

16,368,436 


345,812 

1,546,924 

3,533 

1,571,460 

4,370 

918,634 

90,896,725 


56,280 

4,222,000 


27,000 


9,433,358 


279 


1879. 

Bituminous  coal,  pounds  ....  56,573,814 
Petroleum  oils,  crude  and  re- 


fined, barrels 55,435 

Sundries 7,924,043 

Kock  and  super-phosphate,  lbs 

Nails  and  spikes,  pounds 42,400 

Iron  and  steel,  pounds 40,000 

Leather,  pounds 17,500 


1880. 

50,722,833 

1,208 

854,080 

895,600 


1381. 

58,444,132 

2,514 

* 392’ 666 


Total  tons  of  articles  carried . 
Total  value  of  articles  carried . 


Total  boats  cleared 


thus : 

Canal  opened 

Flour,  barrels  . 


Oats,  bushels.. 
Barley,  bushels 
Eye,  bushels  . . 


Flour  to  wheat,  bushels 

Grand  total,  bushels  .... 


, 1,830,843 

2,286,992 

1,121,240 

$48,142,030 

$59,539,048 

$34,782,568 

$591,652 

$736,088 

$325,674 

8,708 

10,623 

6,294 

Grain  Recapitulatmi. 

ain,  compared  for  three  year 

'S,  are  shown 

1879. 

1880. 

1881. 

May  8. 

April  20. 

May  17. 

4,750 

19,886 

4,465 

29,708,699 

29,877,017 

12,886,762 

21,506,192 

40,410,117 

16,368,436 

908,373 

1,009,123 

1,546,924 

299,757 

18,067 

1,445,400 

433,461 

3,827 

53,868,392 

71,747,785 

30,805,949 

23,750 

99,330 

23,325 

53,892,142 

71,847,115 

30,829,274 

Eastward  akd  Westward  Movemeot  on  the  Erie  Canal. 
The  following  statement  shows  the  amount  of  freight  by  tons 
moved  on  the  Erie  canal  eastward  and  westward  for  ten  years  : 


Sliixoments  of  Eastiuard  Movhig  Freight  from  Buffalo. 


Years. 

Products  of 
the  forest, 
tons. 

Products  of 
animals, 
tons. 

Vegetable 

food, 

tons. 

1872  

347,695 

52 

1,322,981 

1873  

296,128 

29 

1,433,653 

1874  

216,893 

38 

1,164,392 

1875  

151,953 

39 

1,007,559 

783,122 

1876  

124,379 

23 

1877  

183,019 

10,633 

1,220,249 

1878  

234,433 

2,686 

1,635,082 

1879  

212,121 

364 

1,562,208 

1880  

157,783 

9,863 

3,302 

2,061,990 

1881 

157,604 

877,502 

Note.  — In  1874  there  vvere  shippefl  104. 7o4  bushels  of  barley  malt,  153,853  bushels  in  1875, 
215,238  bushels  in  187fi,  205,986  bushels  in  1877,  220.723  bushels  in  1878,  295,683  bushels  in  1879, 
162.179  bushels  in  1880,  and  345,832  bushels  in  1885.  Of  peas  and  beans,  208  bushels  in  1874, 
3,844  i)ushels  in  1875,  826  bushels  in  1876,  544  bushels  in  1877,  27,215  bushels  in  1878,  22,441 
bushels  in  1879,  none  in  1880  and  1,533  bushels  in  1881. 


Years. 

1872 

1873 

1874 

1875 

1876 

1877 

1878 

1879 

1880 

1881 

1872 

1873 

1874 

1875 

1876 

1877 

1878 

1879 

1880 

1881 

1872 

1873 

1874 

1875 

1876 

1872 

1873 

1874 

1875 

1876 

1877 

1878 

1879 

1880 

1881 

1872 

1873 

1874 


280 


Other  aj?’! 
products, 
tons. 

Manufac- 

tures, 

tons. 

Mer- 

chandise, 

tons. 

1,411 

564 

367 

19 

906 

853 

204 

846 

530 

7 

11,602 

337 

29 

373 

335 

3,516 

3,364 

292 

532 

1,406 

472 

11,174 

1,581 

643 

24,288 

1,602 

5,049 

45,907 

2,350 

4,717 

Other  articles,  Total 
tons.  tons. 

Total 

value. 

101,962 

1,774,906 

$52,855,537 

94,035 

1,825,623 

49,772,070 

65,269 

1,448,172 

46,244,875 

38,051 

1,219,538 

40,608,163 

33,213 

941,474 

24,411,554 

38,049 

1,459,122 

38,229,716 

75,758 

1,946,602 

43,466,806 

41,952 

1,830,843 

48,142,030 

26,447 

2,286,992 

59,539,048 

29,858 

1,121,240 

34,782,568 

Total  Amount  of  Tolls  Collected. 

. $1,416,049  31  1877  

. 1,415,634  33  1878  

. 1,196,780  55  1879  

789,830  24  188(» 

583,644  42  1881  


$467,921  74 
628,439  45 
591,652  07 
736,631  10 
325,674  32 


Recei])ts  of  Western  Moving  Freight  at  Buffalo. 


Products  of 
the  forest, 
tons. 

Products  of 
animals, 
tons. 

Vegetable 

food, 

tons. 

3,467 

187 

2,337 

2,465 

72 

5,170 

2,014 

37 

15,174 

1,529 

266 

7,521 

1,507 

88 

3,452 

1,356 

1,874 

230 

5,881 

72 

7,211 

5,210 

51 

3,321 

9,843 

28 

6,253 

12,907 

46 

6,404 

Otlier  a^T 
products, 
tons. 

Manufac- 

tures, 

tons. 

Mer- 

chandise, 

tons. 

101,519 

108,526 

151,560 

63,369 

3 

99,305 

36,145 

281 


Years. 

1875 

1876 

1877 

1878 

1879 

1880 
1881 


other  ag’l  Manufac-  Mer- 

products,  tures,  ehandise, 

tons.  tons.  tons. 

4 lll',531  30,921 

60,547  4,627 

442  74,426  24,685 

304  204,893  106,060 

305  130,708  161,708 

755  120,700  241,469 

641  82,913  313.538 


Other  articles,  Total  Total 

tons.  tons.  value. 

1872  430,846  609,616  $32,178,888 

1873  522,051  701,653  19,56%226 

1874  373,903  526,311  8,646,610 

1875  403,465  555,237  9,193,785 

1876  242,815  313,036  5,045,911 

1877  287,760  395,080  12,310,455 

• 1878  212,038  432,472  22,474,227 

1879  198,140  499,453  43,554,185 

1880  178,566  557,604  33,692,510 

1881  276,330  681,879  41,048,980 


Canal  Tolls. 


The  following  table  shows  the  aggregate  receipts  of  tolls  at  Buffalo 
from  the  opening  to  the  close  of  navigation  for  a series  of  years : 


1881  . . . 

1325,674  32 

1876  

$583,644  42 

1880  ... 

736,631  10 

1875  

1879  ... 

591,652  07 

1874  .... 

1,196;  780  55 

1878  ... 

628,439  45 

1873  

1877  ... 

467,921  74 

1872  

1,416,049  31 

Canal 

opened  May  17th,  1881 ; 

April  20th, 

1880  ; May  8th,  1879  ; 

April  15th,  1878,  and  May  8th,  1877. 


The  tolls  for  1881  from  Buffalo  to  West  Troy  are  as  follows  (dis- 
tance 345  miles):  Wheat,  bushel  of  60  lbs.,  Ic  Om  35f  ; corn,  bushel 
of  56  lbs.,  Oc  9m  66f  ; rye,  bushel  of  56  lbs.,  Oc  9m  66f ; barley,  bushel 
of  48  lbs.,  Oc  8m  28f  ; oats,  bushel  of  32  lbs.,  Oc  5m  52f  ;malt,  bushel  of 
34  lbs.,  Oc  5ni  8Gf. 

Canal  Clearances. 

The  following  statement  shows  the  number  of  boats  cleared  from  the 
opening  to  the  close  of  navigation  for  a series  of  years  ; 

1881 6,294  1876 4,850 

1880 10,623  m5 7,349 

1879 8,709  1874 7,628 

1878 9,027  1873 9,058 

1877 6,908  1872 8,659 

36 


282 


Canal  Freights  from  Buffalo  to  New  York. 

The  following  table  shows  the  ruling  rates  of  freights  to  New  York 
from  Buffalo  (tolls  included,  excepting  for  staves,  which  are  on  the 


free  list)  on  the  dates  specified  in  1881: 


Wheat, 

Corn, 

Oats, 

Pine 

lumber, 

Staves, 
p.  ton. 

1881. 

bu. 

bu. 

bu 

M.  feet. 

free. 

May  14 

7 

. . 

.... 

.... 

May  21 

6 

H 

13  50 

U 75 

Mav  28 

5 

H 

H 

3 40 

1 40 

June  4 

5 

H 

3 25 

1 40 

June  11 

5 

H 

H 

3 90 

1 30 

June  18 

^ 

H 

3 

2 85 

1 25 

June  

H 

3f 

n 

2 75 

1 13 

July  2 

4 

3i 

n 

2 52 

1 00 

July  9..  

4 

2 00 

1 00 

July  16 

H 

4 

H 

2 50 

1 00 

July  23 

H 

4 

H 

2 65 

1 25 

Julv  30 

H 

2 50 

1 12 

Aug . 6 

4 

H 

H 

2 50 

1 00 

Aug.  13 

H 

2 50 

1 00 

Aug.  20 

4 

H 

2 50 

1 00 

Aug.  27; 

H 

4 

3 

2 50 

1 00 

Sept.  3 

4L 

3 

2 50 

1 25 

Sept.  10 



4 

3 

3 00 

1 25 

Sept.  17 

H 

H 

2 85 

1 25 

Sept.  24 

H 

4 

3 

2 85 

1 25 

Oct.  1 

u 

4 

3 

2 85 

1 06 

Oct.  8 

4 

4 

3 

2 85 

1 06 

Oct.  15 

51 

H 

H 

2 85 

1 50 

Oct.  22 

H 

5 

H 

2 85 

1 50 

Got.  29 

5i 

3 

3 15 

1 50 

Nov.  5 

51 

3 

3 00 

1 50 

Nov.  12 

5 

H 

H 

3 00 

1 50 

Nov.  19 

H 

41 

3 

3 00 

1 45 

Nov.  26 

. , 

.... 

.... 

Average  Canal  Freights. 

The  following  statement  shows  the  average  rates  of  canal  freights  on 
wheat  and  corn  between  Buffalo  and  New  York  (tolls  included)  during 
each  month  in  the  past  ten  years,  the  highest  rate  on  wheat  in  each 
year  and  the  average  rate  on  wheat  in  each  year : 

May  June  July  Aug.  Sept.  Oct,  Nov. 

cts.  cts.  cts.  cts.  cts.  cts.  cts. 


(Wheat 12.8  12.1,  11., 5 ’ 12.0  12.5  14.2  15.9 

' ( Corn 11.8  11.1  10.0  11.0  11.3  12.6  13.9 

llighe.st  rate  wheat,  1872,  18o;  average  for  the  season,  13c. 

.o-..  jWlieat 11.8  lO.G  10.2  10.0  ll.G  12.7  12.3 

' ' ( Corti lO.G  9.5  9.2  9.G  10.0  11.2  10.6 

Highest  rate  wlioat,  1873,  l4o;  average,  11. 4o. 


283 


1874 


Wheat. 
Corn.. . 


Highest  rate  wheat, 

( Corn 

Highest  rate  wheat, 

''’“I 

Highest  rate  wheat, 

1877  j Wheat 

^^^^•jCorn 

Highest  rate  wheat, 

Highest  rate  wheat, 

Highest  rate  wheat, 
Wheat 


1880 


1881 


^ Corn 

Highest  rate  wheat. 

Wheat 

Corn 


May 

June 

July 

Aug. 

Sept. 

Oct. 

Nov. 

cts. 

cts. 

cts. 

cts. 

cts. 

cts. 

cts. 

.11.8 

11,3 

9.5 

9.0 

9.5 

9.5 

9.7 

10.8 

10.3 

8.5 

8.0 

8.5 

8.5 

8.7 

00 

t-H 

14c  ; 

average, 

10c. 

7.4 

6.9 

7.5 

8.1 

7.0 

8.2 

10.5 

6.6 

6.3 

6.9 

7.4 

6.5 

7.4 

6.1 

1875, 

11c;  average,  ' 

7.9c. 

6.7 

6.2 

5.9 

5.8 

6.2 

8.3 

7.6 

5.8 

5.4 

5.4 

5.3 

5.6 

7.5 

5.5 

1876, 

10c  ; ; 

average, 

6.6c. 

•5.8 

5.0 

5.4 

7.0 

7.7 

10.6 

10.0 

5.0 

4.9 

4.7 

6.4 

6.7 

6.2 

8.7 

1877, 

12c  ; i 

average. 

7.4c. 

, 5.8 

4.7 

4.3 

5.2 

8.0 

8.0 

5.8 

, 5.2 

4.1 

3.8 

4.6 

7.1 

7,0 

5.2 

1878, 

8.5c; 

average. 

6c. 

4.7 

4.1 

5.2 

6.5 

8.1 

8.0 

10.2 

4.2 

3.6 

4.7 

5.9 

7.4 

7.9 

8.8 

1879, 

12c  ; 

average. 

6.8c. 

6.9 

6.9 

6.0 

5.9 

5.9 

6.7 

8.8 

5.5 , 

6.4 

5.4 

5.4 

5.3 

6.0 

7.5 

1880, 

9c ; average,  6 

.5c. 

5.3 

4.7 

4.3 

4.0 

4.8 

5.0 

5.0 

4.8 

4.2 

3.8 

3.5 

4.3 

4.5 

4.6 

Highest  rate  wheat,  1881,  7c;  average,  4.2c. 


Eeceipts  at  Tide-Water  by  Canal  of  Flour,  Grain,  Etc. 
The  following  comparative  table  shows  the  quantity  of  the  principal 
articles  of  produce  left  at  tide- water  from  the  commencement  to  the 
close  of  navigation  in  the  years  indicated  : 


Canal  opened 

Flour, barrels. 

1879. 

May  8. 

1880. 

April  30. 

21,200 

1882. 

May  17. 

11,000 

Wheat,  bushels 

Corn,  bushels 

Barley,  bushels. . * 

Eye,  bushels 

Oats,  bushels 

Malt,  bushels 

...30,074,000 
....20,178,000 
....  3,130,800 
....  1,053.900 
....  1,118,900 
....  379,900 

30.691.800 

34.869.800 
4,091,700 

859,700 

1,140,800 

637,500 

13,701,900 

18,472,000 

2,982,900 

557,000 

2,070,600 

702,700 

Total  grain,  bushels . . . . 
Flour  to  wheat,  bushels. . . . . 

....56,935,000 
. . . 42,000 

72,291,300 

106,000 

38,487,100 

55,000 

Grand  total,  bushels. . . . 

....56,977,000 

72,397,300 

38,542.500 

The  receipts  at  tide-w'ater  by  canal  of  the  new  crop  of  barley  1881 
were  2,934,700  bushels,  against  4,035,400  bushels  in  1880,  3,114,000 
bushels  in  1879,  2,988,000  bushels  in  1878,  5,126,500  bushels  in  1877, 
3,332,100  bushels  in  1876,  3,833,600  bushels  in  1875,  3,354,300  bush- 
els in  1874,  2,130,800  bushels  in  1873  and  4,147,100  bushels  in  1872. 


The  receipts  for  ten  years  compare  as  follows  (malt  not  included): 


Year. 

1872 

1873 

1874 

1875 

1876 

1877 

1878 

1879 

1880 
1881 


Grain  and  flour. 
Flour,  bbls.  reduced,  bush. 

137,300  51,996,660 

153,500  47,803,200 

165,200  48,687,200 

113,600  37,674,200 

37,100  30,845,300 

29,500  47,475,500 

14,400  62,510,600 

8,400  56,597,600 

21,200  71,759,800 

11,000  37,839,400 


LIVE  STOCK  TEADE. 

We  present  below  the  usual  tables  showing  the  receipts  and  ship- 
ments of  live  stock  during  1881,  with  comparisons,  and  the  average 
range  of  prices  monthly  during  the  year : 

EECEIPTS. 


Per  Lake  Shore  & Michigan  Southern  Railway. 


Month. 

Cattle 

cars. 

Hors, 

cars. 

Sheep 

cars. 

Horses, 

cars. 

January  , . 

2,167 

1,256 

280 

36 

February  . 

1,985 

1,045 

252 

72 

March  . . . 

2,476 

951 

257 

144 

April 

2,873 

983 

307 

137 

May 

2,824 

1,112 

394 

85 

June  . . . , . 

2,832 

1,062 

350 

76 

July 

3,194 

970 

433 

44 

August  . . , 

2,775 

914 

233 

36 

September 

2,369 

1,135 

1,583 

187 

40 

October  . . 

2,942 

226 

49 

November 

2,057 

1,573 

302 

61 

December 

/ 

2,493 

1,824 

398 

57 

Total, 

1881 

30,987 

14,308 

3,622 

830 

u 

1880  

38,023 

15,164 

3,403 

1,001 

1879  

36,606 

12,947 

3,190 

1,097 

« 

1878  

31,391 

13,309 

2,983 

597 

o 

1877  

24,485 

7,744 

2,144 

610 

u 

1876  

29,771 

7,999 

2,421 

566 

Notk.—  It  Is  esiiinatcd  that  tliero  was  on  the  canals  when  naviRation  closed,  on  the  20th 
of  November,  IHHO,  1.1K(),(KK)  bnsh(*ls  of  wlioat,  :i,70(),()00  busliels  of  corn,  30,000  bushels  of 
oats,  30‘.),0(X)  i)iiftliels  of  barley  and  42,000  l)UHhels  of  rye. 


285 


,, 

Cattle 

cars. 

Hog 

cars. 

Sheep 

cars. 

Horse 

cars. 

Total 

1875  . 

22,935 

7,300 

2,131 

915 

(( 

1874  . 

11,049 

2,036 

1,103 

(( 

1873  . 

22,401 

14,078 

2,362 

1,687 

i( 

1872  . 

12,019 

1,838 

1,188 

{( 

1871  . 

7,252 

1,655 

722 

{( 

1870  . 

6,354 

2,217 

425 

January  . . 

^ . 

Per  Canada  Southern  Railiuay. 
217  128 

65 

2 

February  . 

175 

75 

9 

March  . . . . 

93 

97 

17 

April 

756 

69 

70 

7 

May 

337 

77 

32 

5 

June 

668 

194 

47 

3 

July 

497 

96 

14 

. . 

August. . . 

461 

213 

47 

2 

September 

230 

46 

7 

October  . . 

187 

170 

34 

4 

November 

121 

322 

47 

2 

December 

87 

258 

29 

2 

Total, 

1881  . 

5,002 

1,835 

583 

59 

n 

1880  . 

3,533 

1,851 

490 

86 

1879  . 

232 

2,141 

592 

91 

i( 

1878  . 

2,955 

7,020 

80 

ti 

1877  . 

1,006 

649 

50 

n 

1876  . 

919 

598 

87 

(( 

1875  . 

3,477 

837 

* 562 

81 

(( 

1874  . 

898 

431 

204 

Per  Grand  Trunh  Raihoay. 


January  

133 

28 

59 

6 

February  

11 

55 

9 

March 

1 

83 

29 

April  

188 

36 

15 

May 

6 

19 

10 

June 

1 

10 

11 

Julv 

8 

27 

10 

August 

294 

12 

90 

9 

September 

229 

18 

80 

2 

October 

33 

97i 

5 

November 

66i 

140 

11 

December 

53 

82 

11 

Total,  1881  ... 

190 

695 

125 

1880  . . . , 

..  1,711 

208 

824 

138 

1879  .... 

202 

252 

816 

56 

1878  . . . , 

166 

773 

36 

‘‘  1877  .... 

278 

67 

227 

37 

286 


Cattle  noprs,  Sheep  noraes, 

cars.  cars.  cars.  cars. 

Total  1876  1,290  60  6:31  80 

“ 1875  2,604  76  879  87 

“ 1874  2,583  821  919  86 


Per  New  York,  Lake  Erie  <&  Western  Railway. 


January  . . 
February. 
March  . . . . 

April 

May 

June 

July 

August  . . , 
September 
October  . . 
November 
December. 


1 

2 

1 

1 

1 

i 

H 


*2 

2 


1 

1 

1 


Total, 

1881  . 

61 

24 

11 

8 

Per 

Great  Western  Railioay. 

January  . . 

241 

90 

67 

1 

February  . 

280 

112 

59 

. . 

March .... 

286 

51 

57 

12 

April  .... 

376 

51 

32 

7 

May 

687 

81 

3 

3 

June  ....*, 

293 

75 

3 

10 

July 

278 

87 

9 

3 

August . . . 

550 

56 

504 

3 

September 

198 

58 

33 

1 

October  . . 

201 

40 

33 

1 

November 

404 

117 

66 

4 

December 

268 

31 

32 

1 

Total, 

1881'.. 

4,062 

849 

444 

64 

(( 

1880 

2,948 

2,312 

424 

73 

it 

1879  .. 

228 

1,321 

500 

67 

if 

1878  . . 

3,028 

142 

655 

70 

it 

1877  .. 

2,409 

485 

496 

67 

ft 

1876  .. 

1,665 

1,023 

714 

51 

tt 

1875  . 

1,192 

1,065 

633 

98 

it 

1874  . . 

860 

164 

530 

26 

SHIPMENTS. 

Per  Neio 

York 

Central  iQ  Hudson  River  Railway. 

January  . . 

•.  1,886 

961 

316 

41 

February  . 

2,217 

901 

325 

87 

March  . . . 

2,410 

724 

348 

168 

287 


Month. 

April  .... 

Cattle 

cars. 

3,738 

Hop'S 

cars. 

737 

Sheep 

cars. 

316 

Horses 

cars. 

148 

May 

3,582 

837 

271 

90 

June  .... 

807 

305 

84 

July 

3,674 

830 

352 

44 

August. . . 

3,477 

770 

293 

45 

September 

2,881 

894 

265 

59 

October  . . 

3,053 

1,204 

269 

61 

November. 

2,202 

1,240 

311 

65 

December. 

2,085 

1,251 

290 

43 

Total, 

1881  . . . 

10,056 

3,661 

3,521 

755 

(( 

1880  . . . 

35,618 

11,572 

1,092 

a 

1879  ... 

31,482 

10,825 

3,571 

1,027 

a 

1878  ... 

26,763 

10,924 

3,120 

2,570 

634 

« 

1877  .. 

23,287 

5,381 

5,571 

667 

t( 

1876  . . . 

26,325 

2,320 

366 

(( 

1875  . . . 

24,175 

3,737 

2,524 

803 

(( 

1874  . . . 

24,288 

9,207 

2,234 

1,207 

(( 

1873  . . . 

17,82§ 

9,254 

2.067 

1,531 

(( 

1872  . . . 

18,045 

6,642 

2,117 

354 

a 

1871  ... 

14,363 

4,110 

1,205 
• 1,399 

536 

(( 

1870  . . . 

13,022 

2,678 

343 

Per  New 
January  

Nor^,  Lake  Erie  & Western  Raihuay. 
898  295  117 

6 

February  . 

609 

142 

80 

10 

March  . . . 

■ 772 

160 

103 

25 

April  .... 

149 

91 

16 

May 

485 

138 

111 

5 

June 

1,043 

223 

70 

11 

July 

146 

64 

4 

August. . . 

394 

136 

49 

3 

September 

434 

238 

97 

1 

October  . . 

421 

92 

5 

November 

490 

383 

116 

7 

December 

487 

346 

103 

5 

Total, 

1881  . . . 

7,089 

2,477 

993 

98 

a 

1880  . . . 

4,430 

1,177 

130 

(( 

1879  ... 

4,403 

8,634 

3,133 

1,089 

233 

(( 

1878  ... 

3,646 

1,143 

170 

(( 

1877  ... 

8,385 

2,296 

949 

104 

<( 

1876  . . . 

7,783 

2,563 

986 

95 

H 

1875  . . . 

2,366 

1,058 

106 

u 

1874  . . . 

2,913 

1,693 

1,146 

1,408 

82 

t( 

1873  ... 

3,399 

171 

a 

1872  . . . 

2,716 

3,666 

658 

144 

a 

1871  ... 

2,666 

2,671 

702 

153 

<( 

1870  ... 

7,826 

1,146 

111 

288 


RECAPITULATION. 


Or  and  Total  Receipts  for  1881. 


Cattle 

Hogs 

Sheep 

Horses 

Routes. 

cars. 

cars. 

cars. 

cars. 

L. 

S.  & M 

. S.  R.  E 

30,987 

14,308 

3,622 

830 

Canada  Southern 

5,002 

1,835 

583 

59 

Gr 

and  Tr 

link 

2,603 

190 

695 

125 

Gr 

eat  Western 

849 

444 

64 

N. 

Y.,  L. 

E.  & W.  R.  R... 

61 

24 

11 

8 

Total 

, 1881  

42,715 

17,206 

5,355 

1,086 

a 

1880 

46,258 

19,581 

5,166 

1,298 

1879  

37,268 

16,661 

5,098 

1,311 

i<. 

1878  

38,625 

17,947 

5,161 

85.0 

a 

1877  

31,348 

10,598 

3,818 

766 

a 

1876  

36,223 

10,001 

4,309 

984 

a 

1875  

30,203 

9,281 

4,205 

1,137 

u 

1874  

29,682 

12,441 

3,919 

1,371 

Grand  Total  Shipments  for 

1881. 

N. 

Y.  C.  . 

& 11.  R.  R.  R.... 

33,935 

10,056 

3,661 

755 

N. 

Y.,L. 

E.  & W 

7,089 

2,477 

993 

98 

Total 

, 1881  

41,024 

12,533 

4,654 

853 

a 

1880  

44,568 

16,002 

4,698 

1,105 

a 

1879  

35,885 

13,958 

4,660 

910 

GROWTH  OF  THE 

1 TRADE. 

Cattle 

Hogs 

Sheep 

Horses 

head. 

head. 

head. 

head. 

1857  

108,203 

117,168 

307,549 

1858  

134,073 

92,194 

345,731 

1859  

103,337 

73,619 

189,579 

1860  

156.972 

85,770 

145,354 

1861 

141,921 

101,679 

238,952 

1862  

;..  129,433 

103,671 

524,976 

1863  

154,789 

92,128 

474,849 

1864  

135,797 

301,629 

155,959 

1865  

212,839 

300,014 

207.208 

1866  

275,091 

552,831 

341,560 

1867  

257,872 

697,440 

239,943 

1868  

265,105 

470,578 

385,815 

7,773 

1869  

347,871, 

794,272 

381,450 

12,038 

1.870  

739,519 

561,447 

7,896 

1871  

384,294 

886,014 

551,131 

13,319 

1872  

1,145,109 

606,748 

20,786 

1873  

409,738 

1,6)62,500 

733,400 

28,386 

1874  

504,594 

1,431,800 

783,800 

21,936 

1,067,300 

841,000 

18,187 

289 


Cattle 

head. 

Hoffs 

head. 

Sheep 

head. 

Horses 

head. 

1876  

615,790 

1,150,210 

871,928 

12,542 

1877  

1,128,770 

763,600 

12,557 

1878  ' 

657,809 

2,063,765 

1.032.225 

13,602 

1879  

633,556 

1,916,015 

1,019,600 

20,976 

1880  ; . 

786,386 

2.251,815 

1,033,200 

20,768 

1881 

738,900 

2,096,325 

1,113,350 

17,376 

• STOCK  SLAUGHTERED. 

PcjtiTTiJitRfi  i Cattle  Ho^s  Sheep 

Efetimated-I 

1874  35,073  173,300  90,800 

1875  19,956  159,500  118,200 

1876  25,651  208,560  103,678 

1877  20,158  171,000  47,500 

1878  53,025  387,210  175,265 

1879  23,511  310,845  87,600 

1880  28,000  406,295  88,600 

1881  35,845  443,100  98,600 


RANGE  OF  PRICES. 

The  following  exhibit  shows  the  prevailing  average  prices  per  cwt. 
per  month  taken  on  the  principal  market  day  in  each  week  on  cattle, 
hogs,  sheep  and  lambs : 


Cattle. 

X 

Common  to  fair. 

Good  to  best. 

A 

Stockers  and 

feeders. 

January 

$2  25  at  4 30 

$4  20  at  5 75 

$2  00  at  3 60 

February  

2 90  at  4 70 

4 70  at  6 00- 

2 65  at  3 60 

March 

4 60  at  6 25 

2 65  at  4 55 

April 

4 90  at  6 00 

3 20  at  4 85 

May 

5 30  at  6 50 

3 40  at  5 25 

June 

5 50  at  6 55 

3 20  at  4 90 

Julv 

3 00  at  5 60 

5 50  at  6 50 

3 25  at  4 75 

August 

2 75  at  5 30 

5 20  at  6 75 

3 15  at  4 10 

September 

2 90  at  5 40 

5 40  at  6 85 

2 50  at  4 25 

October 

3 00  at  5 50 

5 35  at  7 00 

2 75  at  4 25 

November 

2 75  at  5 40 

5 25  at  6 90 

2 90  at  4 65 

December 

5 50  at  7 75 

3 00  at  4 25 

Western  sheep. 

Canada  lambs. 

Januarv 

$4  00  at  5 75 

$6  00  at  6 75 

February 

4 25  at  6 30 

6 25  at  6 75 

March 

4 25  at  6 80 

6 50  at  7 OO 

April 

4 75  at  6 85 

No  sales. 

May  

4 50  at  6 75 

a 

June 

4 00  at  6 00 

6 75  at  7 00 

Julv 

3 90  at  5 75 

5 75  at  7 00 

37 


290 


August  . . . 
8e})tember 
October  . . 
iSTovember. 
December  , 


January. . , 
February. 
March  . . . . 
April  .... 

May 

June  . . . . , 
July  . . . . 
August  . . 
September 
October  . . 
November 
December  , 


Western  sheep.  Canada  lambs. 


3 

50 

at 

5 

50 

5 

00 

at 

G 

75 

3 

25 

at 

5 

40 

5 

25 

at 

G 

15 

3 

20 

at 

5 

25 

5 

GO 

at 

G 

25 

3 

00 

at 

5 

50 

5 

75 

at 

(> 

25 

3 

00 

at 

5 

75 

5 

50 

at 

G 

75 

Hogs 

Yorkers 

Medium  and  heavy. 

H 

70 

at 

5 

45 

84 

90 

at 

5 

50 

5 

00 

at 

0 

GO 

G 

Of) 

at 

G 

75 

5 

30 

at 

0 

45 

5 

85 

at 

G 

50 

5 

65 

at 

0 

30 

G 

10 

at 

G 

50 

5 

GO 

at 

0 

35 

G 

25 

at 

G 

50 

5 

25 

at 

0 

20 

5 

80 

at 

G 

50 

5 

50 

at 

6 

20 

G 

25 

at 

7 

10 

5 

50 

at 

0 

85 

G 

GO 

at 

7 

20 

5 

70 

at 

6 

85 

6 

40 

at 

7 

25 

5 

70 

at 

7 

00 

G 

30 

at 

7 

00 

5 

20 

at 

0 

25 

5 

85 

at 

G 

75 

5 

75 

at 

G 

35 

6 

00 

at 

6 

70 

EXHIBIT 

KuLES  AIsTD  EEGULATIOi^S  OoVERNING  THE  MEETINGS  AND  TRADING 
OF  THE  Members  of  the  Buffalo  Board  of  Trade. 

At  a meeting  of  the  members  of  the  Buffalo  Board  of  Trade,  held  on 
the  9th  day  of  June,  1877,  the  following  additional  rules  were  adopted  : 

time  and  method  of  trading. 

There  shall  be  a public  call  on  grain  daily  from  11  to  11-^  o’clock, 
A.  M.,  to  be  conducted  by  the  Secretary  of  the  Board  of  Trade  until 
another  person  shall  be  selected  by  the  members  of  the  Board. 

The  call  shall  begin  with  cash  grain,  succeeded  by  the  months  in 
their  respective  order. 

The  offer  to  buy  or  sell  at  a price  shall  be  accepted  before  subsequent 
offers  at  same  figures  may  be  placed.  Subsequent  offers  to  sell  at  a 
lower  or  buy  at  a higher  price  shall  vacate  prior  offers  to  sell  at  higher 
or  buy  at  lower  prices. 

A transaction  shall  vacate  all  previous  bids  and  offers  and  continue 
as  long  as  transactions  are  made  at  the  price. 

Any  dis])ute  arising  as  to  offers,  acceptances  or  withdrawals,  being  in 
time  or  not,  shall  be  decided  on  the  spot  by  the  person  presiding  at  the 
time,  subject  to  an  appeal  to  the  members  present.  The  appeal  must 


291 


be  promptly  taken,  and  a majority  of  the  members  present  and  voting 
shall  settle  the  disputed  point  finally. 

Quantities  of  grain  constituting  purchases  and  sales  under  call  sub- 
ject to  B(3ard  of  Trade  rules. 

Cash  grain  shall  consist  of  any  quantity  not  less  than  a car-load, 
specified  by  buyer  and  agreed  to  by  seller  at  time  of  trading. 

Grain  to  arrive  shall  be  in  boat-load  parcels  or  smaller  parcels  when 
specifically  agreed.  The  name  of  vessel  to  be  given  in  every  instance. 

Grain  for  future  delivery,  inTots  of  not  less  than  1,000  bushels. 

RECORD  OF  TRANSACTIONS. 

A record  of  all  transactions  made  shall  be  kej^t  in  a book  prepared 
for  the  purpose. 

It  shall  be  the  duty  of  the  parties  making  trades,  that  is,  both  buyers 
and  sellers,  to  examine  the  records  immediately  after  the  close  of  the 
Call  Board  to  see  that  the  entries  are  correct.  Any  entry  not  disputed 
and  appealed  from  immediately  shall  be  considered  correctly  recorded. 

A disputed  entry  shall  be  decided  by  the  person  that  presided  at  the 
sale  if  possible,  and  when  his  decision  cannot  satisfy  both  parties  an 
appeal  must  be  taken  to  the  Keference  Committee  of  the  Board  of 
Trade. 

There  shall  be  a committee  of  three  appointed  by  the  President  of 
the  Board  of  Trade  to  determine  from  time  to  time  which  of  the  arti- 
cles of  grain  shall  be  called,  and  when  more  than  one  kind  of  grain  is 
to  be  allowed  to  be  bought  and  sold  on  call,  the  Board  to  decide  on  the 
order  in  which  the  calls  shall  be  made.  This  committee  will  be  charged 
with  the  general  government  of  the  Call  Board. 

The  rules  governing  sales,  deliveries  (except  as  provided  in  the  pre- 
ceding and  following  regulations)  and  payments,  already  existing, 
shall  govern  all  transactions  under  the  call. 

MARGINS. 

Either  party  to  a trade  made  for  future  delivery  can  call  each  on  the 
other  for  ten  per  cent  margin  on  valuation  of  the  grain  named  in  con- 
tract, said  margin  to  be  deposited  before  two  o’clock,  p.  m.,  on  the  day 
the  margin  is  called  in  a bank  designated  by  the  Committee  of  the 
Board  of  Trade  regulating  the  Call  Board. 

Margins  can  be  required  to  be  deposited  as  above  specified  any  time 
during  the  life  of  a contract,  or  the  full  ten  per  cent  shall  be  kept  good 
in  cases  of  advance  or  decline  in  prices. 


292 


PENALTIES. 

In  case  of  failure  of  a party  to  a trade  to  deposit  the  margin  on  his 
contract,  when  required  so  to  do  by  the  other  party  to  the  trade,  within 
three  banking  hours  next  ensuing,  tlie  party  not  in  default  may  close 
the  contract  by  reselling  or  purchasing  as  the  case  may  necessitate  at 
the  next  call  of  the  Board  ; and  the  loss  on  such  contract  must  be  set- 
tled by  the  party  in  default  before  he  can  be  permitted  to  further  enjoy 
the  privileges  of  the  Board  of  Trade. 

A seller  for  future  delivery  may  at  the  expiration  of  his  contract 
tender  to  the  buyer,  in  lieu  of  the  grain  specified  in  his  contract,  a 
price  equal  to  the  cost  of  said  grain  in  the  market  where  the  grade 
called  for  in  the  contract  is  established,  together  with  freight  and 
charges  to  Buffalo,  and  five  per  cent  added  — and  the  buyer  shall  be 
compelled  to  settle  the  contract  on  this  basis. 

In  case  a corner  is  being  run  in  Chicago,  Milwaukee  or  Toledo,  then 
a settlement  shall  be  made  on  the  basis  of  such  of  the  above-mentioned 
markets  not  cornered,  with  same  penalties  added. 

INSPECTION. 

Wheat. — The  grades  established  in  the  cities  of  Chicago,  Milwaukee, 
Toledo  and  Detroit  shall  be  established  here  as  the  basis  of  trades. 

Corn. — The  grades  established  in  the  city  of  Chicago  shall  control 
all  the  contracts  with  the  Board;  but  the  seller  shall  be  permitted  to 
furnish  the  buyer  a higher  grade  and  better  article  than  his  contract 
calls  for,  if  he  chooses. 

Oats. — The  standard  of  grades  shall  be  the  same  as  existing  in  the 
cities  of  Chicago,  Milwaukee  and  Toledo. 

Rye. — The  same  as  Chicago  aix^  Milwaukee. 

Barley. — The  standard  adopted  in  Albany  shall  govern  sales  in  State 
barley,  and  the  inspection  prevailing  in  Oswego  shall  be  adopted  as  a 
standard  for  sales  in  Canada  barley.  For  Western,  the  grades  estab- 
lished in  Chicago  and  Milwaukee  shall  govern. 

The  Board  of  Trade  shall  appoint  a competent  person  to  the  office  of 
grain  inspector  who  shall  carry  out  the  details  and  duties  of  inspector 
and  establish  a rigid  system  of  inspection  at  as  early  a day  as  possible. 

This  Board  of  Trade  shall  appoint  an  Inspection  Committee  of  three 
of  its  members,  who  shall  hold  office  for  one  year,  and  whose  duty  it 
sliall  be  to  have  a general  supervision  over  the  grain  inspection.  An 
inspector  of  grain  shall  also  be  appointed,  who  will  inspect,  under  the 
rules,  all  the  grain  ordered  inspected,  and  give  his  certificate  of  the 
grade.  This  certificate  shall  accompany  all  tenders  or  sales  made  for 


future  delivery,  and  shall  be  conclusive,  except  when  appealed  from  to 
the  Inspection  Committee,  whose  decision  will  be  final . 

The  fees  of  the  inspector  shall  be  30  cents  per  1,000  bushels,  or  20 
cents  per  car-load  in  car  lots,  to  be  paid  by  the  seller. 

In  case  of  appeal  being  made  to  the  Inspection  Committee,  they 
shall  examine  the  grain,  charging  a fee  of  one  dollar  per  1,000  bushels 
to  be  paid  by  the  party  against  whom  their  decision  is  made. 


GRAIK  CONTRACT. 

The  following  shall  be  the  form  of  contract  for  grain  sold  for  future 
delivery : 

Buffalo,  N.  Y 187  . 

In  consideration  of  one  dollar  in  hand  paid,  the  receipt  of  which  is 

hereby  acknowledged have  this  day  sold  to  (or  bought  from) 

bushels  of at cents  per  bushel  

delivered  at  seller’s  (or  buyer’s)  option 187  , 

This  contract  is  made  in  view  of,  and  in  all  respects  subject  to,  the 
By-Laws  and  Kules  established  by  the  Board  of  Trade,  in  force  at  this 
date. 

In  case  of  any  disagreement  between  the  parties  to  this  contract,  it 
shall  be  referred  to  the  Reference  and  Appeal  Committee  of  the  Board 
of  Trade,  whose  decision  shall  be  final. 

Q.  Are  there  any  items  on  that  paper  which  you  hold  in  your 
hands  that  you  would  like  to  offer  to  the  committee  ? 

A.  I don’t  know  as  there  is. 

Q.  That  you  have  in  your  hand  is  a statement  of  the  present 
year  ? 

A.  Yes,  sir. 

Q.  And  this  book  is  a statement  down  to  December,  1881? 

A.  Yes,  sir. 

Witness  reads  the  following:  — Grain  by  lake,  including  flour  re- 
duced to  wheat  to  November  first,  52,527,520  bushels.  Shipments 
of  grain  by  canal  to  November  first,  26,471,352  bushels.  Toll  for 
the  season,  $297, 110.04.  Clearances  of  boats,  5,921 ; shipments  of 
flax  seed  by  canal,  80,000,000  pounds ; exports  by  canal  with  lumber 


294: 


81,000,000  feet;  shingles,  18,000,000  feet;  staves,  74,000,000  pounds; 
exports  by  lake,  westward,  coal,  935,000,000  tons;  cement  and  plaster, 
184,000  barrels;  salt,  95,000  barrels;  salt,  tons,  11,500;  railroad  iron, 
tons,  25,000  ; railroad  iron,  bars,  57,000. 

Q.  All  these  come  within  the  supervision  of  the  Board  of  Trade, 
do  they  ? 

A.  Y es,  sir. 

Q.  Have  you  any  statement  as  to  the  amount  of  pork  and  lard  ? 

A.  The  shipments  of  lard  by  canal  eastward,  3,000,347  pounds  ; 
no  pork;  the  shipments  by  canal  of  lumber,  staves  and  shingles 
show  very  heavy  gain  this  year,  and  the  exports  by  lake,  also  — the 
coal,  cement,  salt  and  railroad  iron. 

Q.  Is  there  any  other  information  that  you  would  like  to  offer  to 
this  committee  ? 

A.  I don’t  know  of  any  thing,  sir,  unless  you  think  of  something 
to  ask  me. 

By  Mr.  Browning  : 

Q.  Have  you  received  any  complaints  from  the  shippers,  or  from 
the  canal  boatmen,  in  relation  to  any  abuses  on  the  part  of  the 
scalpers  ? 

A.  Ho,  sir  ; if  any  complaint  had  been  made  it  would  have  been 
brought  before  the  referee  committee,  but  there  has  not  been  any 
reference  case  this  year. 

Q.  This  Board  of  Trade  is  supposed  to  be  organized  for  the  pro- 
tection of  canal  boatmen  ? 

A.  Yes,  sir. 

Q.  Have  you  heard  of  any  of  the  practices  on  the  part  of  the 
scalpers  which  have  proved  injurious  ? 

A.  I cannot  say  that  I have. 

Q.  Do  you  think  if  complaints  were  made  they  would  be  attended 
to  ? 

A.  Certainly. 

Q.  You  don’t  remember  of  ever  having  received  any  complaints 
of  that  nature  ? 

A.  No,  sir. 

Q.  Are  the  scalpers  members  of  the  board  ? 

A.  Yes,  sir;  a great  many  of  them  — not  all. 

By  Mr.  Boyd  ; 

(2.  I>y  the  laws  of  the  Board  of  Trade  are  the  dealers  in  options 
and  futures  held  on  the  fullillment  of  their  contracts? 


295 


A.  Yes,  sir. 

Q.  What  is  the  punishment  of  a violation  of  any  contract  of  that 
kind  of  any  board  ? 

A.  Brought  before  the  referee  committee  of  the  Board  of  Trade, 
and  if  a decision  is  rendered  and  they  do  not  appeal  from  it  in  five 
days,  they  can  ask  the  trustee  to  experiment ; a man  might  be  per- 
fectly willing  to  pay  and,  at  the  same  time,  unable  to  do  so ; that 
’^ould  be  taken  into  consideration. 

E.  P.  Fish^  sworn  and  examined,^  testified  as  follows ; 

Q.  Where  do  you  reside  ? 

A.  Buffalo. 

Q.  What  is  your  business  ? 

A.  Commission  raercliant  and  broker. 

Q.  Are  you  a member  of  any  firm  ? 

A.  No,  sir. 

Q.  What  does  your  commission  business  consist  of  ? 

A.  It  consists  principally  in  sending  orders  to  Chicago  for  the 
purchase  and  sale  of  grain. 

Q.  Where  is  your  place  of  business  ? 

A.  Sixteen  West  Seneca  street. 

Q.  In  the  city  of  Buffalo. 

A.  Yes,  sir. 

Q.  Do  you  in  your  business  adopt  the  system  of  dealing  in  futures  ? 

A.  I do,  sir. 

Q.  And  options  ? 

A.  Yes,  sir. 

Q.  What  is  your  opinion  in  regard  to  the  system  of  dealing  in 
futures  and  making  of  corners  ? 

A.  Well,  my  opinion  is  that  grain  and  provisions  has  come  to  a 
certain  degree  speculative  articles,  the  same  as  railroad  stock,  or 
cotton  and  such  articles,  that  the  general  run  of  trade  in  dealing  in 
options  is  generally  on  speculation,  and  not  for  the  purpose  of 
receiving  the  grain  or  delivering  the  grain ; as  a rule,  it  is  done  with 
the  intention  of  settling  the  difierences;  in  other  words,  speculation. 

Q.  Is  your  business  a speculative  business  such  as  you  have  de- 
scribed ? 

A.  Not  entirely  ; I do  business  that  is  legitimate,  where  the  grain 
itself  is  handled. 

Q.  Will  you  explain  to  the  committee  how  your  speculation  busi- 
ness is  conducted  ? 


A.  Yes,  sir;  a gentleman  comes  to  me  and  gives  mean  order, 
for  instance  to  buy  1.0,000  bushels  of  corn  and  puts  up  liis  margin, 
wliatever  I may  see  fit  to  call  it,  if  at  all,  and  I send  the  order  to 
Chicaoro  and  it  is  executed  there  on  the  Board  of  Trade,  and  thev 
telegraph  back  to  me  how  trade  is,  and  I rej)ort  it  to  the  party, 
and  he  holds  that  trade  until  he  either  gets  a proht  or  loses,  as 
he  sees  fit  to  get  out  of  it,  that  is  as  a rule,  and  if  he  can  sell  for 
more  than  he  gives  he  makes  a profit,  if  not  he  loses.  I iiave  som^ 
trades  where  the  parties  have  stated  when  thej^  made  the  trade,  for  in- 
stance buy  an  option,  a future  option  in  corn,  and  I have  some  legiti- 
mate dealers  say,  if  they  hold  that  option  until  the  month  comes 
around  and  the  prices  drop,  they  will  take  the  grain  and  have  it 
shipped  to  them  and  pay  for  the  grain  and  use  it. 

Q.  That  is  they  will  take  the  grain  at  the  price  they  have  agreed 
to  purchase  it  at,  even  though  the  price  should  fall  before  the  time 
arrived  ? 

A.  Yes,  sir. 

Q.  What  do  you  mean  by  the  system  of  dealing  in  margins  ? 

A.  The  margin  is  money  to  secure  the  trade  ; for  instance  if  a man 
buys  10,000  bushels  of  corn  I will  take  five  cents  a bushel  margin,  and 
if  the  market  price  goes  down  five  cents  a bushel  in  Chicago  he  is  out 
this  margin,  and  if  he  holds  that  trade  I call  on  him  for  five  cents  a 
bushel  more. 

Q.  He  is  bound  to  make  that  good  ? 

A.  Yes,  sir,  if  it  went  against  him  I would  call  for  additional  mar- 
gin, if  he  sold  out  at  a higher  price  than  he  paid  the  difference  would 
be  paid  to  him,  and  the  trade  would  be  closed  up  in  Chicago,  and 
his  account  made  up  and  the  balance  sent  here  to  him  and  paid  to 
him. 

Q.  And  you  charge  a commission  '( 

A.  Yes,  sir. 

Q,  How  much  ? 

A.  Qu;irter  of  a cent  on  a bushel. 

Q.  This  margin  is  charged  to  him  even  though  the  grain  may 
never  be  delivered  '? 

A.  Yes,  sir. 

Q.  That  is  purely  a speculative  transaction,  is  it  not  ? 

A.  Yes,  sir  ; if  he  loses  it,  it  goes  to  the  Chicago  office,  and  if  he 
docs  not  lose  it,  it  is  returned  to  him. 

Q.  If  the  grain  rises  he  makes  a ])rofit  ? 

A.  Yes,  sir. 


297 


% 


Q.  Do  you  know  wliat  the  term  “ bucket-shop  ” means? 

A.  I do  ; that  is,  I suppose  I do. 

Q.,  Will  YOU  explain  it  to  the  committee? 

A.  I suppose  a bucket-shop  is  an  office  where  they  have  tickers 
giving  the  quotations  from  time  to  time,  and  people  are  allowed  to 
go  there  and  deal  in  small  or  large  quantities,  in  various  margins, 
and  if  they  make  a trade  and  the  market  goes  against  them  to  the 
extent  of  their  margins  they  don’t  put  up  any  more  generally,  the 
deal  is  closed  up  and  they  lose  their  investment ; if  it  goes  in  their 
favor  they  close  it  out  and  settle  themselves  and  make  a profit. 

Q.  What  amount  do  parties  invest  in  these  bucket  shops  ? 

A.  I could  not  tell  you,  I suppose  anywhere  from  1,000  to  20,000 
bushels,  I don’t  know  but  less. 

Q.  And  what  are  the  extent  of  the  margins  that  they  take  ? 

A.  I guess  a man  can  put  up  from  half  a cent  up  as  high  as  he 
likes. 

Q.  Then  he  can  invest  the  sum  of  $5  if  he  chooses  ? 

A.  Yes,  sir. 

Q.  Or  he  can  invest  more  if  desirous? 

A.  Yes,  sir ; he  can  invest  $500,  $50,  or  $5. 

Q.  Do  you  do  any  of  that  in  your  business? 

A.  No,  sir. 

Q.  Do  you  know  of  any  houses  in  the  city  of  Bufifalo  that  do  that 
kind  of  business  ? 

A.  I have  heard  of  several,  I have  not  been  in  them. 

Q.  What  do  you  consider  the  effect  of  such  dealings  to  be  on  the 
public  welfare  ? 

A.  I consider  it  to  be  injurious. 

Q.  Would  you  designate  that  as  gambling  operations  ? 

A.  I would. 

Q.  What  remedy  would  you  suggest  for  this  evil  ? 

A.  That  would  be  a little  difficult  for  me  to  answer. 

Q.  Do  you  think  it  would  be  in  the  interest  of  the  commerce  and 
public  welfare  to  have  the  Legislature  interfere  ? 

A.  I think  it  would  be  in  the  interest  of  the  public  welfare,  but 
not  in  commerce. 

Q.  In  what  way  would  it  be  in  the  interest  of  the  public? 

A™  It  would  cut  off  a number  of  small  dealers  who  ought  not  to 
deal. 

Q.  Who  are  in  the  business  simply  to  carry  on  these  speculative 
and  gambling  transactions  ? 

38 


298 


A.  I mean  it  would  stop  a certain  class  of  speculators  from  specu- 
lating. 

Q.  What  effect  have  the  operations  of  these  speculators  upon  the 
natural  price  of  the  produce  ? 

A.  None  at  all. 

Q.  The  parties  injured  are  only  the  persons  or  individuals  who 
are  dealing  in  margins  ? 

A,  That  is  all. 

By  Mr.  Browning  : 

Q.  Are  you  a member  of  the  Board  of  Trade  ? 

A.  I cannot  tell  you  whether  I am  now  or  not ; I always  nave 
been. 

Q.  What  is  the  smallest  amount  that  you  will  accept  as  a margin 
in  your  business  ? 

A.  In  some  cases  I make  deals  without  any;  five  cents  a bushel 
ordinarily,  but  I have  taken  less  on  dull  markets. 

Q.  How  much  less  ? 

A.  I have  taken  three  cents. 

Q.  How  recently  ? 

A.  Probably  two  or  three  months. 

Q.  On  what  amount  ? 

A.  I could  not  tell  you,  not  less  than  5,000  bushels  of  grain. 

Q.  Is  that  the  smallest  lot  you  have  taken  ? 

A.  Yes,  sir. 

Q.  How  quick  will  you  decide  an  operation  ? 

A.  The  moment  I receive  the  notice.  Supposing  you  were  trading 
with  me  and  wanted  to  buy  or  sell,  I don’t  know  you,  you  \vant  to 
buy  10,000  bushels  of  corn  ; I says  you  give  me  a thousand  dollars, 
and  as  soon  as  you  give  me  the  money  I telegraph  to  Chicago  and 
they  send  me  a reply  in  a few  moments,  and  if  you  are  prompt  with 
your  margins  the  whole  thing  is  done  in  fifteen  minutes. 

Q.  You  say  you  have  taken  three  cents  a bushel  when  the  markets 
were  dull  { 

A.  Yes,  sir. 

Q.  On  not  less  than  5,000  bushels? 

A.  On  not  less  than  5,000  bushels. 

Do  you  have  sort  of  an  exchange  ? 

A.  No,  sir. 


299 


Q.  Do  the  men  come  and  sit  around  your  office  ? 

A.  No,  sir. 

Q.  Do  you  have  a black-board  with  quotations  ? 

A.  No,  sir. 

Q.  Nothing  of  that  kind  ? 

A.  No,  sir. 

By  Mr.  Boyd  : 

Q.  What  proportion  of  your  business  is  legitimate  and  what  pro- 
portion speculative  ? 

A.  But  very  little  speculative. 

By  Mr.  Browning  : 

Q.  The  truth  of  it  is  you  do  business  for  men  who  bet  on  the  rise 
and  fall  of  the  market  ? 

A.  Yes,  sir,  just  exactly  as  they  do  on  Wall  street  on  stock. 

Q.  That  is  about  the  business  you  do? 

A.  Yes,  sir. 

Q.  If  a man  wants  to  bet  his  money  you  take  it  and  hold  the  stakes 
and  charge  him  a commission  ? 

A.  Yes,  sir. 

Q.  And  it  is  purely  a speculative  business  ? 

A.  Yes,  sir,  mostly ; I look  upon  the  speculation  on  grain  as  I 
do  upon  any  other  article,  cotton,  wool,  or  railroad  stocks. 

Q.  Do  vou  find  that  your  customers  are  men  who  deal  in  grain 
only,  or  all  classes  of  people,  salesmen,  bank  clerks  and  all  that  ? 

A.  I have  no  salesmen  or  bank  clerks;  they  are  ordinary  people 
of  no  particular  class. 

Q.  Might  have  lawyers,  editors,  doctors  and  all  that  class  ? 

A.  Yes,  sir,  I execute  orders  for  anybody  that  comes  in  there. 

Q.  Do  you  do  any  business  for  young  men,  that  is  boys  ? 

A.  No,  sir. 

Q.  All  limited  to  men  ? 

A.  All  limited  to  men. 

Q.  Who  know  what  they  are  about  ? 

A.  They  ought  to,  they  don’t  generally,  but  they  ought  to. 

By  Mr.  Boyd  : 

Q.  What  proportion  of  the  customers  that  come  into  your  place 
of  business  make  protits  on  this  business  ? 

A.  I could  not  answer  that. 


300 


By  Mr.  Browning  : 

Q.  If  they  kept  at  it  long  enough  you  would  get  the  best  share 
of  it? 

A.  Yes,  sir,  I think  the  brokers  end  is  the  safest,  but  tliat  is  not 
always  safe.  Sometimes  a man  will  uot  pay  his  margin  and  the  broker 
will  have  to  lose  it. 

Q.  That  is  where  you  take  a man’s  word  ? 

A.  Yes,  sir. 

Q.  Have  you  any  connection  with  any  other  house  in  this  State  ? 
A.  Ho,  sir. 

Q.  That  is  doing  business  of  that  kind  ? 

A.  Ho,  sir. 

Q.  There  is  no  house  throughout  the  State  that  you  communi- 
cate with  ? 

A.  Ho,  sir. 

Q.  Do  you  know  of  other  houses  like  it  in  the  State  ? 

A.  Yes,  sir. 

Q.  Where  ? 

A.  There  is  half  a dozen  more  here. 

Q.  Do  you  know  of  any  other  house  like  it  in  any  other  city  in 
the  State  ? 

A.  That  I am  not  positive  of,  but  I imagine  there  are. 

Q.  Do  you  know  of  any  in  Hew  York  city  ? 

A.  Yes,  sir. 

Q.  Can  you  locate  one  ? 

A.  I know  them  but  I cannot  remember  the  names  now. 

By  Mr.  Boyd  : 

Q.  Do  you  know  the  location  of  their  place  of  business  ? 

A.  1 do  not,  no,  sir,  but  I know  Chicago  houses  have  representa- 
tives there. 

By  Mr.  Browning  : 

Q.  Rave  you  any  connection  with  any  houses  in  Chicago  ? 

A.  Ho,  sir. 

Q.  Are  you  a representative  of  some  Chicago  house  ? 

A.  Ho,  sir. 

Q.  You  went  into  this  business  on  your  own  motion? 

A.  Yes,  sir. 

Q.  A re  you  interested  in  any  lirm  ? 

A.  Ho,  sir. 


301 


By  Mr.  Boyd  : 

Q.  Can  you  give  us  a statement  of  the  amount  of  business  trans- 
acted in  your  office  during  the  year  ? 

A.  I could  by  the  books  ; I have  not  been  in  the  business  quite  a 
year. 

By  Mr.  Browning: 

Q.  What  would  be  the  average  a day? 

A.  I could  not  tel]  you  without  looking  at  the  books.  • 

Q.  How  many  sales  yesterday  ? 

A.  Yesterday  was  a very  dull  time ; 1 don’t  think  I had  but  one 
or  two. 

Q.  How  many  in  a busy  day  ? 

A.  I have  had  as  high  as  ten  or  twelve  probably. 

Q.  Involving  how  much  money  ? 

A.  That  would  depend  upon  the  fluctuation  of  the  market.  I 
have  had  in  a day  probably  upwards  of  100,000  bushels. 

By  Mr.  Boyd  : 

Q.  Bepresen ting  what  margin  ? 

A.  That  should  represent  either  in  money  or  credit  $5, 000. 

By  Mr.  Browning  : 

Q.  One  hundred  thousand  bushels  on  which  you  received  a quarter 
of  a cent  ? 

A.  Yes,  sir,  but  none  of  those  days  have  occurred  lately.  I have 
known  oil  to  fluctuate  recently  as  high  as  seventeen  cents  a barrel 
in  a day. 

Q.  Do  you  do  business  with  that  article  ? 

A.  Ho,  sir. 

Q.  You  don’t  touch  oil  ? 

A.  No,  sir. 

Q.  Nothing  but  grain  ? 

A.  Grain  and  provisions.  * 

Q.  What  class  of  provisions  ? y 

A.  Pork  and  lard. 

Ellis  CojStle^  sworn  and  examined,  testifled  as  follows : 

Q.  Where  do  you  reside? 

A.  Buffalo. 


302 


Q.  What  is  your  business? 

A.  I am  a scalper,  connected  with  a scalping  house. 

Q.  How  long  have  you  been  in  that  business? 

A.  This  is  my  second  season. 

Q.  Will  you  explain  to  the  committee  how  the  business  of  scalp- 
ing is  conducted  ? 

A.  If  it  is  conducted  legitimate  we  go  out  and  get  the  freight  at 
the  best  prices  that  we  can  get,  and  load  the  boats  and  charge  five 
per  cent  commission,  but  I am  not  the  one  that  does  this,  I have  a 
partner  who  takes  the  freight,  and  I am  sort  of  a silent  partnei*  who 
looks  around  the  institution,  and  he  is  the  man  that  generally  takes 
the  freight.  I don’t  undertake  to  do  that  kind  of  business  myself. 

Q.  Do  you  understand  the  illegitimate  system  of  scalping? 

A.  Not  as  well  as  I wish  I did. 

By  Mr.  Browning  : 

Q.  Why  ? 

A.  I was  not  born  a thief. 

Q.  Then  you  wish  you  was  ? 

A.  No,  sir,  I don’t. 

Q.  Then  why  do  you  want  to  know  all  about  it  ? 

A.  •So  I could  give  the  public  all  the  information  about  it. 

By  Mr.  Boyd  : 

Q.  State  to  the  committee  such  information  as  you  have  in  rela- 
tion to  it  ? 

A.  The  legitimate  business  is,  we  represent  to  be  the  agent  of  the 
carrier,  the  carrier  is  the  boatman,  whom  we  charge  a commission 
of  five  per  cent  on  the  gross  bill  of  lading, 

Q.  What  does  the  commission  generally  amount  to  ? 

A.  A commission  of  six  per  cent  generally  amounts  to  $23  or 
$24,  but  I don’t  know  exactly,  I have  not  figured  it  lately. 

Q.  Is  there  any  other  information  that  you  would  like  to  offer  to 
the  committee  ? 

A.  Yes,  sir,  there  is  other  information  that  I have,  that  is  from 
hearsay  I understand  the  way  of  taking  the  freight ; I have  heard 
them  transact  the  business  and  know  all  about  it  in  that  way,  al- 
though I am  not  and  have  not  been  connected  with  that  branch  of 
the  business,  and  don’t  propose  to  be,  and  it  is  only  from  hearsay 
that  I understand  it. 

(2.  Do  you  know  any  thing  about  it  from  observation  ? 


303 


A.  Yes,  sir.' 

Q.  Proceed  and  state  what  you  know  from  observation,  please  ? 

A.  Tlie  grain  receivers  in  the  city  of  Buffalo,  some  of  them,  con- 
tract by  telegraph  the  freight  and  sub-let  it  to  the  scalpers  ; there 
would  be  three  or  four  scalpers  trying  to  get  it,  and  sometimes  a 
scalper  would  take  ten  or  fifteen  loads  of  grain  at  a certain  price  and 
then  hire  the  boatmen  to  carry  it  for  a smaller  price,  so  when  the 
grain  gets  here  it  is  put  into  the  hands  of  the  scalpers,  and  some  of 
those  scalpers  have  boats  of  their  own  that  they  can  control,  and  they 
will  load  them  as  fast  as  they  can  and  send  them  off.  If  you  wanted 
to  get  a cargo  of  grain  carried  tohfew  York  you  go  to  a shipper  and 
ask  what  freights  are  and  he  will  tell  you  the  freight  has  raised,  and 
you  go  to  another  on  the  same  day  and  ask  for  freights  he  will  say 
freights  are  off,  such  and  such  a house  have  sent  boats  at  a certain 
price  ; so  that  establishes  the  rate  of  freight  for  that  day,  so  you  see 
if  we  take  it  we  have  got  to  put  our  boats  in  at  the  price  made,  that 
is  what  is  called  pooling.  These  people  that  contract  the  freight 
want  to  make  money  out  of  it,  and  still  receive  a commission  and 
represent  themselves  as  the  agent  of  tlie  boat. 

Q.  What  is  the  illegal  portion  of  that  operation  ? 

A.  Well,  I should  think  that  the  Jesse  James  gang  was  an  orna- 
ment beside  the  scalper.  They  lie  for  the  purpose  of  making  money. 

Q.  Let  us  understand ; you  say  that  certain  dealers  undertake 
with  shippers  in  the  west  to  have  grain  transported  through  the 
canal  at  a certain  sum  per  bushel  ? 

A.  Yes,  sir. 

Q.  What  IS  that  sum  usually  ? 

A.  If  the  freights  were  six  cents  to-day  a party  would  say  here  is 
a cargo  of  60,000  bushels  being  shipped  at  Chicago  to-day,  what 
will  you  take  it  for?  Well,  freights  are  saj^  six  cents,  I look  upon 
the  reports  of  all  the  boats,  if  I was  the  contracting  party,  and  I 
would  say  there  is  a scarcity  of  boats,  freight  is  going  to  be  high, 
and  I 'would  agree  to  take  it  at  six  and  one-half  ; well,  they  would 
say  we  liave  got  better  offers,  other  scalpers  don’t  think  as  you  do, 
they  think  freights  will  be  off,  and  they  would  say  they  had  had  of- 
fers at  six  cents  and  we  want  to  ship  this  for  less  than  that,  and  they 
will  travel  the  docks  until  they  find  some  scalper  that  will  take  it  at 
three-quarters. 

Q.  At  five  and  three-quarter  cents  you  mean  ? 

A.  Yes,  sir;  and  then  you  would  hear  a scalper  say  I made  an 
offer  on  eight  boat-loads  of  wheat  and  some  one  under-bid  me  and 


‘304: 


they  have  got  it,  and  they  don’t  know  who  that  is  ; the  consequence  is 
when  the  grain  arrives  if  one  scalper  takes  it  he  will  go  around  and 
divide  it  among  his  friends  and  neighbors,  so  he  has  got  them  on  his 
side  to  help  carry  off  the  property,  and  help  put  the  rate  so  they  can 
make  something  out  of  it.  It  seems  to  he  the  object  of  these  con- 
tracting parties  to  make  money  on  the  contracts,  and  still  represent 
themselves  to  be  the  agent  of  the  boatmen. 

Q.  The  scalper  goes  to  the  person  to  whom  the  grain  is  consigned 
here,  and  who  is  to  receive  it  from  the  western  merchant  or  shipper 
at  the  rate  of  six  cents  for  transporting  it  to  New  York  ? 

A.  Yes,  sir. 

Q.  And  the  scalper  takes  it  for  five  and  three-quarter  cents  ? 

A.  Yes,  sir. 

Q.  He  then  goes  to  the  canal  boatman  and  prevails  upon  him  to 
take  it  for  five  cents  ? 

A.  Yes,  sir. 

Q.  Then  this  scalper  has  not  only  the  profit  of  the  three-fourths 
of  a cent  a bushel,  but  he  also  has  a commission  that  he  charges  the 
canal  boatmen  ? 

A.  Yes,  sir. 

Q.  And  that  is  the  system  ? 

A.  Yes,  sir,  that  is  the  system. 

Q.  How  long  has  that  system  been  in  operation  in  Buffalo  ? 

A.  Quite  a number  of  years,  but  more  to  a greater  extent  this  year 
than  ever  before  ; it  has  been  increasing  upon  us.  As  I understand 
it,  I want  to  tell  you  a little  more;  Mr.  Sternberg  run  his  elevators 
last  year  out  of  the  association,  but  he  contracts  the  through  freight 
and  sub-lets  it  to  scalpers  in  order  to  get  business  for  his  elevators. 

Q.  Do  you  think  that  if  there  were  no  scalpers  or  middlemen 
brought  in  that  the  canal  boatmen  would  receive  the  full  amount 
paid  by  the  western  shippers  for  transportation  rates  ? 

A.  Not  necessarily,  for  one  would  be  competing  against  the  other ; 
for  instance  here  is  five  loads  of  grain  and  there  is  ten  boats  to  carry 
it;  if  it  was  not  for  th6  scalpers  tliose  ten  boatmen  would  go  to  the 
grain  men  and  compete  for  that  grain  ; each  try  to  get  those  five  loads 
to  carry,  and,  consequently,  would  have  a tendency  to  keep  the  rates 
low. 

(2.  What,  in  your  opinion,  would  be  a legitimate  transaction  on 
the  }>art  of  the  middlemen  or  scalpers? 

A.  To  be  the  boatman’s  agent  what  he  represents,  without  con- 
li-actiiig  the  freight. 


3U5 


Q.  And  simply  charge  the  boatman  his  percentage  and  let  that  be 
the  only  proht  which  he  receives  ? 

A.  Yes,  sir ; that  is  all  he  should  be  entitled  to. 

Q.  And  the  illegitimate  part  of  it  is  in  contracting  witli  the  com- 
mission merchant  for  a rate  of  transportation  greater  than  what  the 
\ boatman  receives,  and  the  scalper  gets  the  dilference  for  himself  ? 

A.  Yes,  sir,  the  scalper  takes  the  grain  on  his  own  responsibility  ; 
that  is,  he  takes  it  at  a certain  rate  and  if  he  can  get  it  carried  for 
less  it  is  his  good  luck, 

Q.  It  has  been  suggested  to  me  to  ask  you  if  a scalper  should  con- 
tract at  a certain  rate  and  then  the  rate  of  freight  go  up,  who  would 
be  the  loser  ? 

A.  Probably  the  grain  receiver,  or  such  a man  as  Mr.  Richmond, 
because  the  scalper  would  not  be  responsible.  His  theory  would  be 
that  of  endeavoring  to  keep  the  freights  down  if  you  and  I failed  to 
do  it. 

. Q.  Then  the  grain  receiver  is  the  owner  ? 

A.  Yes,  sir ; and  they  feel  well  pleased  if  they  have  got  the 
scalpers  on  their  side  to  help  rob  the  poor  canalers. 

Q.  What  do  you  mean  by  robbing  the  poor  canalers  ? 

A.  By  giving  them  small  rates. 

Q.  You  mean  to  say  that  the  western  shipper  is  charged  a higher 
rate  of  transportation  over  the  Erie  canal  than  the  boatmen  receive  ? 

A.  Yes,  sir. 

Q.  How  much  on  an  average  ? 

A.  I presume  this  year  it  has  been  from  a quarter  to  half  a cent  a 
bushel. 

Q.  Which  ought,  you  think,  to  have  gone  to  the  canal  boatmen  ? 

A.  Yes,  sir;  I think  the  contracting  system  has  kept  the  freights 
a cent  a bushel  lower  than  it  naturally  would  have  been.  We  have 
not  had  any  railroad  competition  ; the  competition  has  been  between 
the  carriers  and  the  contractors  this  season. 

Q.  Have  you  any 'other  information  that  you  would  like  to  offer 
to  the  committee  ? , 

A.  There  is  other  information  ; I am  interested  in  canal  boats  and 
every  thing  of  that  kind. 

By  Mr.  Browning  : 

Q.  You  say  you  own  some  canal  boats  ? 

A.  Y es,  sir,  I own  mortgages  on  some. 

39 


306 


Q.  How  many? 

A.  I have  got  seven  or  eight  mortgages. 

Q.  How  many  others  have  you  got  a direct  interest  in  ? 

A.  That  is  about  all ; indirectly  I am  interested  with  every  poor 
canaler  on  the  canal. 

Q.  I am  asking  how  many  boats  you  can  control  ? 

A.  I don’t  pretend  to  control  any  ; I have  only  about  seven  rnort- 
gages. 

Q.  Did  you  ever  have  a single  contract  in  all  your  experience  as 
a scalper  ? 

A.  No,  sir. 

Q.  Directly  or  indirectly  ? 

A.  No,  sir. 

Q.  Did  your  partner  ever  have  any  ? 

A.  I presume  he  has. 

Q.  Have  you  ever  reduced  the  rates  on  your  own  boats  and  sent 
them  otf  as  you  have  described  ? 

A.  I presume  I have. 

Q.  Then  you  have  pocketed  the  difference  between  the  amount 
your  boatmen  were  to  receive  and  the  amount  the  contract  called 
for. 

A.  No,  sir,  I am  speaking  of  the  competition  that  I have  told  you. 
Q.  You  say  your  partner  has  made  contracts  ? 

A.  I presume  he  has. 

Q.  You  say  you  have  sent  your  boats  off  with  reduced  rates  on 
the  price  named  in  the  contract  ? 

A.  No,  sir. 

Q.  Didn’t  I understand  you  to  say  so  ? 

A.  No,  sir,  not  my  boats. 

Q.  The  boats  that  you  have  control  of  ? 

A.  No,  sir. 

Q.  Y'ho  is  your  partner? 

A.  Andrew  Eagather. 

Q.  Is  he  here  ? 

A.  No,  sir. 

Q.  Is  he  in  Buffalo  ? 

A.  Yes,  sir,  he  is  in  Buffalo. 

Q.  You  are  familiar  with  your  business,  aren’t  you? 

A.  Partially. 


307 


Q.  Don’t  you  know  what  your  partner  does  ? 

A.  I know  what  he  does  in  regard  to  our  company  business,  yes, 
sir. 

Q.  Can  you  tell  me  what  contracts  you  have  had  within  the  last 
year  or  so  ? 

Ai  When  I associated  with  him  last  spring  we  made  an  agreement 
not  to  contract  as  far  as  I was  concerned,  that  I would  not  go  in 
with  him  under  any  considerations  where  we  could  not  do  a legiti- 
mate business  and  be  the  boatman’s  agent. 

Q.  Notwithstanding  that,  you  think  your  partner  has  made  con- 
tracts ? 

A.  I think  he  has  with  some,  yes,  sir. 

Q.  Then  he  is  one  of  the  thieves  you  have  been  talking  about  ? 

A.  Yes,  sir,  any  man  is  that  contracts  in  that  way. 

Q.  Do  you  know  the  price  that  has  been  named  in  the  contract  in 
which  he  forwarded  grain  ? 

A.  No,  sir,  he  has  not  told  me  if  he  has  ever  done  any  such  thing. 

Q.  He  has  kept  that  quiet  ? 

A.  Yes,  sir,  I would  say  that  would  be  his  individual  business. 

Q.  Wouldn’t  you  be  entitled  to  some  of  the  profits? 

A.  No,  sir. 

Q.  Does  he  keep  his  own  account  and  partnership  account  besides  ? 

A.  No,  sir ; my  business  was  not  taking  freights. 

Q.  What  part  of  the  business  did  you  do  ? 

A.  Generally  sitting  around  the  dock  and  talking. 

Q.  Just  sit  around  and  talk? 

A.  Yes,  sir. 

Q.  What  did  you  talk  ? 

A.  Talk  up  freights  and  getting  the  enmity  of  all  the  grain  re- 
ceivers ^nd  scalpers  on  the  dock. 

Q.  What  does  your  partner  do  ? 

A.  Ho  takes  the  freight  in  with  the  other  scalpers,  and  coaxes  the 
boatmen  to  go  off  with  a load  against  my  wishes. 

Q.  Then  he  scoops  in  the  difference  between  the  price  the  boat- 
man gets  and  the  price  named  in  the  contract  ? 

A.  I presume  so,  if  there  is  any  thing  of  that  kind. 

Q.  Can  you  name  anybody  else  who  is  doing  that  sort  of  business  ? 

A.  Yes,  sir. 

Q.  Who? 

A.  It  is  generally  understood  that  Shaffer,  Hancock,  Hager, 
Thomas  M.  Hath,  and  several  others  are  doing  that  kind  of  business. 


308 


Those  are  the  people  that  are  doing  this  crooked  business ; I call  it 
crooked,  the)^  call  it  legitimate. 

Q.  You  don’t  call  it  legitimate? 

A.  No,  sir,  I say  there  is  not  a scalper  on  the  Central  wharf  that 
is  entitled  to  a commission  from  the  canalers  ; they  don’t  work  for 
their  interests,  nor  they  are  not  entitled  to  any  commission  as  an 
agent,  but  they  still  represent  themselves  to  be  an  agent. 

Q.  How  long  does  your  partnership  exist ; is  it  limited  to  any 
time  ? 

A.  Yes,  sir,  one  year. 

Q.  Then  it  dissolves  ? 

A.  Yes,  sir. 

By  Mr.  Boyd  : 

Q.  The  scalpers  sometimes  advance  money  to  the  boatmen,  do 
they  not  ? 

A.  Yes,  sir,  in  order  to  get  the  men  under  their  control  to  load 
their  boats. 

Q.  I§  it  not  a convenience  to  the  canal  boatmen  to  have  this  money  ? 

A.  Yes,  sir,  to  make  drafts  on  the  banks  for  instance  ; it  is  a great 
convenience  for  them  to  get  a little  money,  they  find  they  are  with- 
out friends  and  without  money  ; and  their  friends  might  be  in  the 
interior  of  the  State  and  would  have  to  telegrapli  to  them.  It  is 
cpiite  an  accommodation  to  the  boatman  if  he  has  lost  a liorse,  or  had 
some  bad  luck  ; it  is  a great  accommodation  to  canalers  to  have  peo- 
ple to  draw  on  here  in  Buffalo  because  it  is  quickly  done. 

Q.  Is  the  accommodation  of  receiving  loads  from  the  scalpers 
not  a sufficient  compensation  to  the  boatman  for  the  amount  of  com- 
mission which  he  pays  ? 

A.  I think  the  scalper's  commission  is  too  high  ; I have  always 
argued  it  has  been  too  high.  I could  tell  you  in  regard  to  that ; the 
carrier  is  supposed  to  insure  the  cargo  that  he  carries  and  the  scalper 
receives  a ten  per  cent  rebate  from  the  insurance  company  on  the 
commission  whicli  he  pays,  and  last  year  it  became  illegal  and  their 
commissions  were  made  uniform.  They  had  been  for  years  five  per 
cent  on  the  cargo ; when  that  law  passed  doing  away  with  the  rebate 
on  insurance  companies  they  circulated  a petition  and  the  scalpers  all 
signed  it  to  raise  it  and  make  it  on  the  gross  better,  that  is  taking  a 
commission  on  the  toll,  which  is  another  dodge,  which  gave  the 
scalper  more  on  the  actual  freight,  more  commission,  than  it  did  on 
his  rebate  from  the  insurance  company.  The  toll  amounted  to  a 


309 


<3ent  a bushel,  which  was  about  four  dollars  commission,  and  I think 
the  rebate  from  the  insurance  company  amounted  to  about  two  dol- 
lars. Of  course  the  scalpers  can  get  together  and  make  the  canalers 
pay  whatever  they  see  lit,  that  is,  in  the  line  of  commission. 

Ira  Betts,  sworn  and  examined,  testified  as  follows  : 

Q.  W here  do  you  reside  ? 

A.  Buffalo. 

Q.  What  is  your  business  ? 

A.  Forwarding  and  commission  business. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  About  six  years. 

Q.  Are  you  in  any  way  interested  in  the  canal  boat  business  ? 

A.  1 am  some,  directly  and  indirectly. 

Q.  Are  you  familiar  with  the  system  of  scalping,  as  it  is  termed  ? 

A.  I thought  I knew  something  about  it. 

Q.  Explain  to  the  committee  what  the  system  is,  how  it  affects 
the  canal  boatman’s  interests  ? 

A.  Well,  in  the  first  place  the  grain,  most  of  it,  is  shipped  directly 
to  persons  here,  what  we  call  the  second  platform,  up  stairs ; we 
receive  a great  deal  of  grain  from  the  west  that  comes  direct  to 
us.  Last  year  we  had  quite  a good  deal,  but  not  as  much  as  this 
year;  if  there  is  four  or  five  boats  come  in  and  desire  to  get  a load, 
they  ask  what  the  freights  are,  and  I tell  them,  and  if  they  desire  to 
have  a load  we  go  upstairs  to  J.  M.  Richmond  & Co.,  or  some  other 
company  that  is  dealing  in  grain,  shippers,  and  receive  an  order  from 
them  and  we  pass  it  over  to  the  boatmen,  and  they  load  their  boat 
and  go  out  with  it. 

Q.  Will  you  explain  the  illegitimate  system  of  scalping  that  has 
been  referred  to  here,  if  you  are  familiar  with  the  system  ? 

A.  I don’t  claim  to  be  very  familiar  with  it. 

Q.  Do  you  know  that  such  a system  exists  in  Buffalo  ? 

A.  I always  supposed  it  was  just  as  honest  a business  as  any  other 
business  ; that  it  could  be  done  honestly  just  as  well  as  any  other 
business,  and  so  far  as  I have  had  any  thing  to  do  with  it  I have  done 
it  so,  and  it  has  been  perfectly  legitimate  as  far  as  I have  been  con- 
cerned, and  so  far  as  I know  in  regard  to  my  partners. 

Q.  What  is  your  opinion  in  reference  * to  the  system  of  making 
corners  and  dealing  in  futures  and  options  ? 

A.  I think  it  is  very  injurious  to  the  business. 


310 


Q.  In  what  way  ? 

A.  So  far  as  options  are  concerned  I suppose  yon  mean  bucket- 
shops  ? 

Q.  What  is  your  opinion  in  reference  to  the  system  of  dealing  in 
options  ? 

A.  I believe  it  is  a system  of  gambling,  and  I believe  it  causes  cer- 
tain young  men  and  other  parties  whom  you  could  not  induce  to  go  to 
a place  where  there  is  any  gambling  going  on  to  go  into  that  system 
of  doing  business,  and  sometimes  makes  gamblers  of  them. 

Q.  What  efiect  has  it  upon  the  price  of  produce  and  the  necessa- 
ries of  life  generally  ? 

A.  It  must  run  the  market  up  above  what  the  property  is  actually 
worth,  and  it  causes  a fictitious  value  to  be  attached  to  the  article. 

Q.  On  whom  does  the  burden  fall  ? 

A.  It  falls  mostly  on  the  laboring  class  of  people,  that  get  a fair 
compensation  for  their  labor  and  ought  to  'be  entitled  to  buy  their 
produce  for  what  it  is  worth,  in  proportion  to  what  they  get  for 
their  labor. 

» Q.  Then  the  consumers  are  generally  the  sufferers  ? 

A.  Yes,  sir. 

Q.  What  remedy  would  you  suggest  for  that  evil  ? 

A.  I don’t  know  as  there  is  a remedy  — I presume  there  is  one 
of  course,  but  I have  not  had  sufficient  time  to  think  of  a remedy 
for  it ; if  I had  plenty  of  time  I think  I could  suggest  some  remedy. 

Q.  Do  you  think  it  is  the  duty  of  the  Legislature  to  interfere  and 
attempt  to  put  a stop  to  these  transactions  of  speculations  ? 

A.  I would  be  willing  to  leave  it  to  their  good  judgment.  I think 
they  have  the  power  to  regulate  trade  in  commerce,  and  I think  it  is 
their  duty  to  do  so,  and  in  such  a way  as  they  think  is  best. 

Q.  Do  you  know  to  what  extent  the  dealings  in  futures  and  op- 
tions is  carried  on  in  the  city  of  Buffalo  ? 

A.  I do  not,  sir ; I never  was  in  one  of  those  places  in  my  life 
that  I know  of. 

Q.  Have  you  any  further  suggestions  to  offer  to  the  committee  ? 

A.  I don’t  know  that  I have  unless  you  could  suggest  something. 

Q.  Are  you  familiar  with  the  operations  of  the  Western  Elevat- 
ing Company  ? 

A.  No,  sir,  I am  not,  only  what  I have  heard.  I have  never  had 
any  trouble  with  them  myself  personally. 


311 


By  Mr.  Browning  : 

Q.  Did  1 understand  you  to  say  that  you  do  this  scalping  business  ? 

A.  I have  what  we  call  a forwarding  and  coininission  house,  and 
at  the  same  time  receive  property  when  it  is  directed  to  us. 

Q.  In  the  transaction  of  your  business  do  you  act  as  the  agent  of 
the  canal  boatmen  ? 

A.  Yes,  sir. 

Q.-  Have  you  made  contracts  ? 

A.  Yes,  sir,  our  firm. 

Q.  To  forward  freight  ? 

A.  Yes,  sir.  ' 

Q.  Do  you  know  whether  the  firm  has  done  any  thing  to  bear  the 
market  down  so  as  to  make  a profit  on  the  contract  besides  making 
a commission  out  of  the  boatmen  ? 

A.  It  has  been  our  aim  to  get  as  high  freight  as  we  possibly  could. 

Q.  You  cannot  call  to  account  a single  instance  where  you  have 
done  otherwise  ? 

A.  Ho,  sir,  I don’t  know  whether  my  partner  has. 

Q.  You  don’t  know  of  any  such  transaction  ? 

A.  Ho,  sir,  if  he  did  I would  object  to  it. 

Q.  Do  you  own  any  canal  boats  % 

A.  Y"es,  sir. 

Q.  On  the  Erie  canal  ? 

A.  Yes,  sir. 

Q.  How  many  ? 

A.  I don’t  know;  I have  built  a great  many  boats,  I have  built 
probably  two  hundred  and  fifty  boats.  I have  been  in  the  boat  busi- 
ness since  1852. 

Q.  How  many  boats  can  your  firm  control  now  ? 

A.  It  can  control  directly  and  indirectly  about  two  hundred  boats, 
I think. 

Q.  Do  you  ship  freights  at  the  market  rates  ? 

A.  I might  contract  a cargo  of  grain  and  agree  to  deliver  it  in 
Hew  York  for  six  cents  a bushel  — suppose  a shipper  says  to  me, 
here  I have  100,000  bushels  of  wheat  that  leaves  Chicago  to-day  and 
he  says  I want  to  get  a canal  rate  on  it,  and  I look  and  see  where 
Mr.  Gray’s  boats  are,  or  some  other  gentleman’s  boats  and  telegraph 
to  them  and  say,  are  you  willing  to  take  upon  your  boats  when  they 
arrive,  about  such  a time,  freight  for  five  and  one-half  cents  or  five 
and  three-fourths  cents,  and  if  he  says,  yes,  I make  the  contract  with 
him. 


Q.  If  the  market  rate  was  half  a cent  less  than  your  contract 
called  for  that  would  be  your  prolit  ? 

A.  Yes,  sir. 

Q.  In  other  words,  if  you  should  contract  at  six  cents  a bushel 
and  at  the  time  the  grain  is  delivered  here  the  market  rates  are  five 
and  three-fourths  cents  a bushel  you  would  pay  the  five  and  three- 
fourths  cents  and  take  the  rest  ? 

A.  Yes,  sir  ; and  sometimes  we  have  to  pay  more  than  the  con- 
tract calls  for  and  then  we  would  lose. 

Q.  IIow  often  do  you  lose  ? 

A.  Well,  in  the  course  of  our  business  this  year,  the  option  busi- 
ness, including  the  contracting  we  are  not  ahead  any  thing. 

Q.  You  are  not  ahead  any  thing? 

A.  No,  sir. 

Q;  Sometimes  you  make  a profit  on  a contract  and  sometimes  you 
lose  ? 

A.  Yes,  sir,  I wdll  explain  why  we  occasionally  contract.  I wish 
the  business  could  be  done  without  contracts,  but  others  do  it,  every- 
body does  it.  A man  comes  into  Chicago  and  he  is  buying  grain  and 
wants  to  know  what  he  can  lay  it  down  in  New  York  for  before  he 
buys  it.  The  market  is  so  much  in  New  York  and  he  will  find  out 
what  he  can  get  lake  rates  for,  and  then  will  telegraph  to  Buffalo 
and  see  what  we  can  get  canal  rates  for,  then  he  knows  what  he  has 
got  to  pay,  he  knows  what  it  will  cost  him  to  get  his  wheat  down  to 
New  York,  and  it  is  so  with  Liverpool.  If  I was  going  to  buy  5,000 
bushels  of  wheat  in  Chicago  I would  know  what  it  was  worth  in 
Liverpool,  and  if  I could  not  get  the  canal  and  lake  rates  laid  down, 
do  you  suppose  I would  buy  it  ? No,  sir,  I would  not. 

Q.  You  say  your  firm  sometimes  makes  a profit  on  a contract  ? 

A.  Y es,  sir. 

Q.  And  sometimes  loses  a little. 

A.  Y"es,  sir. 

Q.  Do  you  agree  with  the  last  witness  that  a man  who  does  that 
business  is  a thief  ? 

A.  No,  sir,  I do  not;  I don’t  know  a man  that  I would  call  a thief 
on  the  Central  wharf. 

You  heard  what  the  last  witness  said,  didn’t  you  ? 

A.  Yes,  sir. 

Q.  You  don’t  agree  with  him  ? 

A.  I don’t  think  he  really  meant  just  what  he  said.  I will  ex- 
plaij)  a little  more  about  this  contracting,  I don’t  explain  for  any 


313 


other  houses,  but  so  far  as  our  liouse  is  concerned ; we  have  these 
boats  coming,  and  you  take  a year  like  this  when  there  is  more  boats 
than  freight,  these  men  run  their  boats  to  our  house  with  the  under- 
standing and  supposition  that  we  are  capable  of  furnishing  them  loads 
for  their  boats  at  some  price,  because  a delay  of  three  or  four  days 
is  half  a cent  off,  half  a cent  a bushel  off  from  the  grain,  and  if  we 
keep  them  lying  here  five  or  six  days  waiting  for  freight,  iliat  is 
don’t  get  any  thing  for  them,  of  course  they  would  leave  our  house, 
so  we  reach  ahead  for  business;  we  have  a certain  lot  of  boats  com- 
ing, we  know  how  many  leaves  Troy  every  day,  we  receive  telegraphs 
from  them  and  postal  cards,  stating  about  the  time  they  will  be  here, 
and  we  make  calculations  that  we  have  got  to  have  so  much  grain  for 
those  boats  when  they  come,  and  we  watch  to  sec  who  it  is  consigned 
to  here  and  try  to  get  the  handling  of  this  freight  to  load  our  boats 
with.  I^ow,  because  we  get  more  freight  than  some  others  do  they 
ought  not  to  quarrel  about  it.  We  do  not  lessen  the  canal  rates  at 
all,  it  is  the  supply  of  boats  and  supply  of  grain  that  makes  it.  It 
is  because  there  is  a big  fleet  of  grain  and  a scarcity  of  boats,  you  can 
run  the  rate  up  as  high  as  you  feel  disposed  to. 

Q.  What  effect  would  a corner  in  grain  have  upon  the  canal  boat 
interest  ? 

A.  If  they  corner  the  grain  in  Chicago  it  would  not  be  shipped, 
they  hold  it  back. 

Niles  Ocese,  sworn  and  examined,  testified  as  follows : 

Q.  Where  do  you  reside  ? 

A Buffalo. 

Q.  What  is  your  business  ? 

A.  Canal  transportation  mostly. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  Forty  years  or  over. 

Q.  What  is  your  opinion  with  reference  to  making  corners  and 
dealing  in  futures  and  options  ? 

A.  It  has  a bad  effect  upon  the  legitimate  business. 

Q.  In  what  way  ? 

A.  It  disarranges  the  prices  so  it  is  not  safe  for  a man  to  deal  in 
it.  I used  to  ship  grain  to  Hew  York  before  it  got  into  this  corner 
and  option  business,  and  since  that  it  is  not  safe. 

Q.  Then  it  is  disastrous  to  legitimate  business  ? 

A.  Yes,  sir;  so  much  so  I don’t  pretend  to  do  it  now. 


40 


314 


Q.  Would  you  designate  the  system  of  dealing  in  futures  and  op- 
tions a syslein  of  gaml)ling? 

A.  Y es,  sir. 

Q.  Does  it  dilfer  morally  from  any  other  style  of  gambling? 

A.  I don’t  know  as  it  does.  In  answer  to  that  otiier  question  I 
think  all  these  options  here  are  made  with  tiie  intention  of  delivery, 
which  would  not  be  a system  of  gambling,  but  if  they  were  not  it 
would  be. 

Q.  What  effect  has  this  speculation  upon  the  price  of  breadstuffs 
which  are  the  prime  necessaries  of  life  ? 

A.  At  times  it  runs  it  very  high  and  makes  a fictitious  price,  that 
is  clear  above  the  actual  value. 

Q.  On  whom  does  the  burden  of  this  extra  price  fall  ? 

A.  On  the  consumer. 

Q.  Are  you  familiar  with  the  canal  system  ? 

A.  Y"es,  sir. 

Q.  Have  you  any  information  to  offer  to  the  committee  in  rela- 
tion to  that  matter  ? 

A.  In  what  respect? 

Q.  In  relation  to  the  system  of  grain  carried  by  the  canal  boats, 
and  in  regard  to  this  scalping  business  ? 

A.  We  have  got  a good  many  scalpers  among  us. 

Q.  What  effect  has  the  scalping  business  upon  the  canal  boat  in- 
terests ? 

A.  It  makes  them  pay  very  severe,  makes  the.  carriers  pay  very 
dear  for  the  business  they  do.  They  have  got  a system  here  by 
which  these  receivers  don’t  deal  with  the  boatman  at  all,  they  deal 
with  the  scalper,  and  the  scalper  deals  with  the  boatman.  An  indi- 
vidual boatman  is  dependent  upon  the  scalpers  for  his  freight,  he 
hasn’t  anywhere  else  to  go,  anywhere  else  he  can  get  it,  and  there 
are  so  many  of  them  they  create  a great  competition  among  them- 
selves, and  it  has  a tendency  to  run  the  freight  down  instead  of  up. 
I suppose  you  would  like  to  hear  something  in  reference  to  this  con- 
tracting business.  Wq  have  had  more  of  that  this  year  than  before  ; 
these  scalpers  contract  grain  to  ship  and  ship  it  by  the  boatmen  when 
they  get  it  here,  and  in  that  way  they  become  speculators;  they  go 
into  it  to  make  all  the  money  they  can  out  of  it  and  charge  the  boat- 
men a commission  for  doing  the  business  besides.  They  will  con- 
tract, say  for  six  cents  a bushel,  and  get  the  boatman  to  carry  it  for 


315 


live  and  three-fourths  cents ; instead  of  getting  a price  and  trying  to 
keep  it  they  will  go  in  with  tlie  receiver  and  work  their  game  the 
best  they  can  and  run  the  freights  down.  Tliey  will  talk  to  the  boat- 
man and  say,  here  you  better  take  this,  freights  are  going  off,  and 
talk  to  them  and  get  them  to  take  ‘it  at  as  low  a rate  as  they  can  ; in- 
stead of  trying  to  get  a good  price  for  tliem  they  work  against  them. 
That  has  been  the  effect  of  it,  and  it  has  a very  bad  effect  upon'  the 
carrying  trade  here. 

Q.  Are  you  familiar  with  the  operations  of  the  Western  Elevat- 
ing Company  ? 

A.  1 am  considerably  so,  yes,  sir. 

Q.  Wliat  effect  has  the  present  system  of  canal-boat  interest  upon 
the  elevating  interest  ? 

A.  Not  any,  only  they  charge  too  much  for  elevating. 

Q.  Huw  do  you  know  that  they  charge  too  much  ? 

A.  Because  I think  it  is  more  than  it  is  worth. 

Q.  What  liave  the  rates  been  during  tlie  present  summer  ? 

A.  Seven-eighths  of  a cent  for  transferring,  not  including  the  trim- 
ming, and  that  is  larger  than  the  elevating. 

Q.  Can  the  canal  boatmen  trim  their  own  boats  ? 

A.  If  they  choose  to,  but  they  don’t;  they  could  not  do  it  fast 
enough  and  the  elevator  men  would  be  dissatisfied  and  would  raise 
all  the  objections  to  it  they  could,  and  it  is  not  customary  for 
them  to  do  it.  I think  it  is  just  as  necessary  to  have  these  terminal 
charges  done  for  what  it. is  worth  as  it  is  to  have  a free  canal,  it  is 
just  the  same. 

Q.  What  do  you  think  the  elevation  is  really  worth  ? 

A.  Three-eighths  of  a cent  a bushel  where  they  don’t  put  it  in 
store,  and  I think  that  is  a liberal  price,  and  half  a cent  where  they 
do  put  it  in  store  and  hold  it  five  days. 

Q.  How  are  the  rates  for  elevation  fixed  ? 

A.  It  is  done  by  this  elevating  association,  they  make  their  own 
prices. 

Q.  There  is  no  competition,  I suppose  ? 

A.  No,  sir,  they  have  got  some  tliirty  or  forty  elevators  here  and 
two  of  them  did  most  of  the  work  during  the  middle  of  the  summer, 
and  along  later  they  had  some  eight  or  ten  to  work  out  of  the  wiiole, 
and  the  rest  lay  idle,  and  some  of  them  have  not  turned  awheel  for 
ten  years,  and  some  not  for  five,  and  some  not  this  year,  and  ail  of 
them  drawing  pay  at  the  expense  of  this  route. 

Q.  What  remedy  would  you  suggest  for  that  evil  ? 


31G 


A.  The  Legislature  if  they  can  do  it,  but  I think  it  can  never  be 
regulated,  though. 

Q.  What  would  be  the  nature  of  the  legislation  ? 

A.  They  have  had  bills  before  the  Legislature,  I suppose  you  are 
familiar  with  it,  I don’t  think  it  can  be  done  otherwise.  They  have 
had  this  association  so  long  it  has  caused  a great  many  elevators  to  be 
built,  people  have  built  these  elevators,  the  floaters  and  transfers, 
for  the  purpose  of  blackmailing  the  association,  they  have  got  to  buy 
them  up  and  take  them  in,  and  it  has  a very  bad  effect  upon  this 
route  from  Chicago  to  I^ew  York,  and  here  are  the  railroads,  they 
have  got  considerable  of  an  interest  here,  although  it  is  their  inter- 
est to  keep  up  the  prices  so  they  can  get  more  through  freights,  and 
putting  up  the  price  here  it  would  have  a tendency  to  draw  more 
freight  unto  the  railroads  from  the  west.  That  is  the  system  of  ele- 
vating here  is  a great  drawback  on  this  water  route,  and  it  is  grow- 
iim  worse  than  it  is  better. 

O 

By  Mr.  Browning  : 

Q.  Do  you  think  you  could  get  along  without  these  scalpers  ? 

A.  They  become  quite  a necessary  evil  the  way  the  business  is 
done. 

Q.  Do  you  think  it  could  be  improved  ? 

A.  I don’t  know  about  that. 

Q.  Do  you  agree  with  me  that  a^scalper  who  is  strictly  an  agent 
of  the  boatman  and  tries  to  get  a good  price  for  him  and  gives  that 
price  that  he  is  a good  friend  to  the  boatman  ? 

Q.  Yes,  sir. 

Q.  And  where  they  reduce  the  price  and  try  to  make  a profit  at 
both  ends,  then  it  is  disastrous  to  the  boatmen  ? 

A.  Yes,  sir  ; they  make  a profit  at  both  ends  when  they  are  lucky, 
and  when  they  are  not  they  lose.  I don’t  think  they  make  much 
out  of  the  contracting,  but  it  has  a tendency  to  drive  this  freight 
down  and  injure  the  carrier,  but  they  don’t  make  any  thing  out  of 
it,  I don’t  think ; they  have  been  stuck  a number  of  times  this  year, 
some  of  them,  pretty  strong. 

Q.  I look  upon  this  contracting  business  as  very  serious,  because 
the  shipper  in  the  west  is  likely  to  control  the  freights  on  this  canal  ? 

A.  There  may  be  something  in  that. 

O,.  Tf  that  is  the  effect,  do  you  receive  any  benefit  ? 

A.  \V(m1o  not. 


317 


By  Mr.  Boyd  : 

Q.  Is  it  not  true  the  grain  pays  the  charge  for  shoveling  and  ele- 
vating ? 

A.  Certainly. 

Q.  It  is  not  a charge  made  to  the  canal  boatmen  ? 

A.  No,  sir  ; the  grain  pays  it. 

Q.  Yes,  sir? 

A.  The  lake  carrier  pays  it  on  the  lake  and  the  canal  carrier  pays 
it  on  the  canal. 

Q.  It  is  a charge  on  commerce  ? 

A.  Yes,  sir. 

Q.  The  burden  does  not  fall  on  the  canal  boatmen  altogether  ? 

A.  No,  sir,  a great  amount  of  it  falls  on  the  lake  carrier. 

By  Mr.  BROWNiiTG : 

Q.  As  I understand  it,  it  is  a charge  on  commerce,  and,  as  a charge 
on  commerce,  it  is  something  that  falls  on  the  consumer  ? 

A.  Yes,  sir;  and  it  is  just  as  necessary  to  get  these  charges  down  to 
a proper  price  as  it  is  to  have  a free  canal. 

James  //.  Baker,  sworn  and  examined,  testified  as  follows  : 

Q.  Where  do  you  reside  ? 

A.  Buffalo. 

Q.  What  is  your  business  ? ^ 

A.  Boat-building  by  occupation. 

Q.  Are  you  in  that  business  now  ? 

A.  Yes,  sir. 

Q.  Have  you  got  any  interest  in  any  boats  on  the  canal  ? 

A.  Yes,  sir. 

Q.  Will  you  state  what  your  opinion  is  of  the  effect  upon  the  canal- 
boat  interest  of  the  making  of  corners  ? 

A.  I think  it  is  bad. 

Q.  In  what  way  ? 

A.  In  cornering  up  this  grain  and  keeping  it  in  Chicago,  and  allow- 
ing boats  to  accumulate  here  and  allowing  men  to  speculate  and  try 
and  make  a fortune  out  of  it ; I think  it  is  the  worst  kind  of  gambling. 

Q.  What  is  your  opinion  in  relation  to  dealing  in  futures  and  op- 
tions ? 

A,  I think  it  is  about  the  same,  all  gambling,  the  worst  kind. 

Q.  Do  you  think  it  ought  to  be  abolished  by  law  ? 

A.  Yes,  sir,  it  had. 

Q.  What  do  you  know  in  relation  to  the  business  of  scalping  as  car- 
ried on  in  the  city  of  Buffalo,  and  its  effect  upon  the  canal-boat  in- 
terests ? 


318 


A.  I have  not  been  around  the  dock  l)nt  little  and  I am  not  much 
acquainted  with  the  way  they  do  the  business. 

Q.  Have  you  derived  any  knowledge  from  observation  ? 

A.  Yes  sir. 

Q,  State  what  that  is  in  relation  this  subject  ? 

A.  This  contract  system  has  been  very  detrimental  to  the  interest  of 
the  canal,  I think. 

Q.  How? 

A.  These  men  take  a contract  for  so  much,  and  some  days  there  are 
a good  many  boats  arrive  here,  and  they  will  say,  here  is  more  boats 
than  there  is  freight  or  grain,  and  they  will  try  to  get  the  freight 
down  and  use  their  influence  to  try  and  get  it  down  as  low  as  they  can, 
and  try  to  get  the  boatmen  to  carry  it  cheap,  and  drive  them  into  it 
and  make  them  load  any  way,  whether  they  want  to  or  not,  and  it  had 
a bad  effect  on  the  whole  system. 

Q.  What  effect  has  the  elevating  system  as  carried  on  ip  the  city  of 
Buffalo  upon  the  grain  interests  ? 

A.  I could  not  tell  you,  only  there  are  a great  many  idle  elevators 
every  day  doing  nothing. 

Q.  You  have  no  knowledge  as  to  the  propriety  of  the  present  rate 
of  charges  ? 

A.  No,  sir. 

Q,  Have  you  any  other  information  that  you  would  like  to  offer  to 
the  committee  ? 

A.  I have  not,  sir. 

P.  G.  Cooky  Jr.y  recalled,  testified  as  follows : 

Q.  I wish  you  would  explain  to  the  committee  here  what  the  value 
of  the  warehouse  receipts  is  that  the  association  gives  ? 

A.  It  is  just  as  valuable  as  though  the  man  had  his  money  in  his 
pocket, 

Q.  Ail  the  warehouses  are  responsible  and  your  association  is  re- 
sponsible ? 

A.  Yes,  sir. 

Q.  What  would  be  the  effect  in  case  the  association  issuing  it 
broke  up,  would  the  warehouse  Receipts  be  considered  as  secure  in 
case  one  individual  elevator  man  should  give  his  receipt  for  grain  ? 

A.  No,  sir  ; I don’t  think  they  would  be. 

Q.  If  the  party  that  owned  the  elevators  was  not  supposed  to  be 
responsible  his  warehouse  receipts  would  not  be  worth  much? 

A.  No,  sir. 


319 


By  Mr.  Browning  t 

Q.  Is  your  association  incorporated  ? 

A.  No,  sir. 

Q.  Then  you  cannot  be  sued,  nor  cannot  sue  as  an  association  ? 

A.  No,  sir. 

Q.  What  is  your  cash  account  ? 

A.  We  have  no  capital. 

Q.  Where  is  the  security,  except  that  they  have  confidence  in  the 
comj^any  as  they  would  have  in  an  individual  ? 

A.  The  whole  elevator  interest  is  responsible,  they  could  be  held 
responsible  for  the  grain. 

Q.  How? 

A.  I donT  know  as  I could  explain  that. 

Q.  Have  you  ever  had  a suit  of  that  kind  ? 

A.  No,  sir. 

Q.  Isn’t  a certificate  issued  by  Jesse  Hoyt  for  grain  in  his  elevator 
in  Chicago  just  as  valuable  in  the  market  at  New  York  as  a certificate 
issued  by  the  association  here  ? 

A.  Yes,  sir, 

Q.  If  the  party  is  responsible  who  owns  the  elevators  and  has  the 
grain  in  his  possession,  wouldn’t  his  certificate  be  just  as  valuable  as 
if  he  was  a member  of  this  association  ? 

A.  Yes,  sir. 

Q.  In  other  words,  you  don’t  issue  a certificate  unless  you  have  got 
the  grain  ? 

A.  No,  sir. 

Q.  And  the  grain  is  what  gives  the  security  ? 

A.  Yes,  sir. 

Q.  And  your  grain  is  all  insured,  is  it  not  ? 

A..  We  don’t  insure  it. 

Q.  But  it  is  insured  by  somebody? 

A.  Yes,  sir.  A lake  vessel  pays  an  eighth  of  a cent  to  the  elevator 
company,  in  addition  to  the  three-quarters  charged  by  the  elevator 
company  to  the  proprietors  of  the  grain. 

Adjourned  until  10  o’clock,  morning. 


Proceedings  of  Thursday  a.  m.,  November  16,  1882. 

Amos  A.  Bissell,  sworn  and  examined  by  Mr.  Browning,  testified  as 
follows : 


/ 


‘620 


• Q.  Where  do  you  live  ? 

A.  Lockport. 

Q.  Where  do  you  do  business  ? 

A.  Central  wharf. 

Q.  Buffalo  ? 

A.  Yes,  sir. 

Q.  What  is  your  business  ? 

A.  Forwarding  commission  business. 

Q.  Are  you  connected  with  any  firm  ? 

A.  I am  a member  of  the  firm  of  Gallagher,  Bissell  & Co. 

Q.  How  long  have  you  been  in  business  of  that  kind  ? 

A.  Over  thirty  years. 

Q.  And  are  you  familiar  with  all  its  details  ? 

A.  Yes,  sir. 

Q.  Can  you  tell  this  committee  what  effect  corners  in  grain  have 
upon  the  market  and  business  generally  ? 

A.  AVell,  so  far  as  I have  been  able  to  discover  I think  the  buying 
and  selling  of  options  is  detrimental  to  the  transportation  business. 

Q.  What  is  the  selling  of  an  option  ? 

A.  The  selling  of  a certain  parcel  of  grain  that  a man  doesn’t  have. 
Q.  Selling  something  that  you  haven’t  got  ? 

A.  Selling  something  that  you  haven’t  got. 

Q.  And  buying  something  that  you  don’t  want  ? 

A.  Agreeing  to  have  delivered  what  you  don’t  expect  to  have  de- 
livered. 

Q.  And  buying  what  you  don’t  want  ? 

A.  Yes,  sir. 

Q.  Do  you  think  the  system  of  grading  gives  more  opportunity  for 
speculating  than  the  old  system  of  sampling  ? 

A.  Altogether  ; without  grading  the  gambling  system  could  not  be 
carried  on  — the  option  system. 

Q.  Then  you  attribute  nearly  all  the  evils  that  result  from  dealing 
in  futures  and  options  to  the  grading  system  ? 

A.  Yes,  sir. 

Q.  Before  that  it  was  scarcely  known  ? 

A.  Scarcely  known  at  all. 

Q.  You  are  an  owner  of  canal  boats  ? 

A.  Yes,  sir. 

Q.  Do  you  think  it  is  necessary  to  have  an  agent  at  Buffalo  usually 
called  scalpers  to  do  business  for  the  canal  boatmen  ? 

A.  Yes,  sir. 

(2-  Are  you  familiar  with  tlie  system  of  contracting  through  grain  ? 


321 


A.  Yes,  sir. 

Q.  Do  you  think  that  is  a good  thing  ? 

A.  I think  it  is  beneficial  to  the  transportation  business  if  it  is  car- 
ried on  right. 

Q.  Do  you  think  a scalper  who  acts  for  a canal  boatman  as  his  agent 
is  justified  in  taking  a through  contract  and  then  bearing  down  the 
market  ? 

A.  No,  I don’t  think  he  is  justified  in  bearing  down  the  market,  but 
invariably  better  plices  can  be  obtained  in  the  west  than  there  can  be 
after  the  grain  gets  here. 

Q.  I think  the  receiver  here  is  more  apt  to  bear  the  market  than  a 
contractor  ? 

A.  He  has  more  opportunity  to  do  it,  for  the  reason  that  if  a 
man  has  a contract,  to  forward  that  property  and  whatever  the 
price  may  be  he  must  forward  it,  while  the  receiver  can  wait  a few 
days  — five  days’  storage — he  can  wait  and  see  if  he  cannot  bear  the 
market,  see  if  he  cannot  ship  it  less,  while  a contractor  who  agrees  to 
forward  it,  contracts  to  take  it  from  the  vessel  and  put  it  on  a boat 
and  send  it  right  along  without  any  delay  whatever.  He  often  has  to 
pay  any  expense  which  attaches  to  it  while  waiting  here,  such  as  in- 
surance over  night. 

Q.  Can  you  say  any  thing  to  the  committee  as  to  the  question  of 
charges  on  the  grain  or  on  the  boatmen  here  by  the  elevators  here  for 
transferring  cargoes  ? 

A.  I think  the  price  is  too  high  here. 

Q,.  You  think  the  price  is  too  high  ? 

A.  Yes,  sir. 

Q.  For  elevating  ? 

A.  Yes,  sir. 

Q.  How  much  too  high  ? 

A.  I think  elevating  ought  to  be  done  here,  including  the  five  days’ 
storage,  for  at  least  half  a cent  a bushel. 

Q.  That  is  just  for  elevating  ? 

A.  Elevating  and  transferring  from  the  boat,  including  the  five 
days’  storage. 

Q.  Including  trimming  ? 

A.  I wouldn’t  say  as  to  the  trimming. 

Q.  What  pays  the  trimming,  the  grain,  the  shipper  or  the  canal 
boatmen  ? 

A.  The  grain. 

Q.  That  is  not  a charge  that  the  canal  boatmen  have  to  pay  ? 

A.  No,  sir;  when  the  canal  boatman  receives  his  load  he  has  to 
41 


322 


trim  his  boat,  that  is  shoveling,  and  that  is  more  than  three  times 
what  it  should  be;  the  vessel  I don’t  wish  to  say  any  thing  about. 

Q.  The  cikial  boatman  has  to  pay  for  the  trimming  about  three 
times  what  it  is  worth  ? 

A.  Yes,  sir;  than  the  labor  is  really  worth. 

Q.  What  part  of  the  elevator  charge  does  the  canal  boatman  have 
to  pay  ? 

A.  Not  any. 

Q.  Who  pays  that  ? 

A.  The  grain. 

Q.  The  grain  pays  that  ? 

A.  Yes,  sir. 

Q.  And  if  that  was  any  less  would  the  canal  boatman  reap  any 
benefit  ? 

A.  I think  it  would  make  the  route  cheaper  and  be  more  business. 

Q.  On  the  theory  that  if  you  make  the  charges  less  it  is  going  to 
increase  the  volume  of  business  ? 

A.  Yes,  sir. 

Q.  Is  there  any  thing  else  you  would  like  to  say  now  before  this 
commiStee  ? 

A.  No,  I don’t  know  as  there  is.  ‘ 

Q.  Do  you  know  any  thing  about  bucket-shops  ? 

A.  I don’t  have  any  thing  to  do  with  them. 

Q.  Are  you  the  Mr.  Bissell  who  was  a member  of  the  Legislature 
some  years  ago  ? 

A.  Yes,  sir. 

Q.  You  represented  what  district  ? 

A.  The  first  district  of  Niagara  county. 

Q.  From  Lockport  ? 

A.  Yes,  sir. 

Q.  As  having  been  a member  of  the  Legislature  and  having  a 
knowledge  of  these  evils  and  abuses,  can  you  suggest  to  this  commit- 
tee how  a remedy  may  be  provided  and  applied  to  prevent  a continu- 
ance of  these  abuses  ? 

A.  Only  CO  pass  a law  to  stop  them. 

Q.  Do  you  think  that  we  could  draft  a law  to  prevent  them  ? 

A.  It  seems  to  me  so. 

Q.  Are  you  a member  of  the  Board  of  Trade  ? 

A.  Yes,  sir, 

Q.  Has  the  Board  of  Trade  ever  taken  up  for  consideration  any  of 
these  abuses  with  a view  to  remedying  them  ? 

A.  Not  to  my  knowledge. 


323 


Q.  Don’t  you  think  it  is  a part  of  the  duty  of  the  Board  of  Trade 
to  take  notice  of  these  things  ? 

A.  I think  it  is. 

Q.  Is  it  an  incorporated  institution  ? 

A.  Yes,  sir. 

Q.  And  to  your  knowledge  you  don’t  know  that  they  have  ever  taken 
notice  of  any  of  these  abuses  with  a view  of  remedying  them  ? 

A.  I don’t  think  they  have  ; they  never  have  while  I was  present. 

Q,  Have  you  ever  been  an  officer  or  director  of  the  Board  ? 

A.  No,  sir;  I think  we  are  charged  too  much  for  unloading  boats 
in  New  York. 

Q.  Where? 

A.  New  York  city  ; I think  that  is  the  greatest  abuse  that  we  have* 

Q.  Go  on  and  tell  me  about  that  ? 

A.  We  are  charged  a half  a cent  a bushel  for  unloading  a canal 
boat  ill  New  York,  and  the  grain  pays  something  like  three-fourths  of 
a cent  more  to  these  elevators. 

Q.  That  is  a cent  and  a quarter  ? 

A.  Yes,  sir,  and  it  is  entirely  too  much  ; I can  unload  a canal  boat 
beside  a barge  as  we  often  do  for  half  the  money  by  hand  labor  that  it 
costs  us  to  unload  a boat  there,  that  we  are  charged  for  unloading  a 
boat  there.  I think  $20  would  dip  eight  thousand  bushels  of  grain 
into  another  boat  beside  of  it  where  we  pay  $40. 

Q.  You  think  it  ought  to  be  about  one-half  ? 

A.  One-half. 

Q.  This  is  a uniform  rate  of  charges  in  New  York  city  ? 

A.  All  charge  the  same. 

Q.  All  in  together  ? 

A.  Yes,  sir. 

Q.  Floaters  and  the  rest  of  them  ? 

A.  Floaters  and  millers  and  receivers  and  all  of  them  ; a miller  at 
his  own  elevator  charges  the  canal  boatman  $40  to  take  off  his  own 
load,  and  then  steals  about  $50  worth  besides. 

Q.  He  gets  a rebate  ? 

A.  Yes,  sir. 

Q.  Are  there  any  rebates  in  New  York;  have  you  ever  heard  tell  of 
any  ? 

A.  There  is  rebates  to  the  grain. 

Q.  But  not  to  the  boat  ? 

A.  The  boat  doesn’t  get  any ; we  pay  actually  $40  ; they  pay  some 
percentage  to  a man  who  collects  this  money  and  pays  it  over  to  them. 

Q.  How  much  ? 

A.  I think  ten  per  cent. 


324 


Q.  Do  you  know  of  any  bucket-shops  of  scalping-houses  in  New 
York  city  ? 

A,  No,  sir. 

Q.  In  your  opinion  the  charge  in  New  York. ought  to  be  about  one- 
half  ? 

A.  One-half  I think  would  be  a liberal  price  for  unloading  a boat. 
A vessel  only  pays  one-eighth  here  in  Buffalo. 

Q.  Only  one-eighth  ? 

A.  That  is  all  the  vessel’s  charge  is  one-eighth,  while  we  pay  one- 
half. 

Q.  In  New  York  ? 

A.  In  New  York  ; yes,  sir. 

Q.  What  is  the  argument  for  it  ? 

A.  The  floating  elevator  people  pretend  that  they  are  doing  it  as 
cheap  as  they  can,  but  I notice  when  there  is  any  likelihood  of  any  law 
being  passed  they  are  on  hand  to  prevent  it  if  possible. 

Q.  You  have  seen  them  there  to  prevent  the  passage  of  laws  ? 

A.  Oh,  I have  met  them  there,  certainly. 

Q.  Well,  they  come  down  from  Buffalo  to  prevent  the  passage  of 
laws  too  ? 

A.  They  send  certain  ones  from  Buffalo. 

Q.  Do  you  find  that  5mur  accommodations  in  New  York  are  as  good 
and  as  cheap  as  they  are  here  aside  from  the  elevating  ? 

A.  No,  sir,  we  are  charged  nothing  for  wharfage  here  and  there  we 
are  charged. 

Q.  What  are  you  charged  in  New  York  ? 

A.  Fifty  cents  a day. 

Q.  What  are  your  towing  expenses,  how  does  that  compare  with 
your  towing  expense  here  in  Buffalo  ? 

A.  That  is  fair,  we  don’t  complain  of  that. 

Q.  Do  you  experience  any  other  trouble  in  New  York,  in  the  port  of 
New  York? 

A.  Nothing  but  wharfage. 

Q.  Do  you  think  the  canal  district  is  properly  located  in  New  York? 

A.  I haven’t  paid  as  much  attention  to  that  since  I left  the  Legis- 
lature as  I did  before.  I think  it  is  properly  located  if  we  had  more 
room  there  ; I think  these  piers  that  the  railroads  have  there  ought  to 
be  uncovered  and  that  the  railroads  ought  to  lay  their  boats  straight 
and  allow  boats  to  come  in  and  out  there,  and  not  lay  their  boats  across 
the  slip  and  prevent  boats  from  running  in  and  out.  They  do  that  to 
control  the  ships. 

Q.  If  there  is  any  thing  else,  Mr.  Bissell,  we  will  be  glad  to  hear 
you  ? 


325 


A.  I don’t  think  of  any  thin^  else. 

Q.  Do  you  have  as  good  wharf  accommodations  here  as  you  have  in 
New  York  ? 

A.  Oh,  yes,  fully  as  good  ; all  lay  anywhere,  no  charge,  free. 

Q.  And  your  opinion  is  that  dealing  in  futures  and  options  are  dis- 
astrous in  their  results  to  trade  and  commerce  ? 

A.  I do. 

Q.  It  enhances  the  price  of  the  necessaries  of  life  and  is  an  extra 
burden  on  the  people  ? 

A.  Yes,  sir. 

Q.  And  ought  to  be  abolished  if  possible  ? 

A.  Yes,  sir ; and  tends  to  hold  the  grain  unnaturally  from  coming 
forward  at  the  proper  time. 

Q.  That  is  your  own  opinion,  is  it? 

A.  Yes,  sir, 

Almon  S.  Carpenter,  sworn  and  examined  by  Mr.  Browning,  testi- 
fied as  follows  : - 

Q.  Where  do  you  reside  ? 

K.  Buffalo. 

Q.  Do  business  here  ? 

A.  Yes,  sir. 

Q.  What  is  your  business  ? 

A.  My  business  is  forwarding  and  commission — canal  business 
principally. 

Q.  Are  you  a member  of  any  firm  ? 

A.  Yes,  sir. 

Q.  What  is  the  name  of  your  firm  ? 

A.  Carpenter,  Avery  & Co. 

Q.  How  long  have  you  been  engaged  in  that  business  ? 

A.  All  my  life  pretty  much,  35  or  40  years. 

Q.  Are  you  familiar  with  all  its  details  ? 

A.  Yes,  sir;  I think  I have  a pretty  good  schooling  in  it. 

Q.  Have  you  dealt  in  options  and  futures  ? 

A.  Not  lately,  no,  sir. 

Q.  Sufficient  to  give  the  committee  an  idea  of  how  it  is  carried  on  ? 
A.  I couldn’t  explain  that  satisfactorily ; I have  not  dealt  in  any 
for  several  years,  in  options ; some  other  person  who  is  more  familiar 
with  the  way  that  is  done  now-a-days  can  do  better  than  I could. 

Q.  Do  you  believe  that  dealing  in  futures  and  options  has  a tend- 
ency to  demoralize  and  disturb  the  market  ? 

A.  Yes,  sir ; I thinR  it  does. 


32G 


Q.  And  its  elTect  is  disastrous  upon  commercial  interests  ? 

A.  I think  it  is. 

Q.  Do  you  believe  it  has  a tendency  to  increase  the  price  of  the 
necessaries  of  life  over  their  actual  values  ? 

A.  Yes,  sir. 

Q.  And  that  the  increase  falls  a burden  upon  the  people  ? 

A.  That  is  the  way  I look  upon  it. 

Q.  Do  you  believe  it  should  be  stopped  if  there  is  any  way  that  it 
can  be  stopped  by  legislation  ? 

A.  I believe  it  should  be  if  there  is  any  way  that  it  can  be  stopped. 

Q.  Do  you  attribute  all  these  evil  results  in  whole  or  in  part  to  the 
system  of  grading  ? 

A.  No,  1 don’t  know  as  I can  do  that ; the  system  of  grading 
different  grades  of  grain,  I suppose  you  mean  ? 

Q.  A^es,  sir. 

A.  No,  there  has  always  been  first  and  second-class  wheat  and  corn 
and  always  will  be. 

Q.  Was  there  as  much  of  an  opportunity  for  speculating  when 
grain  was  sold  by  sample  as  there  is  now  ? 

A.  I don’t  think  it  was  quite  as  safe  to  speculate  as  now;  that  is 
a man  buying  by  sample,  sometimes  the  sample  would  be  better  than 
what  he  would  get  when  he  came  to  get  his  grain,  and  it  used  to  create 
trouble  ; now  a grain  inspector  announces  a cargo  of  grain  to  be  No. 
1 or  No.  2,  and  it  must  be  that. 

Q.  Do  you  regard  buying  and  selling  futures  as  buying  what  you 
haven’t  got  and  what  you  don’t  want  ? 

A.  Yes,  sir. 

Q.  Do  you  look  upon  it  as  a species  of  gambling  or  betting  ? 

A.  Yes,  sir  ; it  is  nothing  more  or  less  than  that. 

Q.  Are  you  familiar  with  the  charges  for  elevating,  discharging 
cargoes  ? 

A.  Yes,  sir. 

Q.  Do  you  think  the  prices  are  too  high  for  elevating  at  this  port  ? 

A.  It  seems  to  me  that  the  business  could  be  done  very  much  cheaper. 

Q.  How  much  cheaper 

A.  Well,  I think  half  a cent  a bushel  for  handling  grain  would  be  a 
good,  fair  paying  price. 

Q.  Let  me  ask  you  in  connection  with  that  if  you  have  given  the 
8ui)ject  of  elevating  grain  sufficient  consideration  and  made  yourself 
sufficiently  familiar  with  the  expense  of  elevating  to  arrive  at  that  con- 
clusion ? 

A.  I have. 


327 


Q.  Will  you  state  to  the  committee  as  you  understand  it* the  expense 
of  elevating  grain  which  leads  you  up  to  the  conclusion  that  half  a 
cent  a bushel  would  be  sufficient  ? 

A.  Well,  all  I know  about  it  — I have  never  been  interpreted  in  the 
elevators,  but  I have  been  familiar  with  the  way  the  business  has  been 
done  ever  since  there  has  been  elevators  here.  Now,  for  instance,  the 
five  elevators  can  handle  grain  and  pay  expenses,  so  they  claim  ihey 
tell  me,  of  course  I never  made  any  figures,  at  one-fourth  of  a cent  a 
bushel. 

Q.  Who  told  you  that  ? 

A.  Owners  of  elevators.  But  understand  that  don’t  pay  for  break- 
downs or  interest  on  their  money  and  all  that  sort  of  thing,  taxes,  but 
the  actual  expense  of  handling  the  grain. 

Q.  Can  you  tell  me  who  told  you  that  ? 

A.  The  working  elevators  only  allow  one-quarter  of  a cent  a bushel 
for  handling  the  grain,  and  the  rest  goes  into  the  pool.  That  is  the 
amount  that  is  actually  allowed  for  the  expense  of  handling  this  grain 
elevating  it,  running  it  in  storage  and  running  it  out  again. 

Q.  And  the  other  quarter  of  a cent  is  to  meet  any  contingency  ? 

A.  For  profits  if  there  is  any,  and  insurance,  and  all  that  sort  of 
things.  It  is  an  offset  to  any  losses,  too. 

Q.  So  that  you  think  that  grain  could  be  delivered  with  a profit  for 
one-half  a cent  a bushel  ? 

A.  I think  so. 

Q.  Are  there  any  other  charges  that  you  think  are  exhorbitant  at 
this  port  in  connection  with  receiving  and  discharging  a cargo  of 
wheat  ? 

A.  No,  I don’t  think  there  are. 

Q.  The  other  charges  you  think  are  reasonable  ? 

A.  Yes,  sir. 

Q.  You  don’t  complain  then  for  the  charge  of  trimming  a boat  ? 

A.  That  one  charge  is  a little  too  high  ; they  charge  ten  shillings 
a thousand;  eight  thousand  bushels  of  wheat  or  corn,  that  is  ten  dol- 
lars. Of  course  it  takes  from  about  four  to  six  men  to  trim  a boat ; 
some  of  them  load  it  in  forty-five  minutes,  and  some  it  will  take  an 
hour. 

Q.  Load  a boat  in  one  hour  ? 

A.  Yes,  sir. 

Q.  And  employ  to  do  that  five  or  six  men  ? 

A.  Yes,  sir. 

Q.  And  charge  ten  dollars  to  do  that  ? 

A.  Yes,  sir  ; I think  that  ought  to  be  reduced  to  seventy-five  cents. 


328 


Q.  Sevcnty-nvo  cents  <‘i  thousand  for  the  trimmers  ? 

A.  Yes,  sir;  instead  of  ten  sliillings. 

Q.  In  other  words  it  ought  to  be  reduced  fifty  cents  ? 

A.  Yes,  sir  ; I think  that  would  pay  tlie  trimmers  very  well ; it 
would  pay  the  trimmers  a good  deal  better  than  it  would  pay  the 
canal  boatmen  to  take  it  to  New  York. 

Q.  Do  you  think  the  charges  in  New  York  are  too  high  ? 

A.  I am  not  familiar  enough  with  the  business  down  there;  it  seems 
to  me  they  ought  to  do  it  a little  less ; all  I know  is  that  our  boats 
have  to  pay  a half  a cent  a bushel. 

Q.  Are  you  a boat-owner  ? 

A.  I am  not  just  now. 

Q You  have  been  ? 

A.  Yes,  sir. 

Q.  Are  you  familiar  with  the  system  of  scalping  at  this  port? 

A.  Yes',  sir,  it  is  a part  of  my  business. 

Q.  Are  you  a scalper  ? 

A.  A commercial  broker,  that  is  a more  aristocratic  name, 

Q.  That  is  the  same  as  a scalper  ? 

A.  Yes,  sir. 

Q.  Do  you  act  as  agent  for  the  canal  boatmen  ? 

A.  Yes,  sir. 

Q.  And  you  get  for  them  the  highest  price  that  you  can? 

A.  Our  business  is  to  get  the  best  rate  we  can  for  the  boatmen. 

Q.  And  you  charge  the  boatmen  a commission  ? 

A.  We  charge  the  boatmen  a commission  for  that  service. 

Q.  What  is  your  charge  ? 

A.  We  charge  them  five  per  cent  on  the  amount  of  freight,  gross 
freight. 

Q.  Do  you  make  contracts  ? 

A.  We  do  sometimes ; for  this  procuring  freights  for  the  boats  and 
doing  this  business,  and  for  our  compensation  we  charge  five  per  cent 
on  the  amount  of  the  freight  bill,  and  besides  that  we  have  to  advdnce 
the  boatmen  money  to  pay  tolls  and  running  expenses,  and  pay  the 
back  charges,  lake  freights  and  Buffalo  charges. 

Q.  Do  you  get  commission  on  that  ? 

A.  No,  sir  ; we  pay  that  and  carrv  it  until  the  boat  discharges  in 
New  York. 

Q.  You  make  a contract  occasionally,  you  say,  for  through  grain  ? 

A.  We  do  sometimes  ; we  haven’t  done  that  much  for  a year  or  two. 

Q.  When  you  did  tliat  did  you  give  the  canal  boatmen  the  rate  that 
you  contracted  for  carrying  it  for  them  ? 


3-<?9 

A.  Sometimes  we  have  to  pay  more  to  the  boatman  for  carrying  it 
than  we  contracted  to  carry  it  through  for. 

Q.  Have  yon  known  of  instances  when  the  scalpers  will  come  to- 
gether for  the  purpose  of  bearing  down  the  rate,  for  the  purpose  of 
making  a profit  out  of  the  contract  ? 

A.  r have  known  of  a few  instances,  but  as  a general  thing  they  can- 
not make  it  work.  When  there  is  more  freight  than  there  is  boats  then 
they  have  to  pay  right  along,  no  matter  what  the  contract  is. 

Q.  Men  who  carry  on  that  business  as  you  sa\^  are  sort  of  commer- 
cial brokers  upon  their  own  hook,  and  are  not  merely  agents  for  the 
boatmen? 

A.  Yes,  sir  ; it  becomes  necessary  once  in  a while  where  a man  is 
loading  a large  line  of  boats,  in  order  to  let  these  boats  it  is  absolutely 
necessary  to  have  the  stuff  on  hand  to  load  these  boats.  I am  speak- 
ing of  the  summer  season  when  there  is  a scarcity  of  boats. 

Q.  Isn’t  it  the  rule  that  when  a number  of  scalpers  find  that  the 
grain  has  arrived  and  they  have  contracted  to  carry  it  througli  for  a 
less  amount  than  the  cpiotations  of  yesterday  we  will  say,  that  they 
will  bear  down  the  market  with  a view  of  saving  themselves  from  loss  ? 

A.  They  will  if  they  can. 

Q.  And  that  is  what  they  usually  do  ? 

A.  That  is  what  they  usually  do,  but  as  I. said  before  they  cannot 
always  do  it. 

Q.  They  try  to  do  it  ? 

A.  They  try  to  do  it. 

Q.  Isn’t  it  a fact  that  they  frequently  will  bear  down  the  market 
with  a view  of  making  a profit  out  of  the  contract  ? 

A.  Yes,  sir ; they  do  that  sometimes. 

Q.  But  upon  the  whole  you  think  the  scalpers  a pretty. good  institu- 
tion for  the  canal  boatman  and  the  shippers  ? 

. A.  Yes,  sir  ; they  are  a pretty  fair  set  of  men. 

Q.  Is  that  your  experience  ? 

A.  That  is  my  experience. 

Q.  Does  it  involve  any  capital  to  carry  on  this  business  ? 

A.  Well,  it  involves  capital  or  good  credit.  A little  of  both  is  very 
convenient. 

Q.  Do  you  know  any  thing  about  rebates  — do  you  ever  receive  re- 
bates, or  have  you  ever  known  of  elevators  to  pay  rebates  ? 

A.  I have  been  knowing  sfich  facts.  They  appear  in  business  once 
in  a while. 

Q.  Does  the  canal  boatman  ever  pay  any  ? 

A.  No. 


42 


330 


Q.  Do  the  shippers  ever  pay  any  ? 

A.  We  have  to  pay  once  in  a while  five  or  ten  dollars  to  get  it  when 
freight  is  scarce.  We  pay  it  to  the  shippers,  and  as  a general  thing 
we  make  that.  We  don’t  make  any  thing  in  loading  boats  in  that  way. 

Q.  What  is  the  inducement  to  do  that  ? 

A.  The  boatmen  do  not  pay  any  rebate,  we  pay  the  rebate. 

Q.  What  do  you  do  it  for  ? 

A.  T have  just  stated.  For  instance  you  have  a cargo  of  grain  here 
to  ship,  you  want  to  ship  it,  well,  there  is  a few  more  boats  than 
freight;  I might  have  two  or  three  bo^its  I would  want  to  load*  or  Mr. 
Smith  here  might  have  two  or  three,  and  these  gentlemen,  and  so  on, 
we  would  go  to  the  shipper  and  say,  here,  I want  two  loads  of  freight. 
The  price  we  want  for  instance  is  six  cents,  he  won’t  pay  it,  and  you 
find  you  cannot  get  the  price,  and  he  says,  here  boys  if  you  want  the 
freight  give  me  five  or  ten  dollars  and  you  can  get  the  order. 

Q.  That  fixes  the  price  ? 

A.  That  fixes  the  price,  and  if  I get  two  or  three  loads  and  pay  you 
five  or  ten  dollars  for  it  and  Mr.  Smith  wants  any  he  has  got  to  pay  it 
or  he  cannot  get  it. 

Q.  You  might  call  that  scaling  the  market? 

A.  You  might  call  it  that,  we  call  it  down  there  sometimes  ‘^monkey 
money.”  There  was  a few  gentlemen  in  lormer  years  that  wouldn’t 
stoop  to  that,  so  finally  that  got  to  be  quite  a name  for  that  kind  of 
business. 

Q.  Have  you  ever  done  that  kind  of  business  ? 

A.  I have  done  lots  of  it,  but  never  did  it  when  I could  help  it.  I 
never  have  paid  monkey  money  ” for  a load  when  I could  get  a load 
without. 

Q.  Well,  what  is  the  effect  of  doing  that? 

A.  The  effect  is  simply  this,  that  it  kind  of  demoralizes  the  business 
for  that  day,  for  instance.  You  don’t  have  to  do  this  all  the  time. 

Q.  Who  gets  the  benefit  of  it  ? 

A.  The  scalper,  as  a general  thing,  doesn’t  get  any  benefit.  For 
instance,  I take  8,000  bushels  of  wheat  of  you  at  six  or  five  cents, 
whatever  the  price  may  be,  and  I give  you  810  for  it,  and  I say  ‘‘  Here, 
iMr.  Smith,  you  put  on  this  load  for  eight  cents,”  and  that  comes  out 
of  what  we  charge  him  for  commission. 

Q.  You  make  it  up  out  of  somebody  else  ? 

A.  We  do,  if  we  can  ; we  cannot  do  it  ills  a general  thing;  the  boat- 
men, as  a general  thing,  are  a i)retty  sharp  set  of  men. 

Q.  In  other  words,  if  you  want  to  engage  the  services  of  twenty  men. 


331 


and  you  wanted  to  pay  them  $2.50  a day,  and  there  were  five  in.  the 
number  who  demanded  $4.00,  and  you  were  satisfied  tliat  they  could 
convince  all  the  others  that  they  were  worth  $4.00,  you  would  make 
your  peace  with  them  by  paying  the  five  $4.00  a day  ? 

A.  No,  we  don’t  do  that;  when  we  load  a boat  we  pay  them  all 
alike ; I was  speaking  of  taking  this  of  a shipper;  you  are  the  shipper, 
you  get  the  money  and  the  boatman  gets  the  benefit;  he  gets  the  six 
cents  freight,  and  we  are  out  whatever  we  pay  you ; we  used  to  have  a 
certain  set  of  men  down  there  that  wouldn’t  stoop  to  such  a thing  as 
that ; the  way  the  business  has  been  done  now  for  a few  years  back, 
there  is  a number  of  individuals  on  the  Central  wharf  that  are  willing 
to  receive  grain  to  ship  forward  to  New  York  without  even  one-eighth 
of  a cent  commission;  they  went  in  on  general  principles  to  get  what 
they  could  out  of  the  carrier  and  out  of  the  insurance  company,  and  a 
rebate  out  of  the  elevators  ; that  has  been  followed  up  considerable 
until  this  year,  but  this  year  the  insurance  companies  don’t  pay  any 
rebate  whatever,  and  the  elevators,  according  to  their  rules  and  regu- 
lations, agree  not  to,  but  there  is  some  special  arrangement  with  one 
or  two  elevators  there  where  they  get  a good  deal  of  business  they 
wouldn’t  get  if  there  wasn’t  a wheel  within  a wheel,  and  these  men 
that  receive  grain  in  this  way,  of  course  if  they  couldn’t  get  any  thing 
out  of  the  carrier,  or  out  of  the  insurance  company  for  rebate,  or  out 
of  the  elevating,  it  would  be  no  object  for  them  to  handle  the  grain  at 
all.  Do  you  understand  ? 

Q.  You  will  pardon  me,  Mr.  Carpenter,  but  I do  not  understand  as 
clearly  as  I ought  to.  I understood  you  paid  this  amount  to  the  canal 
boatman  in  order  to  fix  the  market,  and  then  would  ship  it  at  that 
price.  Now  it  appears  that  you  pay  that  to  the  shipper.  Now  I want 
to  know  the  object  of  paying  that  to  the  shipper  ? 

A.  The  reason  is  we  have  to  take  off  the  freight,  that  is,  take  the 
freight  for  one-eighth  of  a cent,  or  make  the  price  six  cents  and  pay 
the  shipper  $10 ; in  the  other  way  we  would  have  to  pay  the  boatman 
five  and  seven-eighths  cents. 

Q.  In  order  to  keep  the  price  up  you  would  pay  the  shipper  the 
difference  between  the  price  he  wanted  it  carried  for  and  the  price  you 
want  to  keep  it  up  to  ? 

A.  Yes,  sir. 

Q.  And  that  would  frequently  amount  to  $10  ? 

A.  Yes,  sir. 

Q.  And  do  you  do  that  in  the  interest  of  the  canal  boatmen  ? 

A.  Yes,  sir. 

.Q.  Do  you  do  it  by  their  advice  and  with  their  consent  ? 

A.  No,  we  do  it  on  our  own  hook. 

Q.  Where  does  your  profit  come  in  from  that  transaction  ? 

A.  We  have  an  object  in  view. 


332 


Q.  That  is  what  I am  trying  to  find  out  ? 

A.  We  have  an  object  in  view  to  keep  the  price  up  ; I am  only 
speaking  of  this  happening  when  there  is  a scarcity  of  freight;  rather 
than  to  let  tlie  price  down  to-day  we  would  do  this,  rather  than  to  let 
the  price  come  down. 

Q.  It  would  be  for  the  object  of  the  contractors  to  keep  the  price 
down  ? 

A.  Yes,  sir. 

0,.  They  wouldn’t  pay  any  rebate  to  keep  the  price  up  ? 

A.  No,  it  wouldn’t  be  for  their  advantage  ; there  is,  for  instance,  a 
few  men  down  there  that  have  some  contracted  freight  on  hand,  and 
a greater  number  might  not  have  any,  and  the  boatmen' generally  side 
with  the  men  that  are  trying  to  get  them  the  best  price;  that  is 
natural ; and  in  that  way  we  would  say  to  a boatman,  here,  we  do 
this,  we  give  this  man  five  or  ten  dollars  for  freight  for  the  sake  of 
keeping  the  freight  up,  so  that  they  shall  not  go  down  to-day,  and 
these  men  that  have  contracted  the  freight  let  them  pay  the  price,  the 
full  price  that  we  pay ; we  intend  to  keep  the  price  up  if  it  cost  us  five 
or  ten  dollars  a load  for  a thousand  or  a hundred  thousand  loads. 

Q.  I don’t  understand  this  ; you  are  describing  a class  of  men  that 
are  willing  to  pay  money  out  of  pocket  to  keep  the  price  up  when  it  is 
for  their  benefit  to  have  it  come  down  ? 

A.  We  don’t  do  this  only  when  it  is  an  object  to  keep  the  price  up 
to  a certain  figure,  or  sometimes  we  have  to  take  freight  in  this  way, 
when  the  freights  are  down  we  cannot  take  our  own  price  for  it,  we 
have  to  take  it  at  the  shipper’s  price  and  then  pay  him  for  it  besides ; 
it  is  very  often  done  that  way,  but  only  when  we  want  to  keep  the 
price  up  to  a certain  figure ; for  instance,  to-day  is  a dull  day  and  to- 
morrow there  will  be  a large  number  of  vessels  in  here,  we  would  keep 
the  price  up  to-day  for  the  purpose  of  bridging  over  to-day  to  meet 
the  vessels  that  are  coming  in  to-morrow,  and  give  the  canal  boatmen 
the  benefit  of  it. 

Q.  Is  there  any  thing  else  you  would  like  to  state? 

A.  I don’t  know  but  I have  stated  about  all  there  is  of  it. 

Q.  Now,  briefly,  you  are  of  the  opinion  that  buying  and  selling  and 
speculating  in  futures  is  demoralizing  and  disastrous  to  the  trade 
and  commercial  interests  of  the  public  ? 

A.  Yes,  sir. 

(2.  You  believe  that  the  elevating  charges  are  too  high? 

A.  Yes,  sir. 

(2.  And  you  believe  that  an  honest  scalper  is  a benefit  to  the  canal 
boatmen  ? 

A.  I believe  they  are  a necessary  evil. 


Q.  A necessary  evil  ? 
A.  Yes,  sir. 


333 


Proceedin-gs  of  Friday,  Novemler  17,  1882. 

John  F.  Hagar,  Jr.,  sworn  and  examined  by  Mr.  BROWJsrii^G,  testified 
as  follows : 

Q.  Where  do  you  reside  ? 

A.  Buffalo. 

Q.  What  is  your  business  ? 

A.  Forwarding  and  commission  business. 

Q.  What  do  you  mean  by  that  ? 

A.  Well,  get  loads  and  ship  them.  A captain  comes  to  me  and 
wants  a load  and  I go  up-stairs  and  get  it  for  him  if  I can. 

Q.  Are  you  agent  for  the  canal  boatmen  ? 

A.  Yes,  sir. 

Q.  How  long  have  you  been  engaged  in  that  business? 

A.  Fourteen  or  fifteen  years. 

Q.  In  this  city  ? 

A.  Yes,  sir ; fourteen  years  I guess  it  is. 

Q.  Have  you  ever  bought  a future  or  dealt  in  options  ? 

A.  No,  sir;  I have  never  dealt  in  options.  I don’t  have  enough  to 
fill  out  loads,  and  sometimes  I have  bought  a little  to  fill  it  out,  400  or 
500  or  1,000  bushels. 

Q.  Can  you  state  to  the  committee  what  the  effect  has  been  upon 
‘the  commercial  interests  of  the  country  from  dealing  in  futures  ? 

A.  I don’t  think  what  I have  done  in  it  would  have  an  effect  on  any- 
one. I have  not  dealt  in  it  to  make  any  money  out  of  it.  What  I 
have  done  I have  merely  done  to  get  the  boat  out,  or  something  like 
that. 

Q.  Are  you  a member  of  the  Board  of  Trade  ? 

A.  Yes,  sir. 

Q.  In  your  opinion  is  the  speculation  in  grain  disastrous  or  bene- 
ficial to  trade  — or  are  you  not  familiar  enough  with  the  question  to 
give  an  answer  ? 

A.  Well,  I don’t  believe  I am. 

Q.  Your  business  and  your  experience  then  is  limited  to  forwarding  ? 

A.  That  is  my  business. 

Q.  Are  you  familiar  with  the  charges  for  elevating  grain  ? 

A.  Not  much,  I know  of  course  the  charge,  but  I don’t  know  much 
about  what  it  costs  them. 


334 


Q.  You  are  not  able  to  state  whether  the  charge  for  elevating  grain 
is  too  high  or  too  low  ? 

A.  No,  sir;  I couldn’t  say  any  thing  about  that. 

Q.  Are  you  sometimes  called  a scalper  on  the  market? 

A.  Yes,  sir. 

Q,  And  you  act  as  the  agent  of  the  canal  boatmen  ? 

A.  Yes,  sir. 

Q.  And  your  business  is  to  secure  a proper  rate  of  freight  for  for- 
warding grain  ? 

A.  Yes,  sir. 

Q.  Are  you  connected  with  any  firm  ? 

A.  Yes,  sir ; Gatchel  & Hagar,  that  is  the  firm  name. 

Q And  you  keep  the  price  up  ? 

A.  We  get  all  we  can. 

Q.  Do  you  mean  for  yourselves,  or  for  the  boatmen  ? 

A.  For  the  boatmen,  that  is  our  business  — we  try  to. 

Q.  And  do  you  make  contracts  for  through  grain  ? 

A.  I do,  sometimes,  yes,  sir. 

Q.  Within  the  last  year  ? 

A.  Yes,  sir. 

Q.  What  have  you  made  contracts  for,  what  rate  ? 

A.  Well,  I couldn’t  tell  you  without  looking  over  different  rates. 

Q,  Can’t  you  recollect  one  rate,  that  you  got  for  through  freight  ? 

A.  Yes,  sir ; I have  got  some  at  eight  cents. 

Q.  When  did  that  occur  ? 

A.  I don’t  know,  quite  a little  while  ago. 

Q.  A month  ago  ? 

A.  I guess  it  was  over  a month  ago,  six  weeks,  may  be.  I couldn’t 
give  you  the  date  ; I could  tell  you  by  looking  at  my  books. 

Q.  Then  you  made  the  contract  for  forwarding  gram  within  two 
months  at  eight  cents? 

A.  I did. 

Q.  How  much  did  the  canal  boatman  get  ? 

A.  Eight  cents. 

Q.  Are  you  aware  that  scalpers  will  occasionally  make  a corner  in 
the  rates,  bear  down  the  market  with  a view  of  making  a profit  on 
their  contract  in  addition  to  the  commission  made  upon  the  canal 
boatman  for  securing  it  ? 

A.  No,  sir;  I haven’t  done  it. 

(2.  I asked  you  if  you  were  aware  that  that  has  been  done  ? 

A.  No,  sir. 

Q.  You  have  never  been  a party  to  that  transaction  ? 


335 


A.  No,  sir, 

Q.  When  you  make  a contract  for  six,  seven  or  eight  cents,  you  give 
them  that  for  it  ? 

A.  I never  hear  down  on  the  rates  ; I give  them  whatever  the  freight 
is;  I claim  they  get  more  in  that  way;  these  shippers  bear  down,  they 
will  try  to  ship  it  cheaper. 

Q.  Have  you  ever  found  in  your  experience  that  when  grain  has  ar- 
rived here  and  you  had  a contract  for  through  freight,  say  at  seven 
cents,  and  the  rate  has  been  six  and  one-half,  have  you  paid  six  and 
one-half,  or  have  you  paid  seven  cents  ? 

A.  Of  course  if  the  rate  was  six  and  one-half  I have  paid  it. 

Q.  And  you  have  made  the  difference  between  six  and  one-half  cents 
and  seven  cents  yourself  ? 

A.  Yes,  sir  ; on  the  other  hand  I have  paid  a cent  a bushel  myself 
out  of  my  pocket ; when  the  grain  got  here  I have  had  to  pay  a cent  a 
bushel  more  ; I think  I have  paid  as  high  as  a cent  and  a quarter. 

Q.  Have  you  any  objections  to  stating  how  much  capital  it  requires 
to  carry  on  your  business  ? 

A.  That  is  more  than  I can  tell  ; it  takes  some. 

Q.  Can  you  approximate  it  — if  you  consider  that  it  is  an  improper 
question  I will  not  insist  upon  it  ? 

A.  May  be  there  is  some  other  gentleman  that  can  tell  you  better 
than  I can. 

Q.  Well,  then,  we  will  not  insist  upon  an  answer.  Then  you  con- 
tract to  send  the  property  through  at  a certain  rate,  and  if  upon  the 
property  arriving  here  the  rate  is  less  it  is  to  your  advantage  ? 

A.  Yes,  sir. 

Q.  And  if  it  is  higher  it  is  to  your  loss  ? 

A.  Yes,  sir  ; we  pay  it. 

Q.  That  is  the  practice  ? 

A.  Yes,  sir  ; and  furthermore  where  we  have  stuff  and  these  men 
up-stairs  have  it  we  won’t  bear  down  the  rate  ; we  give  the  men  the 
boats  and  go  on. 

Q.  Have  you  ever  paid  shippers  a rebate  ? 

A.  I have. 

Q.  How  much  ? 

A.  I don’t  know  ; I have  paid  considerable  ; I cannot  tell  for  cer- 
tain ; I wouldn’t  like  to  say  how  much ; I have  paid  shippers  rebate 
and  never  charged  the  boatmen,  but  paid  it  myself. 

Q.  Why  do  you  pay  that  rebate,  and  what  benefit  is  it  to  you  di- 
rectly or  indirectly  ? 

A.  Sometimes  I have  a boat  of  my  own  that  wants  to  get  out,  or 


336 


some  captain  wants  to  get  out  his  boat,  and  I will  give  something  to 
get  the  load  to  get  him  out. 

Q.  What  is  the  object,  just  to  get  him  out? 

A.  Yes,  sir  ; ho  cannot  afford  to  lay  here  ; he  has  got  four  horses 
and  a crew  on  his  hands,  and  he  cannot  afford  to  lay  here. 

Q.  Is  there  anybody  cheated  ? 

A.  The  man  that  pays  it  loses  the  ten  dollars. 

Q.  He  is  not  cheated  because  he  goes  in  with  his  eyes  wide  open  ? 

A.  It  is  just  as  you  may  call  it. 

Q.  I mean  is  there  any  cheating  about  it  ? 

A.  I don’t  know  as  there  is  any  cheating, 

Jacol)  Shaver,  Jr.,  sworn  and  examined  by  Mr.  BROWiTiNG,  testified 
as  follows : 

Q.  Where  do  you  reside  ? 

A.  Buffalo. 

Q.  What  is  your  business  ? 

A.  Well,  forwarding  and  commission,  mostly  forwarding, 

Q.  Are  you  also  known  as  a scalper  ? 

A,  Yes,  sir. 

Q.  And  you  act  as  the  agent  for  the  canal  boatmen  ? 

A.  Yes,  sir;  agent  and  sometimes  a little  bit  of  proprietorship. 

Q.  Are  you  an  owner  of  canal  boats  ? 

A.  Well,  I have  got  some  little  interest,  my  partner  likewise. 

Q.  When  you  act  for  boats  not  under  your  own  control  then  you 
act  as  agent  for  those  boats  ? 

A.  Yes,  sir;  or  for  the  principals. 

Q.  How  long  have  you  been  engaged  in  that  business  ? 

A.  Between  eighteen  and  nineteen  years. 

Q.  Are  you  familiar  with  the  system  of  dealing  in  futures  and  op- 
tions? 

A.  Do  you  mean  buying  and  selling  in  Chicago  ? 

Q.  Yes,  sir. 

A.  Well,  I have  done  very  little  at  it. 

Q.  Do  you  think  speculation  ingrain  is  a benefit  or  an  injury  to  the 
trade  ? 

A.  According  to  what  I read  these  corners  are  very  bad  for  the 
country,  but  as  far  as  I am  concerned  what  speculation  I have  done  is 
about  like  a drop  of  w'ater  to  the  Buffalo  river.  I speculated  in  135,- 
000  bushels  two  years  ago,  and  paid  about  $300  in  commissions  and 
telegrams.  We  small  fry  on  the  dock,  whatever  we  do  we  think 
doesn’t  amount  to  any  thing,  it  is  mostly  done  in  Chicago,  and  it  is 
done  there  very  largely.  Dealing  in  millions  every  day. 


337 


Q.  Not  much  of  that  carriea  on  here  ? 

A.  Not  a great  deal,  there  may  be  some  few  houses. 

Q.  Do  you  concur  with  the  other  witnesses  in  the  opinion  that  it  is 
a species  of  gambling  ? 

A.  In  some  instances  I think  it  is  a very  good  thing. 

Q.  Why  ? 

A.  Well,  sir,  if  you  were  a dealer  in  grain  largely  in  New  York  and 
should  buy  100,000  or  200,000  bushels  of  wheat,  and  started  it  on  board 
a vessel  in  Oliicago  and  the  market  swung  down  fifteen  or  twenty  cents, 
there  is  no  chance  for  you  to  cover  while  it  is  in  transit,  without  you 
sell  short  against  it,  and  then  you  can  save  yourself.  If  you  bought 
this  property  and  it  was  on  the  lake  you  couldn’t  dispose  of  it,  while 
if  you  laid  around  and  sold  short  you  could  get  out  in  that  way.  I 
have  known  instances  where  there  has  been  losses  from  $1,000  to  $2,- 
000  on  a load  of  corn  and  a load  of  wheat. 

Q.  Do  you  look  upon  speculations  in  futures  as  buying  what  you 
don’t  want  and  selling  what  you  haven't  got  ? 

A.  If  they  don’t  corner  it.  The  capitalists  buy  up  every  thing  and 
drive  them  into  a corner  and  run  up  the  price  sometimes  ten  cents  a 
day.  They  did  so  last  spring. 

Q.  You  think  that  is  a good  thing  or  a bad  thing  ? 

A.  I think  it  is  a bad  thing. 

Q.  And  ought  to  be  prevented  if  it  is  possible  ? 

A.  Yes,  sir.  It  is  an  injury  to  the  country  ; it  is  an  injury  to  the 
consumer. 

Q.  It  increases  the  prices  over  the  natural  value,  and  the  burden  falls 
upon  the  consumer  ? 

A.  There  is  no  question  about  that. 

Q.  As  the  agent  of  the  canal  boatman  making  rates  and  securing  a 
good  price  for  carrying  grain,  do  you  try  to  get  as  high  a price  as  possi- 
ble for  doing  this  business  ? 

A.  Most  certainly  we  do. 

Q.  You  think  it  is  your  duty  as  agent  for  the  canal  boatman  to  get 
as  much  as  you  can  so  that  they  could  make  a good  living  ? 

A.  Yes,  sir;  yesterday  I took  it  at  five  and  three-quarters  and  to- 
day at  six  cents  on  wheat. 

Q.  You  make  contracts,  do  you  ? 

A.  We  do. 

Q.  When  you  make  a contract  do  lyou  give  the  same  price  to  the 
boatman  ? 

A.  No,  sir;  not  always. 

Q.  When  the  rate  is  lower  than  the  contract  you  pay  the  rate,  in 


43 


338 


other  ’vvords  if  tlic  contract  calls  for  six  cents  and  on  the  day  the  grain 
arrives  the  rate  is  five  and  one-half  cents  you  i)ay  five  and  one-half? 

A.  We  pay  the  highest  rate,  but  we  don’t  pay  the  jirice  we  take  it  at. 

Q.  You  pay  the  current  price  ? 

A.  Yes,  sir;  I know  we  don’t  always  bear  the  price  down.  When 
we  have  any  grain  on  hand  we  have  to  make  or  lose  it  out  of  tlio  con- 
tract, and  we  veiy  often  give  a quarter  of  a cent  a bushel  more  because 
we  have  got  this  stuff  on  hand,  and  it  pays  us  a profit  that  we  don’t  go 
to  a lake  receiver  and  get.  Say  the  price  is  five  cents  on  grain  that  is 
all  we  can  get  from  the  receiver  ; su])pose  we  have  a lot  on  liand  and 
we  give  it  to  the  boatman  at  five  and  one-quarter,  it  is  nothing  out  of 
our  pocket. 

Q.  When  you  find  upon  the  arrival  of  the  grain  that  the  rate  is 
lower  than  the  contract  price,  you  send  it  through  on  the  rate  quoted 
that  day,  and  consider  that  a fair  business  transaction,  and  the  differ- 
ence between  that  rate  and  what  the  contract  calls  for,  that  is  your 
profit,  over  the  percentage  that  you  receive  from  the  canal  boatman  ? 

A.  I don’t  know  as  1 clearly  understand  you  ; grain  comes  here  and 
sometimes  lays  two  or  three  days. 

Q.  Is  it  a fact  that  grain  that  is  contracted  to  he  sent  right  through 
can  remain  here  two  or  three  days  ? 

A.  Yes,  sir. 

Q.  Yot  obliged  to  go  right  through  ? 

A.  Yo,  sir. 

Q.  Grain  that  you  contract  to  forward  at  a certain  rate  ? 

A.  Yes,  sir;  sometimes  you  have  got  to  wait  two  days  for  it. 

Q.  Must  wait  two  days  ? 

A.  Sometimes  we  do,  because  the  vessel  cannot  get  to  the  elevator 
to  discharge. 

Q.  It  is  only  in  not  getting  up  to  the  elevator  ? 

A.  Yes,  sir. 

Q.  It  is  not  optional  with  you  not  to  forward  it  right  through  ? 

A.  I don’t  consider  it  an  injury  not  to  forward  it. 

Q.  Have  you  a discretion  in  the  matter. 

A.  They  don’t  push  us  very  strongly  at  times;  say  grain  is  bought 
for  delivery  the  first  of  October,  sometimes  a delay  here  of  four  or  five 
days  is  a benefit  to  the  people  in  Yew  York,  for  if  the  grain  eomes 
down  tliere  two  or  three  days  ahead  they  have  to  pay  a demurrage  or 
put  it  in  store,  so  that  the  owners  of  the  grain  are  not  in  a great  hurry. 

Q.  Isn’t  it  a fact  that  when  you  make  a contract  to  forward  grain 
at  six  cents  that  the  scalper  tries  to  get  a lower  rate  than  that? 

A.  In  our  experience  I find  that  it  has  been  more  beneficial  to  the 


339 


men  that  run  to  us  than  it  has  been  an  injury;  we  have  a certain  line 
of,  boats  that  it  is  our  interest  and  it  is  our  duty  to  protect  them  ; 
there  is  a great  deal  of  competition  on  the  Central  wharf,  and  if  we 
don’t  look  ahead  and  procure  freight  for  these  boats  we  would  have 
sometimes  an  accumulation  of  20  or  30  boats,  and  would  stand  no 
better  chance  than  those  that  have  only  three  or  four,  and  we  prefer 
to  take  these  loads  and  pay  the  difference  out  of  our  own  pocket,  and 
sometimes  we  go  and  pay  what  wo  call  this  monkey  money  to  the  ship- 
pers for  the  purpose  of  getting  a load  and  getting  the  boats  off. 

Q.  The  answer  I want  is  whether  you  make  a contract  to  forward 
grain  at  six  cents  we  will  say,  if  you  don’t  try  to  make  a lower  rate, 
or  if  it  is  not  to  your  advantage  to  secure  a lower  rate,  say  five  and 
three-quarters  ? 

A.  You  mean  after  the  grain  arrives  here  and  the  contract  is  six 
cents  and  the  rate  is  six  cents  we  try  to  depress  the  rate  ? 

Q.  Yes,  sir. 

A.  Oh,  no,  we  don’t  do  that. 

Q.  You  have  never  known  where  they  have  tried  to  bear  down  the 
market  ? 

A.  NAt  when  the  price  was  the  same  price  the  day  the  grain  came 
in ; had  we  contracted  it  a half  a cent  a bushel  less,  or  if  we  thought 
the  freight  might  drop  off  a quarter  of  a cent,  probably  we  might  do 
a little  something  that  way. 

Q.  Do  you  think  it  is  possible  to  break  down  the  market  so  you  could 
get  it  at  a less  rate  than  six  cents  ? 

A.  I don’t  think  it  would  be  any  interest  for  them  to  do  it,  because 
they  get  their  commission.  If  they  had  contracted  it  at  five  and  one- 
half  cents,  and  the  freight  was  six  cents  and  they  thought  there  was 
any  possibility  of  the  freight  going  a little  lower  they  might  possibly 
try  to  depress  it. 

Q.  You  think  it  has  been  done  ? 

A.  It  probably  has. 

Q.  You  think  it  is  possible,  and  that  it  has  been  done,  that  where 
the  rate  is  six  cents  and  the  contract  is  five  and  one-half  they  have 
made  a syndicate  and  tried  to  bear  the  market  down  to  save  their 
losses? 

A.  It  might  be. 

Q.  Are  you  a canal  boat-owner  ? 

A.  I have  got  some  little  interest,  not  a great  deal. 

Q.  Have  you  ever  paid  a rebate  to  the  shipper  ? 

A.  Yes,  sir. 

Q.  How  much  ? 


340 


A.  For  a great  many  years,  considerable;  more  than  I wish  I had, 
more  than  I like  to  think  about. 

Q.  Do  you  keep  a record  of  these  transactions? 

A.  No,  I don’t  think  I keep  that  account  ; I didn’t  want  to  see  it. 
Q.  To  your  best  recollection  whom  have  you  paid  a rebate  to  ? 

A.  I don’t  wish  to  answer  that  question.. 

Q.  You  decline  to  answer  that  question  ? 

A.  I don’t  wish  to. 

Q.  Have  you  ever  received  a rebate  from  the  shipper  ? 

A.  No,  sir,  I don’t  think  I ever  did. 

Q.  Have  you  ever  received  a rebate  from  anybody  else  ? 

A.  We  couldn’t  receive  a rebate  from  anybody  else,  except  the 
shipper . 

Q.  Whom  do  you  do  business  with  for  the  canal  boats,  for  the  grain 
or  for  canal  boats  — when  the  grain  arrives  you  pay  the  back  charges? 
A.  Yes,  sir. 

Q.  Any  rebate  on  that? 

A.  No,  sir,  we  simply  give  our  checks  for  the  back  charges. 

Q.  Do  you  pay  the  insurance  ? 

A.  Yes,  sir,  we  get  the  boats  insured  and  charge  the  boat  and  pay  it 
to  the  insurance  company. 

Q.  Is  there  any  rebate  from  the  insurance  company  ? 

A.  Not  a cent. 

Q.  Did  you  ever  hear  of  a rebate  being  paid  by  the  insurance  com- 
pany ? 

A.  Yes,  sir;  we  used  to  get  that. 

Q.  How  much  ? 

A.  I think  the  highest  we  ever  got  was  twenty  per  cent. 

Q.  Have  they  stopped  that  ? 

A.  Yes,  sir. 

Q.  How  long  ? 

A.  Ever  since  our  friend  from  Onondaga  got  up  that  law. 

Q.  You  refer  to  Mr.  Alvord  ? 

A.  I do. 

Q.  If  there  has  been  any  rebate  paid  by  any  insurance  company 
since  tliat  time  it  has  been  in  violation  of  the  law  ? 

A.  We  always  consider  it  so,  that  is,  we  never  have  received  any. 

Q.  'Twenty  per  cent  is  the  highest  you  have  ever  known  of  being 
paid  by  the  insurance  company? 

A.  Yes,  sir. 

(1.  Did  the  canal  boatmen  get  the  benefit  of  that? 

A.  No,  sij-. 


341 


Q.  Who  did? 

A.  We  did. 

Q.  As  the  agent  of  the  canal  boatmen  ? 

A.  Certainly ; we  cannot  work  for  nothing ; we  paid  thirteen  per 
cent  interest  at  that  time. 

Q.  When  you  make  a contract  is  that  upon  3"our  own  motion,  or  do 
tlie  canal  boatmen  ask  you  to  contract  the  through  freights  for  them  ? 

A.  We  don’t  ask  them  any  thing  in  regard  to  it. 

Q.  You  don’t  consult  them  in  regard  to  that  ? 

A.  No,  sir. 

Q.  That  is  independent  of  your  relation  as  agent  of  the  canal  boat- 
men ? 

A.  Yes,  sir. 

Q.  So  that  you  really  carry  on  a business  oi  your  o\yn  as  contractor, 
and  another  business  as  canal  agent  ? 

A.  When  we  do  contract  it  is  upon  our  own  responsibility. 

Q.  Then  you  make  your  own  deals  and  make  as  much  as  you  can, 
and  if  you  lose  it  is  upon  your  own  responsibility  ? 

A.  Yes,  sir. 

Q.  If  you  don’t  lose  then  the  boatmen  get  the  benefit  of  it  as  well 
as  you  do  ? 

A.  No,  sir  ; if  we  should  contract  at  six  cents  and  the  freight 
should  only  be  five  and  a half,  we  would  be  very  foolish  to'give  them 
the  one-half  cent. 

Q,.  Then  you  make  the  difference  ? 

A.  A^es,  sir  ; because  we  lose  oftener  than  we  gain,  that  is  in  dollars 
and  cents  we  do.  For  the  last  two  years,  in  consequence  of  the  crops 
being  light,  the  supply  of  grain  has  been  very  limited  for  the  boatmen, 
that  is  for  the  demand  of  boats,  and  the  concern  that  has  a great 
many  boats  running  to  them,  they  must  do  something  to  protect  their 
interest  if  they  lose  money  ; they  have  got  to  have  grain  coming  ; 
sometimes  I have^seen  it  only  200,000  or  300,000  bushels  of  grain  on 
the  way  down.  If  you  had  three  or  four  boats  on  the  way  up  from 
Troy  3^011  would  look  out  for  grain  for  them  ; if  there  was  plenty  of 
grain  coming  there  would  be  no  benefit  in  getting  these  contracts. 

Q.  But  the  customers  don’t  get  the  benefit  of  the  contract? 

A.  I don’t  see  as  they  will  turn  around  and  pay  us  a quarter  of  a 
cent  on  a bushel  if  we  lose. 

Q.  If  you  were  really  the  agent  of  the  canal  boatmen  and  represented 
the  canal  boatmen  you  would  make  the  contract  and  pay  the  canal 
boatmen  just  what  the  contract  called  for,  and  if  it  was  six  cents  and 
the  rate  was  five  and  one-half  you  would  pay  the  six  cents,,  and  if  it 


342 


was  six  cents  the  canal  boatmen  would  have  to  take  it  at  six  cents,  hut 
you  make  a contract  and  if  the  rate  is  lower  you  take  advantage  of  it, 
and  if  it  is  higher  you  say  you  pay  the  difference,  so  that  yon  are  an 
agent,  only  you  are  not  an  agent? 

A.  As  I understand  it,  according  to  your  remark  they  shall  eat  the 
turkey  and  we  eat  the  crow,  or  we  eat  tlie  crow  and  they  eat  the 
turkey,  all  the  time  ; you  cannot  hold  them  to  any  thing  without  you 
have  it  written  in  black  and  white,  and  then  they  will  try  to  s(piirm 
out;  how  would  it  be  with  them  if  they  should  lie  here  thirteen  or 
fourteen  days  without  a load,  would  they  say  we  were  looking  out  for 
their  interest  if  we  got  the  highest  price  here  when  they  got  ready  to 
load? 

Q.  You  carry  on  a separate  and  distinct  business  of  your  own  as  a 
contractor,  and  I don’t  see  but  the  boatman  is  obliged  to  take  the 
rate,  no  matter  what  the  contract  may  call  for,  whether  more  or  less  ? 

A.  I don’t  know  whether  you  consider  us  agents  of  the  boatmen,  or 
what ; all  there  is  about  it  is  this,  if  we  go  and  get  a cargo  of  wheat  of 
the  shippers  up  stairs  they  hold  us  responsible  as  proprietors ; if  there 
is  any  loss  they  don’t  look  to  the  boatmen,  but  look  to  us  ; now,  what 
are  we?  Are  we  agents,  or  are  we  proprietors  ? 

Q.  You  will  pardon  me,  but  I want  to  tell  you  that  there  has  been 
a great  many  hard  stories  told  down  at  Albany  about  the  scalpers, 
and  what  I am  trying  to  get  at  is  the  true  inwardness  of  the  scalping 
at  this  point,  and  if  I am  trying  to  get  at  the  bottom  of  it,  I have  no 
interest  in  the  matter,  except  to  find  out  what  there  is  in  the  subject  ? 

A.  I would  like  to  give  you  all  I can  ; I don’t  think  there  are  many  of 
us  that  have  been  engaged  in  the  business  twenty  or  twenty-five  years 
that  have  made  a dollar  out  of  it ; I think  the  brotherhood  of  what  is 
called  the  scalpers  has  advanced  out  $300,000  that  I would  not  give  a cent 
for ; I mean  when  we  take  a lot  of  grain  and  put  it  on  the  canal  boat, 
if  any  thing  happens,  if  the  captain  runs  away  or  if  it  is  taken  off,  as 
happened  at  Weedsport  last  fall,  we  have  to  see  that  grain  through  at 
a loss  ; now,  what  are  we  ? Are  we  agents,  or  are  w^)roprietors  ? 

Q.  I give  it  up. 

A.  And  we  pay  the  party  in  New  York  to  do  the  business  down 
there  ; now,  if  that  is  an  agency,  then  we  are  agents,  and  if  it  is  pro- 
prietorship, then  we  are  proprietors. 

Edward  Oallagker,  sworn  and  examined  by  Mr.  Bkowning,  testified 
as  follows : 

Q.  Where  do  you  reside  ? 

A.  Buffalo. 


343 


Q.  What  is  your  business  ? 

A.  Forwarding  commission  merchant,  and  commonly  called  scalpers, 
Q.  How  long  have  you  been  in  that  business  ? 

A.  Twenty-two  years. 

Q.  Are  yon  the  Mr.  Gallagher  who  was  a member  of  the  Legislature 
some  years  ago  ? 

A.  Yes,  sir. 

Q.  Eepresented  the  district  from  Erie  county  ? 

A.  Yes,  sir. 

Q.  Are  you  familiar  with  the  system  of  dealing  in  futures  and 
options  in  grain  ? 

A.  Not  very  familiar,  Senator. 

Q.  Enough  to  say  whether  it  is  a good  thing  or  bad  thing  for  com- 
merce and  business  generally  ? 

A.  I think  it  is  very  detrimental,  sir,  to  the  business  interests  of  the 
country. 

Q.  And  ought  to  be  stopped  if  it  is  possible  ? 

A.  If  it  is  a possible  thing,  yes,  sir. 

Q.  Do  you  regard  it  as  a species  of  gambling  ? 

A.  I do,  sir. 

Q.  And  disastrous  to  the  morals  of  the  community  ? 

A.  Yes,  sir. 

Q.  Are  you  familiar  with  the  charges  made  by  the  elevators  here  for 
transferring  grain  ? 

A.  Somewhat. 

Q.  Do  you  think  they  are  too  high  or  too  low  ? 

A.  I think  the  present  rate  of  elevation  is  too  high. 

Q.  How  much  ? 

A.  I think  half  a cent  a bushel  is  a fair  compensation  for  transfer- 
ring grain  in  Buffalo,  or  any  other  place. 

Q.  And  in  reaching  that  conclusion  have  you  given  the  matter  suffi- 
cient consideration  to  justify  yourself  ? 

A.  I think  I have. 

Q.  You  think  half  a cent  is  sufficient? 

A.  Yes,  sir. 

Q.  As  a scalper  do  you  act  as  the  agent  of  the  canal  boatmen  ? 

A.  I do,  sir. 

Q.  Try  to  secure  them  a high  rate  of  freight  ? 

A.  I. do. 

Q.  Are  you  the  owner  of  canal  boats  ? 

A.  No,  sir;  not  now.  I ffave  formerly. 

Q.  Are  you  a contractor  ? 

A.  I do  something  in  that  line  of  business. 


344 


Q.  Are  you  a member  of  a firm  ? 

A.  Yes,  sir. 

Q.  What  is  the  name  of  your  firm  ? 

A.  Gallagher,  Bissell  & Company. 

Q.  Mr.  Bissell  is  a member  of  the  Legislature,  also  ? 

A.  Yes,  sir. 

Q.  Did  you  hear  what  Mr.  Shaver  said  on  this  subject? 

A.  Yes,  sir. 

Q.  Do  you  agree  with  him  ? 

A.  I do,  sir. 

Q.  Substantially? 

A.  Yes,  sir;  I didn’t  hear  it  all. 

Q.  In  relation  to  his  dealings  with  the  canal  boatmen  and  shippers 
with  regard  to  forwarding  grain.  He  stated  when  the  rate  was  lower 
than  the  conti*act  price  he  paid  the  rate  and  made  a profit  off  the  con- 
tract, and  when  the  rate  was  higher  than  the  contract  he  paid  the  dif- 
ference and  suffered  the  loss  ; is  that  the  way  you  do  ? 

A.  I coincide  with  him  fully.  As  a representative  of  a good  many 
boats  I agree  with  him  that  he  has  had  to  reach  out  and  contract  ahead 
in  order  to  provide  for  his  boats,  as  I have,  or  our  firm.  lie  has  very 
often  had  ten  or  twelve  or  fifteen  boats  a day,  and  our  house  has  and 
the  supply  here  was  not  equal  to  the  demand  at  the  time,  and  he  has 
reached  out  ahead  to  contract  freight  for  his  boats  in  order  to  keep  his 
boats  going. 

Q.  Did  you  ever  pay  a rebate  for  a load  ? ' 

A.  I have,  sir,  vyry  often. 

Q.  Have  you  ever  received  a rebate  from  an  insurance  company  ? 

A.  No,  sir. 

Q.  Have  not  ? 

A.  Yes,  sir  ; I have,  oh,  yes. 

Q.  Do  you  remember  how  much? 

A.  From  ten  to  twenty  per  cent  in  times  gone  by  ; but  not  for  the 
last  two  years.  We  are  working  under  the  operation  of  the  new  law. 

Q.  That  was  some  years  ago  ? 

A.  Yes,  sir  ; previous  to  two  years  ago  we  used  to  receive  from  ten  to 
twenty  per  cent. 

Q.  That  was  your  profit  ? 

A.  Yes,  sir? 

Q.  Do  you  know  any  thing  about  the  charges,  the  port  charges  in 
New  York  ? 


345 


A.  I know  what  they  charge  the  boats. 

Q.  Do  you  think  the  charges  are  too  much  ? 

A.  Half  a cent  a bushel  ? 

Q.  Yes,  sir. 

A.  No,  sir. 

Q.  Is  that  the  charge,  half  a cent  a bushel  at  New  York  ? 

A.  Yes,  sir,  that  is  what  they  charge  the  boats. 

Q.  Do  you  think  the  wharfage  is  too  high  ? 

A.  There  ought  not  to  be  any  wharfage  at  all.  We  never  have 
charged  a cent  here. 

Q.  Is  the  wharfage  just  as  good  here  as  it  is  there  ? 

A.  Better  ; I think  it  is  free  for  all  that  comes  to  our  port.  If  a 
vessel  comes  in  loaded  with  coal  she  goes  to  the  coal  docks  and  is  not 
charged  one  cent  for  wharfage,  and  it  is  so  with  the  canal  boats  and 
schooners ; and  ought  to  be  so  in  New  York,  or  any  other  receiving 
point  in  this  State. 

Q.  Is  there  any  thing  else  that  you  desire  to  say,  Mr.  Gallagher  ? 

A.  No,  sir,  unless  you  desire  to  ask  me  some  questions  ? 

Q.  As  a man  who  has  been  a member  of  the  Legislature  and  given 
this  question  some  consideration,  are  you  prepared  at  this  time  to  offer 
any  suggestion  to  the  committee  as  to  how  these  evils  may  be  pre- 
vented in  the  future  with  regard  to  the  speculations  in  grain  ? 

A.  No,  sir,  I don’t  know  that  I am.  There  is  a law  on  the  statute 
books  of  the  State  of  Illinois  prohibiting  the  dealings  in  options,  but 
there  is  more  going  on  in  that  State  than  in  any  other  State  probably; 
they  don’t  seem  to  enforce  the  law. 

Q.  Do  you  know  any  thing  about  the  bucket-shops  in  Buffalo  ? 

A:  No,  sir,  I do  not ; there  are  some  here,  but  I don’t  know  to  what 
extent  they  deal. 

Q.  You  cannot  speak  from  experience  or  from  your  own  knowledge  ? 

A.  No,  sir. 

William  Avery,  sworn  and  examined  by  Mr.  Browning,  testified 
as  follows  : 

Q.  Where  do  you  reside? 

A.  Onondaga  county. 

Q.  Where  do  you  do  business  ? 

A.  Here  in  Buffalo. 

Q.^  How  long  have  you  been  doing  business  here  ? 

A.  Twenty  years. 

Q.  What  is  your  business? 


44 


346 


A.  Scalper. 

Q.  Have  you  had  any  experience  in  buying  or  selling  options  and' 
futures  and  making  corners? 

A.  No,  sir. 

Q.  Wiiat  can  you  say  from  observation,  is  it  a good  thing  or  bad 
thing  for  the  commercial  business  of  the  country  ? 

A.  I think  it  is  just  as  legitimate  as  one  hundred  of  other  tilings 
going  on,  sir  ; there  is  plenty  of  all  such  tricks  played : if  one  is  good 
the  other  one  is. 

Q.  At  the  same  time  you  don’t  think  it  is  very  good,  do  you  ? 

A.  I have  not  considered  it  much  ; I only  speak  from  observations 
and  the  way  the  machine  is  running  generally  through  the  country. 

Q.  Are  you  aware  that  speculations  in  grain  has  a tendency  to  in- 
crease its  price  from  the  natural  value  ? 

A.  No,  sir. 

Q.  You  don’t  know  that  to  be  a fact? 

A.  No,  sir. 

Q.  Are  you  familiar  with  the  charges  made  by  the  elevators  for 
transferring  grain  ? 

A.  All  I know  about  it  is  what  I have  heard;  I never  examined 
the  books. 

Q.  What  did  you  hear  on  the  subject  ? 

A.  I heard  that  it  is  -three-quarters  of  a cent  to  the  grain,  and 
seven-eighths  to  a vessel. 

Q.  You  don’t  know  whether  that  is  too  much  or  too  little? 

A.  I think  it  is  too  much. 

Q.  How  much  too  much  ? 

A.  I think  grain  ought  to  be  transferred  forh^^lf  a cent  a bushel. 

Q.  That  opinion  is  based,  however,  upon  what  you  have  heard ; not 
from  any  personal  knowledge  or  experience  ? 

A.  That  is  all. 

Q.  As  a scalper  do  you  act  as  the  agent  of  the  canal  boatmen  ? 

A,  I don’t  know  what  you  call  it,  agent  or  what;  we  generally  have 
to  foot  our  own  bills,  we  don’t  look  back  to  anybody;  we  load  the 
boats  and  charge  them  a commission  ; there  don’t  anybody  know  these 
boats  but  us  ; we  take  our  property  from  different  individuals  and 
agree  to  deliver  it  in  New  York  at  such  a price  ; we  don’t  tell  them, 
we  are  agents,  or  any  thing  about  it;  we  take  50,000  or  00,000  bushels 
and  agree  t(j  carry  it  through  ; we  don’t  tell  them  we  are  tln^  agents 
or  any  thing  about  it. 

Q.  They  don’t  know  whether  you  are  the  agent  or  not? 

A.  No,  sir;  they  don’t  know  what  boat  we  are  going  to  put  it  on 
when  we  take  it. 


347 


Q.  In  other  words  you  are  doin^  business  on  your  own  hook  ? 

A.  We  are  doing  business  on  our  hook,  as  I look  at  it. 

Q.  Independent  of  the  shipper  and  independent  of  the  boatman  ? 

A.  Yes,  sir. 

Q.  When  you  make  out  a bill  of  lading  how  do  you  put  your  name 
on  it? 

A.  I don’t  put  our  name  on  it. 

Q.  You  don’t  qall  yourself  an  agent  ? 

A.  I don’t  know  — in  one  sense  of  the  word  I do  not,  another  one 
I do. 

Q.  What  is  the  practice  of  the  other  gentlemen  engaged  in  your  busi- 
ness, do  they  put  their  name  down  as  the  agent  of  the  boatman  ? 

A.  r could  not  tell  you  ; I don’t  know  whether  they  consider  them- 
selves agents  or  proprietors,  or  what  I am  sure.  I know  if  I take  a load 
of  grain  I calculate  I have  got  to  deliver  it. 

Q.  You  look  after  your  own  interests  and  make  your  own  profits  and 
carry  on  your  own  affairs  independent  of  the  shippers  and  canal  boat- 
men so  far  as  the  transactions  of  your  own  house  are  concerned  ? 

A.  Yes,  sir,  intend  to;  I don’t  go  to  acanaler  and  ask  whether  I can 
get  him  a load  or  not. 

Q.  Do  you  pay  rebates  to  shippers  ? 

A.  Yes,  sir,  I have. 

Q.  What  consideration  did  you  get  for  that  ? 

A.  We  got  so  much  out  of  pocket. 

Q.  You  lose  so  much  money  by  paying  rebates? 

A.  Yes,  sir,  we  lose  so  much  money  by  paying  rebates. 

• 

Joseph  E.  Hadcock,  sworn  and  examined  by  Mr.  BKOWi^i]N’G,  testified 
as  follows : 

Q.  Where  do  you  reside  ? 

A.  Buffalo. 

Q.  What  is  your  business  ? 

A.  I am  in  the  forwarding  commission  business. 

A.  Do  they  call  you  a scalper? 

A.  Sometimes. 

Q.  Do  business  here  ? 

A.  Yes,  sir. 

' Q.  How  long  have  you  done  business  here  ? 

A.  Twenty-five  years. 

Q.  Are  you  familiar  with  the  system  of  dealing  in  futures  and  op- 
tions and  making  corners  in  grain? 

A.  I am  not  familiar  with  corners  ; I have  dealt  in  futures  a little. 


348 


Q.  Where  ? 

A.  Here  and  in  New  York. 

Q.  On  the  Board  of  Trade  or  in  the  bucket-shops  ? 

A.  I never  dealt  in  the  bucket-shops  as  I know  of. 

Q.  On  the  Board  of  Trade  ? 

A.  Yes,  sir  ; and  in  New  York  ; T had  an  agent  do  it  in  New  York 
and  in  Chicago. 

Q.  Do  you  think  'it  has  a beneficial  or  disastrous  tendency  on  the 
trade  ? 

A.  It  has  been  beneficial  to  me. 

Q.  You  have  panned  out  all  right  ? 

A.  I don’t  know  about  it. 

Q.  They  do  lose  sometimes  ? 

A.  Yes,  sir  ; I have  lost. 

Q.  What  has  been  beneficial  ? 

A.  Well,  in  the  end  I am  not  any  thing  out,  I guess. 

Q.  But  we  are  not  speaking  of  yourself,  we  are  speaking  about  the 
consequences  to  the  public  ; do  you  think  it  is  a good  or  bad  thing 
for  the  business  in  commerce  generally  ? 

A.  I don’t  believe  I am  able  to  judge  about  anybody  else’s  business; 
I have  lieard  of  others  that  have  not  been  benefited. 

Q.  Are  you  familiar  with  the  charges  of  elevating  grain  here  ? 

A.  Sonne  what. 

Q.  Do  you  think  the  charges  are  too  high  or  too  low  ? 

A.  That  I am  not  able  to  state. 

Q.  You  are  not  able  to  state  ? 

A.  No,  sir;  you  can  get  elevating  done  here  at  about  five-eighths 
of  a cent  a bushel,  and  I don’t  think  that  is  far  out  of  the  way. 

Q.  When? 

A.  Last  summer. 

Q.  This  last  summer  ? ^ ^ 

A.  Yes,  sir. 

Q.  By  whom  ? 

A.  Different  elevators. 

Q.  By  the  association  ? 

A.  If  you  had  any  grain  here  you  could  have  it  elevated  for  five- 
eighths  of  a cent  a bushel. 

Q.  Do  you  know  that  to  be  a fact? 

A.  Yes,  sir. 

(2.  Can  you  mime  any  one  who  would  do  it  for  that  ? 

A.  No,  sir;  I would  not  like  to;  but  it  has  been  done;  that  is 
wliat  1 have  |)ai(l  ; I have  received  grain  and  paid  about  that  rate. 


349 


Q.  As  a scalper  do  you  act  as  the  agent  of  the  canal  boatmen  ? 

A.  We  don’t  sign  our  bills  as  agent,  we  just  sign  them  our  own 
names. 

Q.  So  that  you  never  commit  yourselves  ? 

A.  I don’t  know  whether  we  commit  ourselves  or  not. 

Q.  As  agent,  or  not  ? 

A.  We  don’t  sign  any  bill  of  lading  as  agent,  at  all  ? 

Q.  Then  you  are  not  liable  ? 

A.  We  are  liable  if  we  sign  a bill  of  lading,  responsible  for  the  bill 
of  lading,  as  I understand  it ; to  see  that  the  property  is  delivered  in 
New  York,  and  if  there  is  any  disaster  happens  to  the  boat  we  are  re- 
sponsible; we  have  to  forward  it. 

Q.  You  are  protected  by  the  insurance,  are  you  not  ? 

A.  We  get  an  insurance  certificate,  but  turn  it  over  to  the  shipper, 
part  of  it,  and  retain  part  of  it  ourselves,  enough  to  cover  our  charges 
and  advances,  we  calculate. 

Q.  What  I want  to  get  at  is  whether  you  consider  yourselves  the 
agent  of  the  canal  boatmen,  or  not  ? 

A.  No,  sir  ; I don’t  consider  myself  the  agent. 

Adam  Homer,  sworn  and  examined  by  Mr.  Browning,  testified  as 
follows : 

Q.  Where  do  you  live  ? 

A.  Buffalo. 

Q.  What  is  your  business? 

A.  Scalper. 

Q.  How  long  have  you  been  engaged  in  that  business  ? 

A.  About  fifteen  years. 

Q.,  Where  do  you  do  business  ? 

A.  In  Buffalo. 

Q.  Are  you  familiar  with  the  charges  for  elevating  ? 

A.  Somewhat. 

Q.  Do  you  think  they  are  too  high  or  too  low  ? 

A.  That  is  not  for  me  to  decide,  sir. 

Q.  Are  you  familiar  with  the  system  of  dealing  in  futures  and  op- 
tions and  making  coruers  on  grain  ? 

A.  Not  much. 

Q.  Did  I understand  you  to  say  you  acted  as  the  agent  of  the  canal 
boatmen  ? 

A.  We  do  not,  no,  sir. 

Q.  Are  you  a contractor  ? 

A.  Sometimes. 


350 


Q.  And  on  the  day  the  grain  arrives  you  ship  at  the  rate  quoted  tliat 
day? 

A.  The  market  price,  yes,  sir. 

Q.  And  you  would  pay  that  ? 

A.  Yes,  sir ; sometimes  a little  more. 

Q.  Not  more  than  the  market  price  ? 

A.  Yes,  sir  ; sometimes  we  have  to. 

Q.  More  than  the  market  price  ? 

A.  Yes,  sir. 

Q.  Why? 

A.  Because  we  want  to  get  it  off  quick  and  we  pay  more  for  the  busi- 
ness, and  it  is  a benefit  to  the  boats.  For  instance  I have  six  boats 
lying  here  and  I have  got  a cargo  to  transfer,  I can  Avait  over  night, 
and  some  other  scalper  Avants  to  send  some  grain  right  off  he  Avill  pay 
more  than  the  regular  price  to  get  it  off  that  night,  and  I can  wait 
over  night. 

Q.  And  it  is  a loss  to  you  ? 

A.  No,  sir  ; not  always. 

Q.  It  is  inside  of  the  contract  price  ? 

A.  For  instance  I take  a contract  for  six  cents  and  the  rate  is  five 
and  three-fourths,  I tell  them  if  you  Avant  it  you  can  ha\^e  it  but  you 
haA^e  got  to  put  it  on  such  a night,  and  they  are  Avilling  to  do  it  and  I 
will  give  them  more.  That  is  if  I have  a load  of  grain  that  I Avant 
shipped  immediately. 

Q.  Have  you  ever  paid  shippers  a rebate  ? 

A.  Yes,  sir. 

Q.  Frequently  ? 

A.  Not  very  often. 

Q.  What  benefit  is  that  to  you  ? 

A.  It  is  money  out  of  our  pocket. 

Q.  Why  do  you  do  it  ? 

A.  For  instance  I have  a boat  and  it  wants  to  get  out  and  some  ship- 
per comes  along  and  says,  here,  I will  give  you  this  order  if  you  will 
give  me  ten  dollars,”  and  I give  it. 

Q.  And  still  give  the  boatman  the  same  price  ? 

A.  Yes,  sir. 

Q.  And  that  comes  out  of  your  pocket  ? 

A.  Yes,  sir  ; and  Ave  say  nothing  to  anybody. 

Q.  You  keep  that  quiet? 

A.  Yes,  sir. 

Daniel  A.  Cooney,  SAvorn  and  examined,  testified  as  follows  : 

.\m  clerk  of  the  committee  making  this  investigation. 


351 


Q.  Have  you  been  charged  with  subpoouaing  witnesses  ? 

A.  Yes,  sir  ; I have  subpa3naed  Mr.  Eagather  to  appear  before  this 
committee  this  morning. 

Q.  You  have  subpoenaed  him  to  appear  this  morning? 

A.  Yes,  sir  ; and  he  failed  to  appear. 

Q.  And  were  you  directed  by  the  committee  to  go  and  invite  him 
to  appear  this  afternoon  ? 

. A.  Yes,  sir;  at  two  o’clock. 

Q.  Did  you  go  to  his  office  ? 

A.  Yes,  sir  ; I went  to  his  office  and  saw  Mr.  O’Eourke  and  he  told 
me  Mr.  Eagather  had  told  him  to  say  that  he  had  left  town,  and  Mr. 
O’Eourke  told  me  he  was  up  stairs  and  I looked  through  the  building 
and  could  not  find  him,  and  I met  a stranger  and  we  went  to 
the  Board  of  Trade  rooms  and  found  him  there  ; 1 told  him  that 
the  committee  had  adjourned  to  meet  at  two  o’clock,  and  had  in- 
structed me  to  inform  him  that  they  wished  him  to  bej^resent  at  that 
hour  as  a witness  ; he  told  me  that  it  ’would  be  impossible  for  him  to 
attend,  as  he  had  bought  a cargo  of  corn  and  would  have  to  attend  to 
it,  but  if  the  committee  was  in  session  to-morrow  morning  he  would 
appear  at  any  hour  that  they  might  name. 

Q.  Did  he  make  any  attempt  to  avoid  vou  so  you  could  not  sub- 
poena him  ? 

A.  I cannot  say  that  he  made  any  other  attempt. 

The  committee  adjourned  to  meet  at  the  call  of  the  chair. 

(Copy.) 

[The  following  statement  handed  to  the  clerk  of  the  committee  and 
ordered  to  be  included  in  testimony.] 

Hon.  JoH]sr  G.  Boyd,  Chairman  of  the  State  Senate  Committee  to 

investigate  the  system  of  making  ‘‘corners  and  dealing  in  futures,’’ 

with  reference  to  its  effects  upon  commerce,  etc. 

Dear  Sir — Having  had  a few  moments’  conversation  with  you  at 
the  Tifft  House  on  your  visit  here  last  week  in  relation  to  some  of  the 
testimony  taken  before  your  committee  adverse  to  the  interest  of  the 
Western  Elevating  Company,  I expressed  a desire  to  be  heard  on  the 
subject  as  a representative  of  that  interest.  You  kindly  granted  me 
permission  to  make  such  statement  which  would  be*  reported  by  yc  u 
to  the  committee  and  which  I herewith  append. 

In  the  first  place  it  is  proper  that  it  should  be  distinctly  understood 
the  Western  Elevating  Company  is  not  a corporation.  It  issues  no 
stock  and  is  simplv  an  associated  pool  of  thirty-eight  permanent  and 
floating  elevators,  continuing  in  existence  from  year  to  year.  The 
business  of  issuing  receipts,  collecting  charges,  etc.,  is  done  through 


352 


the  office  of  this  company,  which  acts  on  the  same  principle  as  a clear- 
ing-house. During  the  past  few  years  various  committees  have  inves- 
tigated the  methods  pursued  by  the  company  in  the  transaction  of  its 
business,  and  the  public  press  has  had  more  or  less  to  say  on  the  sub- 
ject. The  reports  presented  have  failed  to  show  that  the  company 
has  been  derelict  in  its  duty  to  the  public,  or  that  the  schedule  of 
charges  are  not  lower  than  at  any  shipping  port  in  the  country.  Some 
persons  who  are  antagonistic  to  the  elevators  still  keep  up  the  cry  of 
exorbitant  terminal  charges  when  they  know  that  the  charges  pay 
but  the  barest  interest  on  the  large  capital  invested,  while  the  benefit 
the  public  derive  from  the  association  are  of  no  small  value. 

By  means  of  this  pooling  arrangement  expenses  are  lessened  ; by  reg- 
ulating the  number  of  elevators  running  according  to  the  fluctua- 
tions incidental  to  the  business. 

Bu:Salo  in  some  respects  isrdifferent  from  other  shipping  points.  The 
receipts  of  grain  may  one  day  be  less  than  100,000  bushels,  and  the 
next  run  to  1,000,000  to  2,000,000  bushels,  and  if  the  grain  trade  is 
to  be  preserved  to  Bufialo,  accommodations  must  be  maintained  in  con- 
siderable excess  of  everyday’s  needs.  It  is  a kind  of  business  that  does 
not  move  with  any  thing  like  the  even  volume  that  has  to  be  dealt 
with  in  ordinary  circumstances.  If  it  did  the  business  could  be  han- 
dled at  lower  rates,  as  a steady  business  would  [employ  dess  capital  and 
render  a smaller  plant  necessary  ; as  it  is  now  the  ample  storage  room 
gives  Buffalo  a great  superiority,  and  wdth  her  elevating  facilities  ves- 
sels are  never  kept  waiting  at  a large  expense. 

Then,  again,  the  business  is  limited  to  a few  months  in  the  year, 
whereas  at  western  ports  the  receiving,  storing  and  forwarding  of  grain 
gives  employment  to  the  elevators  throughout  the  year.  In  Chicago  all 
grain  is  graded  according  to  quality,  and  no  cargo  is  kept  separate,  but 
all  lumped  in  together.  With  us  this  is  not  the  case  ; the  cargoes  are 
all  kept  separate  ; if  there  is  only  400  bushels  in  a 4,000  bushel  bin  no 
more  can  be  put  into  it  until  the  small  amount  is  removed.  Yet  in 
the  face  of  all  these  adverse  circumstances  Buffalo  ^charges  less  than 
any  other  terminal  point,  and  has  to  sustain  the  abuse  that  has  been 
heaped  upon  the  association  for  years  past  by  persons  not  acquainted 
with  the  facts  in  the  case. 

It  is  said  that  figures  are  always  good  proof,  so  let  us  take  a glance  at 
tlie  items  of  the  cost  of  sending  a bushel  of  grain  from  the  west  to 


New  York. 

From  Mississippi  river  to  Chicago 10  cents 

Flcvating  at  Chicago IJ 

Insurance  at  (Chicago ...  ^ “ 

Insurance  on  lake “ 


353 


Lake  freights  (approximates) 4 cents 

Elevating  at  Buffalo f ‘‘ 

Canal  freight  to  New  York C '' 


23|  “ 

Thus  it  will  be  seen  the  Buffalo  elevators  receive  but  three-fourths 
cent  a bushel,  and  yet  the  cost  of  transportation  from  the  west  to  tide- 
water is  laid  at  their  door.  In  1870  the  State  made  a reduction  in  the 
tolls.  The  Western  Elevating  Co.  followed  the  example  thus  set  by 
reducing  their  charges  from  two  cents  to  one  and  one-fourth,  which 
included  the  charge  to  the  vessel  as  well  as  weighing,  elevating  from  the 
vessel  and  spouting  back  into  the  canal  boat.  At  no  time  since  1875 
has  the  total  elevating  to  grain  and  vessel  exceeded  one  cent  a bushel. 
The  price  now  is  three-fourths  cent  to  the  grain,  and  the  lake  vessel 
pays  for  her  own  unloading,  which  is  one-eighth  cent  a bushel,  includ- 
ing weighing.  The  canal  boat  has  the  grain  loaded  into  her  free,  but 
pays  for  her  own  trimming  as  she  agrees  with  laborers,  or  does  it  with 
her  own  crew  ; for  shoveling,  the  money  comes  from  the  vessel,  the 
same  as  if  she  unloaded  railroad  iron,  or  any  other  kind  of  cargo. 

The  experience  we  have  had  as  an  association  proves  the  wisdom  of 
our  course.  At  no  time  during  the  twenty-four  years  of  our  existence 
have  we  charged  as  much  per  bushel  for  elevating  or  storing  grain  as 
we  did  as  individuals  formerly,  except  during  war  times.  The  buyer, 
seller  and  forwarder  have  the  benefit  of  the  policy  p^irsued  fully  as 
much  as  the  members  of  the  association.  Concisely  stated  the  reason 
is  simply  this:  Formerly  an  elevator  had  to  bear  running  expenses 
whether  in  successful  operation  or  not.  What  was  lost  at  one  time  by 
the  cutting  of  rates  was  made  up  by  round  charges  in  the  busy  part 
of  the  season  when  the  consignee  could  have  little  choice  as  to  his 
elevator,  and  was  at  the  mercy  of  the  elevato]-.  Now  during  the  dull 
season  we  can  close  certain  elevators,  and  call  them  into  use  as  occa- 
sion requires,  and  so  cut  down  expenses.  As  far  as  the  large  profits  of 
the  elevators  are  concerned  their  books  will  show  that  the  property 
has  not  j^aid  any  larger  percentage  than  canal  and  vessel  property 
which  is  subject  to  constant  fluctuations.  There  are  no  members  of  the 
association  who  have  grown  rich  out  of  the  business.  There  is  not  an  ele- 
vator for  the  past  ten  or  fifteen  years  that  has  been  built  out  of  money 
made  in  the  business.  Under  the  present  system  it  has  been  a very 
average  business,  and  nothing  more.  The  only  increase  of  elevators 
in  the  past  few  years  has  been  from  railroads  forming  connections 
with  their  propeller  lines,  and  a few  parties  who  have  built  transfers 
and  floaters,  which  are  small  investments. 

45 


354 


The  canal  men  certainly  have  no  reason  to  complain.  Their  inter- 
ests are  identical  with  our  own.  The  grain  is  spouted  into  the  boat 
free.  Trimmers  charge  from  $1  to  $1.25  per  thousand  for  trimming, 
but  even  this  charge  is  purely  optional  with  the  boat-owner,  as  he  can 
do  this  trimming  with  his  own  men  if  he  chooses.  The  railroad  eleva- 
tors charge  one-half  cent  per  bushel  extra  to  deliver  to  cars,  so  that 
the  railroads  pay  this  much  more  than  the  boats. 

I noticed  in  the  testimony  before  your  committee  that  several  gen- 
tlemen gave  it  as  their  opinion  that  elevating  could  be  done  at  a profit 
at  one-half  cent  a bushel.  Some  of  these  same  gentlemen  testified 
before  an  investigating  committee  two  years  ago  that  one-half  cent 
was  a fair  rate.  In  that  year  the  receipts  Avere  105,000,000  bushels, 
while  this  year  they  have  been  less  than  50,000,000. 

The  inconsistency  of  their  testimony  is  apparent  at  a glance.  This 
statement  of  elevating  being  done  at  a jirofit  for  one-fourth  to  one- 
half  cent  per  bushel  has  been  made  before,  and  refuted  by  those  most 
intimately  acquainted  with  the  business.  Such  statements  are  simply 
a guess  of  persons  who  have  no  means  of  knowing  whether  their  esti- 
mate is  a fair  one  or  not. 

In  his  testimony  before  the  Assembly  committee,  Mr.  Stephen 
Sherman  stated  that  no  elevator  could  do  business  at  such  low  figures. 
Interest,  taxes,  insurance  and  repairs  were  items  that  had  to  be  con- 
sidered. He  was  a grain  receiA'er,  and  his  company  received  in  one 
year  a million  bushels,  and  he  paid  one  cent  a bushel  to  the  elevators 
cheerfully.  * 

The  report  presented  to  the  Legislature  two  years  ago  by  the  com- 
mittee on  canals,  of  Avhich  Mr.  Hurd  was  chairman,  after  an  exhaust- 
ive research  stated  that  the  abuses  in  the  operatioyi  of  elevators  in  the 
State  were  not  as  great  as  charged,  and  any  fair-minded  person  ac- 
quainted with  the  details  of  the  business  Avill  readily  agree  with  this 
statement. 

The  value  of  our  method  of  doing  business  is  that  the  price  charged 
is  uniform,  and  the  western  shipper  knows  at  all  times  what  price  he 
has  to  pay.  By  giving  a few  days’ free  storage  it  prevents  canal  men 
from  putting  up  the  rate  of  freight  to  an  unhealthy  figure,  and  by  that 
means  stopping  canal  shipments  and  sending  large  amounts  of  grain 
by  rail,  as  is  always  the  case  when  the  shipper  is  apparently  at  the 
mercy  of  the  canal  boatmen. 

This  protection  of  the  shippers’  interest  is  one  reason  of  the  outcry 
against  the  association,  and  has  been  the  means  of  having  impractica- 
ble bills  urged  upon  the  Legislature  by  false  statements  and  misrepre- 
sentations. 


355 


In  conclusion  I have  merely  to  add  that  the  passage  of  any  act  by 
the  Legislature  interfering  with  private  rights  is  an  exceedingly  deli-  ' 
cate  one,  and  one  that  should  not  be  attempted  without  the  most 
mature  deliberation. 

Mr.  Hurd’s  committee  in  its  report  stated  that,  elevators  located 
at  terminal  points  like  New  York,  Buffalo  and  Oswego,  conduct  their 
business  in  a way  that  tends  to  drive  commerce  into  other  channels, 
and  thereby  inffict  a loss  upon  the  State  at  large,  it  would  seem  an  act 
of  wisdom  to  restrain  such  operations  by  legislative  enactment.  To 
ascertain  beyond  doubt  that  business  is  being  conducted  by  methods 
that  demoralize  trade  and  injure  the  material  prosperity  of  a State  re- 
quire careful  consideration,  and  unbiased  investigation,  and  while 
it  would  seem  advisable  to  give  the  State  some  control  over  certain 
classes  of  business,  like  that  of  elevating  and  transferring  grain  within 
the  State,  such  laws  proposed  should  be  carefully  prepared  and  im- 
partially considered,  so  that,  while  seeking  to  protect  the  general  in- 
terests of  the  State,  injury  may  not  be  inflicted  upon  the  individuals.” 

The  elevators  controlled  by  the  Western  Elevating  Co.  pay  State 
and  city  taxes  to  the  amount  of  nearly  $100,000  a year,  and  are  one  of 
the  most  important  industrial  enterprises  of  Buffalo.  In  no  other  way 
than  by  “pooling  our  issues,”  so  to  speak,  could  the  property  be  made 
to  pay  even  the  small  amount  of  profit  it  does  now,  and  at  the  same 
time  afford  such  complete  security  and  facilities  to  the  shipper  — avoid- 
ing any  vexatious  and  expensive  delays,  and  giving  him  a uniform  tariff. 
The  large  storage  room  at  the  head  of  the  Erie  canal  has  been  the 
means  of  attracting  large  shipments  of  grain  by  this  route,  and  ship- 
pers know  that  should  a scarcity  of  canal  boats  at  Buffalo  occur  at  any 
time,  or  rates  of  freight  be  forced  up  beyond  a just  and  reasonable 
point,  they  can  always  have  their  grain  stored  at  a nominal  figure  until 
it  is  advantageous  to  ship;  so  that  the  elevating  company,  instead  of 
“driving  commerce  into  other  channels,” has  had  and  still  has  a ten- 
dency to  bring  business  to  Buffalo,  and  in  so  doing  benefits  the  entire 
State. 

' Buffalo,  November  25,  1882. 


WILLIAM  H.  ABELL, 

President  Western  Elevating  Go, 

State  of  New  York,  ) ^ 

Erie  Comity,  j * 

Subscribed  and  sworn  to  before  me, ) 
this  25th  day  of  November,  1882. ) 

A.  U.  Adams, 

Commissioner  of  Deeds  in  and  for  City  of  Buffalo. 


356 


TESTIMONY. 

The  Committee  met  at  the  Metropolitan  hotel  in  the  city  of  New 
York. 

Present  — Senators  Boyd  and  Browning,  of  the  Committee,  John 
"W.  Corning,  Sergeant-at-Arms  of  the  Senate,  and  Daniel  A.  Cooney, 
clerk  of  the  committee. 


New  York,  Friday,  November  24,  1882. 

Francis  B,  Tlmrber,  being  duly  sworn,  was  interrogated  and  testified 
as  follows  : 

By  Mr.  Boyd. 

Q.  Where  do  you  reside  ? 

A.  I reside  in  New  York  at  49  West  Twenty-fifth  street. 

Q.  What  is  your  business  ? 

A.  Wholesale  grocer;  dealer  in  food  products. 

Q.  Please  state  to  the  committee  your  opinion  in  relation  to  the 
whole  system  of  making  ‘^corners”  and  dealing  in  ^‘futures”  with 
reference  to  its  effect  upon  commerce  and  its  influence  upon  the  pub- 
lic welfare  ? 

A.  I will  say  that  in  anticipation  of  being  asked  for  my  opinion,  I 
wrote  out  some  of  my  views  and  have  had  tliem  put  in  type  for  con- 
venience sake,  and  with  your  permission,  I Avill  read  them. 

The  witness  then  reads  as  follows  : 

“ The  growth  of  monopolies  and  the  aggressions  of  associated  cap- 
ital upon  the  interests  of  the  people  have  of  late  made  thoughtful 
men  feel  that  some  additional  safeguards  were  necessary.  New  meth- 
ods of  handling  the  great  staples  of  commerce  have  given  rise  to  new 
methods  of  dealing  in  them,  and  as  with  steam  roads,  the  advantages 
have  been  accompanied  by  attendant  evils  which  require  checking. 

^*The  classifying  or  grading  of  goods  has  given  rise  to  a system  of 
dealing  in  ^futures’  which  means  much  more  than  sales  for  future 
delivery,  and,  in  reality,  indicates  a gigantic  system  of  gambling 
whicli  lias  infected  a large  portion  of  the  community.  This  is  not 
only  demoralizing  to  those  who  participate  in  these  practices,  but  it 
affects  the  material  interests  of  both  producers  and  consumers,  as  well 
as  those  of  legitimate  traders,  by  forcibly  setting  the  clock  hands  of 
value  back  and  forth,  and  alternately  making  all  of  these  classes  pay 
tribute  to  the  combinations  which  manipulate  first  one  and  then  an- 
other of  the  great  staples  which  enter  into  daily  consumption. 

“The  Standard  Oil  (lompany  is  an  example;  here  is  a corporation 
which,  according  to  testimony  recently  given  in  Pennsylvania,  began 
in  1872  with  '$1,000,000  ca})ital,  which  was  subsequently  increased  to 


357 


$3,500,000,  and  on  this  latter  capitalization  it  paid  dividends  in  1880 
amounting  to  $10,321,812,  and  it  practically  controls  and  fixes  the 
value  to  the  consumer,  on  a staple  ranking  third  in  the  list  of  our 
Nation’s  exports.  Through  its  speculative  manipulations  it  has 
within  a few  weeks  more  than  doubled  the  price  of  crude  oil,  and  its 
profits  thereby  are  variously  estimated  at  from  $20,000,000  to  $40,- 
000,000. 

A speculative  combination  raised  the  price  of  wheat  in  1879  from 
$1.02  per  bushel  in  August  to  $1.44  in  December,  and  at  various 
times  since  the  same  system  of  trading  has  alternately  raised  and  de- 
pressed prices  to  such  an  extent  as  to  seriously  demoralize  legitimate 
trade  — three  hundred  vessels  at  one  time  being  idle  in  the  port  of 
New  York  waiting  cargoes  which  the  greed  of  the  speculators  would 
not  permit  to  be  loaded,  and  many  of  which  were  obliged  to  seek  car- 
goes elsewhere. 

“ Another  combination  obtained  control  of  most  of  the  available 
supply  of  pork  in  the  country  and  then  advanced  prices  so  that  the 
consuming  public  had  to  pay  fifty  per  cent  more  for  its  supplies  ; these 
transactions  were  undertaken  by  men  who  had  first  attained  great 
wealth  largely  through  special  favors  from  railroad  corporations. 

These  operations  are  popularly  known  as  ‘corners,’  and  are  ef- 
fected through  sales  for  future  delivery,  but  getting  meh  to  sell  in 
many  cases  what  they  do  not  possess  or  expect  to  possess  — with  the 
understanding  that  only  ‘margins’  will  be  required  and  ‘ difier- 
ences  ’ will  be  settled  instead  of  actual  delivery  of  the  merchandise 
being  required.  They  are  usually  accompanied  with  much  misrepre- 
sentation, and  indeed  false  reports  are  a jDart  of  the  stock  in  trade  of 
those  who  participate  in  them.  They  are  less  fair  and  more  demoral- 
izing than  a game  of  cards,  for  with  the  latter  there  is  no  misrepresen- 
tation and  only  the  chances  of  the  game  are  against  the  player,  while 
corners  may  be  compared  to  a game  of  cards  in  which  both  before  and 
after  the  bets  are  made  the  cards  are  stocked  against  the  player.  Why 
should  gambling  with  cards  be  prohibited  by  law,  and  the  gambler  or 
the  seller  of  a lottery  ticket  be  subject  to  arrest  when  such  things  are 
tolerated  ? Corners  are  made  unlawful  by  special  statute  in  the  State 
of  Illinois,  and  Judge  Jameson,  of  that  State,  in  an  opinion  recently 
delivered,  compared  them  to  highwaymen  enticing  travelers  into  a 
corral  and  relieving  them  of  their  purses. 

“ I would  therefore  make  corners  unlawful  and  educate  public  opin- 
ion until  the  law  could  be  enforced. 

“I  would  limit  speculation  by  prohibiting  the  buying  or  selling  on. 
‘margins,’  and  also  all  other  gambling  devices  such  as  ‘puts,’ 

‘ calls  ’ and  ‘ straddles.’ 

“ I would  prohibit  a man  selling  what  he  did  not  possess,  excepting 


358 


in  the  case  of  a farm  or  factory,  where  the  growing  crop  or  regular 
product  furnished  a reasonable  basis  in  legitimate  trade  for  such 
transactions.  In  short  I would  make  actual  delivery  a l^asis  for  a law- 
ful transaction.” 

I might  say  that  I considered  that  only  as  a basis  which  perhaps 
would  suggest  (juestions,  and  that  I would  be  glad  to  answer  any 
which  I am  able  to. 

Q.  Have  you  thought  of  any  form  of  act  which  must  be  passed  by 
the  Legislature  ? 

A.  I can’t  say  that  I have  formulated  any  such  idea  ; I have  thought, 
somewhat  upon  it;  but  it  seemed  to  me  that  all  the  testimony  which 
could  be  drawn  out  from  all  sides  should  be  before  the  coinmiMee  be- 
fore they  attempt  to  prescribe  remedies  Ln*  the  evils  whicli  every  one 
knows  to  exist. 

Q.  Do  you  think  that  State  legislation  would  be  sufficient  to  rem- 
edy the  evil  resulting  from  these  speculations,  or  would  it  be  necessary 
to  invoke  the  aid  of  Congress  ? 

A.  I think  you  would  have  to  have  perhaps  both  ; but  you  would 
certainly  haye  to  have  State  legislation,  because  on  transactions  that 
were  consummated  exclusively  within  the  limits  of  a State,  the  point 
would  probably  be  raised  that  national  legislation  could  not  constitu- 
tionally apply ; but  I would  not  hesitate  to  apply  reasonable  and  con- 
servative measures  to  limit  the  speculation  within  the  limits  of  this 
State. 

Q.  How  are  the  banks  and  other  moneyed  institutions  affected  by 
illegal  speculations  in  grain  and  other  food  products  ? 

A.  I can’t  say  that  I have  much  personal  knowledge  of  the  banking 
business  ; but  these  speculations  introduce  an  element  of  uncertainty 
and  distress  in  commercial  circles  and  are  demoralizing  in  that  re- 
spect. I should  say  that  panics  are  almost  always  started  by  this  kind 
of  gambling  process,  and  that  they  then  react  unfavorably  upon  all 
legitimate  trade. 

Q.  Do  you  believe  that  this  system  of  gambling  speculation  is  ex- 
tending ? 

A.  Tliere  is  every  indication  that  it  is  extending  very  rapidly  and 
especially  in  the  great  staples  of  food  products.  I am  not  so  familiar 
with  questions  affecting  stocks  and  banking  as  I am  with  those  pro- 
ducts. 

Q.  And  what  is  the  effect  or  result,  rather,  of  those  speculations 
nj)on  the  social  condition  of  the  people  generally? 

A.  1 will  speak  first  of  its  effect  upon  business  as  it  has  come  under 
my  own  observation,  and  that  is,  that  it  tends  to  dissatisfy  business 
men  with  the  legitimate  and  regular  course  of  business  which  they 
have  been  brought  up  to,  makes  them  more  reckless  and  venturesome  ; 


359 


they  take  more  chances.  I think  it  has  a bad  effect  upon  the  morals 
generally  of  business  men,  and  as  a large  and  considerable  portion  of 
society  is  composed  of  business  men,  it  affects  the  general  welfare  of 
society  unfavorably  in  that  respect. 

Q.  What  effect  have  such  speculations  upon  the  labor  interests  of 
the  country  ? 

A.  I think  that  they  tend  to  extreme  activity  at  times,  and  extreme 
dullness  at  other  times,  in  the  various  branches  of  manufacture  and 
products  ; that,  in  other  words,  it  is  overdone  at  times,  resulting  in  a 
reaction,  and  that  it  would  have  an  unfavorable  effect  upon  the  inter- 
ests of  laboring  men  by  making  their  occupation  less  continuous  and 
regular,  and  as  regards  their  interest  in  the  price  of  living,  it  unques- 
tionably, at  times,  taxes  them  very  heavily,  as,  for  instance,  I have  il- 
lustrated in  the  staples  of  oil  and  wheat  and  pork  in  my  written  state- 
ment. 

Q,  Have  you  given  any  thought  as  to  how  far  it  affects  our  relation 
with  foreign  countries,  and  the  commerce  carried  on  between  this 
country  and  other  countries  ? 

A.  I have,  to  some  extent.  I have  had  it  illustrated  very  strongly 
within  the  last  year  or  two  ; that  at  times  when  these  corners  were 
being  run,  it  advanced  our  market  here  to  a higher  point  than  those  in 
Europe,  and  other  countries  supplied  the  regular  legitimate  consum- 
ing demand  there,  when  we  should  have  had  those  orders.  After- 
ward, when  it  was  too  late,  the  prices  here  would  be  reduced,  but  we 
had  lost  the  trade. 

Q.  By  what  standard  is  the  natural  and  proper  value  of  all  food 
products  regulated  ? 

A.  By  that  of  supply  and  demand,  coupled  with  actual  deliveries  of 
the  goods  themselves. 

Q.  I think  you  said  that  the  profits  of  the  speculator  were  altogether 
an  increase  in  the  price  of  breadstuffs  and  other  products,  or  some- 
thing to  that  effect  ? 

A.  No;  generally  in  these  great  fluctuations  in  price,  there  is  a basis 
for  the  operations  of  the  men  who  control  these  corners  ; ” but  they 
will  take  hold  of  that  basis  and  by  misrepresentations  magnify  it  so 
that  they  greatly  exaggerate  the  situation,  and  it  re-acts  unfavorably, 
at  times,  on  both  the  producer  and  consumer.  There  will  be,  gener- 
ally, a temporary  advantage  .derived  by  a small  portion  of  the  commu- 
nity from  these  operations,  as,  for  instance,  when  prices  are  largely 
enhanced  by  a corner,”  that  portion  of  the  public  whose  supplies 
have  not  passed  into  the  hands  of  the  cornerers  ” may  get,  tempo- 
rarily, a higher  price  for  their  product,  but  that,  of  course,  is  at  the 
expense  of  the  consumer,  and,  on  the  other  hand,  when  ]5rices  are  ar- 
tificially depressed  below  a normal  point  by  these  operations,  the  con- 


Sumer  may  profit,  for  tlie  time  being,  on  that  account ; l)ut  tliat  is  at 
the  ex])ense  of  tlie  producer,  wlio  is  forced  to  submit  to  abnormally 
low  prices  for  liis  ])roduc^t,  and  the  si)eculators  act  ])ctween  both 
classes,  or,  at  least,  you  might  say,  tax  both  classes  by  their  o})era- 
tions.  They  set  the  clock  hands  of  value  backward  and  forward,  you 
Height  say,  as  a figure  of  speech,  and  as  through  their  combinations 
they  know  pretty  well  what  can  be  accomplished,  they  make  not  only 
the  producer  and  consumer,  but  the  whole  body  of  legitimate  traders, 
mo]’e  or  less  tributary  to  them,  as,  for  instance,  when  the  great  ])ork 
corners  were  run  by  the  Armours,  in  Oliicago,  they  got  contrid  of  tin* 
larger  portion  of  the  available  supply,  and  then  they  advanced  prices 
largely,  and  regular  traders,  distributors,  the  legitimate middlemen,*’ 
as  you  might  call  them,  were  forced  to  pay  these  exorbitant  prices, 
because  the  supplies  were  largely  in  the  hands  of  the  men  making  tlui 
corner. 

Q.  Do  you  know  of  dny  business  failures  having  been  caused  by  il- 
legal speculation  in  grain  and  other  products  ? 

A,  I have  none  particularly  in  mind,  excepting  that  it  is  very  com- 
mon in  the  public  prints  to  notice  that  such  and  such  a man  has  failed 
to  meet  his  engagements  on  account  of  not  being  able  to  makegood 
his  margins  in  these  speculative  transactions.  And  you  frequently 
also  see  notices  of  breaches  of  trust  on  the  ^oart  of  bank  officers,  and 
officers  of  moneyed  institutions,  the  result  of  speculation,  both  in 
stocks  and  produce.  I know  of  nothing  excepting  by  the  general  re- 
port on  that  point. 

Q.  Are  you  familiar  with  the  operations  of  the  Stock  Exchange  in 
New  York  ? 

A.  I can’t  say  that  I am  very  familiar  with  those. 

Q.  Or  the  Produce  Exchange  ? 

A.  Not  specially  with  those  of  the  Produce  Exchange. 

By  Mr.  Browning  : 

Q.  How  is  it  possible  for  the  Legislature  to  ])as3  a bill  that  will  dis- 
criminate between  the  man  who  buys  a ‘‘  future  ” or  an  option  for  the 
delivery  of  grain  at  some  time  in  the  future  we  will  say,  and  the  man 
who  buys  with  the  expectation  of  receiving  the  grain  ? 

A.  i\Iy  own  idea  is  in  getting  at  a })rohibition  of  this  process 
that  the  selling  of  what  a man  hai  not  got  should  be  pro- 
hibited, that  you  should  start  at  that,  and  if  you  make  that  the  st:ift- 
ing  point,  and  make  the  exceptions  that  I have  noted  in  that  written 
statement  of  the  man  who  has  the  growing  crop,  or  the  manufacturer 
who  has  his  regular  ])roduct,  that  you  there  do  have  a basis  of  limit- 
ing the  gamlTling  transactions  which  are  simply  those  conducted  on 
nuirgins  by  men  who  have  not  the  article  they  sell  or  any  legitimate 


361 


means  of  possessing  it.  ‘I  do  not  know  whether  that  answers  your 
question  exactly. 

Q.  I will  put  it  more  plainly.  Suppose  1 should  start  out  througli 
the  country  or  send  my  agents  out  to  buy  up  all  the  grain  that  is  to 
day  available,  and  make  an  advance  upon  the  crops  tliat  have  been 
planted  with  the  view  of  securing  control  of  the  entire  grain  crop 
next  year.  I have  a prospect  of  possession.  That  was  done  all 
through  the  South  when  they  ’svere  struggling  for  an  existence  right 
after  the  war.  They  had  to  mortgage  their  crops  to  get  the  money  to 
go  on  and  recuperate.  Suppose  I should  carry  on  that  same  principle 
throughout  the  West  in  the  way  I have  indicated  by  sending  my  agents 
out  to  interview  the  farmers  and  to  make  the  best  bargains  possible 
with  the  view  of  getting  control  of  the  grain  crop  next  year,  and  witli 
that  prospect  of  delivery  I come  into  the  market  here  and  sell.  Do 
you  think  we  could  pass  a law  to  prevent  that  ? You  see  there  is  an 
anticipation  of  actual  possession  of  the  grain. 

A.  The  first  seller  would  be  the  grower  of  course.  He  would  have 
a perfectly  legitimate  prospect  for  his  transaction.  The  second  man 
I should  want  to  think  aliout  a good  deal.  My  impression  is  that  you 
would  have  to  begin  at  him  to  prohibit  the  selling  for  future  delivery. 
That  is  the  thought  as  it  strikes  me  at  this  time. 

Q.  You  would  have  to  begin  with  myself  for  instance  ? 

A.  Yes,  if  you  were  the  man. 

Q.  You  hold  then  that  there  is  a difference  between  myself  and  the 
miller  who  would  send  his  agent  out  to  purchase  future  crops  because 
he  would  bring  it  into  his  mill  and  grind  it  up  into  flour? 

A.  Yes.  You  would  be  a speculator,  and  he  would  be  a legitimate 
business  man. 

Q.  But  if  we  should  pass  a law  of  that  kind,  don’t  you  suppose  that 
they  could  find  some  way  to  violate  it  ? I am  only  stating  here  now  what 
the  men  at  Buffalo  stated  to  this  committee.  They  said,  the  millers 
in  particular,  that  they  believed  that  “ futures  ” were  a good  thing  for 
their  business, *because  they  could  keep  up  the  supply  ; they  could  have 
their  contracts  ahead,  and  they  knew  just  what  they  could  depend 
upon,  and  if  you  prevented  that  by  any  legislation,  it  would  seriously 
cripple  their  business  and  when  we  wanted  to  know  how  we  could  dis- 
criminate between  them  and  ‘Mutures,”  they  were  stuck  and  didn’t 
know  how  to  answer  the  question’. 

A.  I would  draw  the  line  between  a man  doing  a regular  legitimate 
business  like  that  of  a miller  and  a speculator,  for  instance,  like  our 
friend  Keene,  who  goes  into  the  market  like  a bull  in  a china  shop  and 
raises  old  nick  with  general  values. 

Q.  They  passed  a law  in  Illinois  upon  this  subject ; do  you  know 
46 


302 


how  tliiit  law  has  operated  tliere  ? lias  it  had  a tendency  to  check 
dealings  in  futures  ” and  “ options  ?” 

A.  1 know  that  it  has  not  accomplished  all  that  they  expected  that 
it  would  accomplish,  and  at  the  same  time  I am  told  by  friends  in 
Chicago,  that  it  has  had  a good  effect.  Of  course  it  is  impossible  to 
pass  any  law  that  will  absolutely  prohibit  crime  of  any  kind.  The 
enforcement  of  a law  depends  largely  upon  its  reasonableness  and  the 
state  of  public  opinion  behind  it.  Public  opinion  alone  will  not 
remedy  such  evils  ; but  a reasonable  law  backed  by  public  opinion  will 
to  a great  extent  give  the  public  a remedy.  You  can’t, of  course,  pre- 
vent stealing  or  any  other  crime  entirely,  but  by  having  a legal  pro- 
hibition many  men  who  have  not  any  moral  restraint  from  stealing 
are  deterred  from  doing  so.  If  public  opinion  did  not  frown  down 
upon  stealing  and  disapprove  of  it,  those  fellows  would  not  be  deterred 
by  the  law  ; they  would  take  their  chances  of  conviction,  and  I venture 
this  assertion  that  there  are  plenty  of  men  in  the  community  at  this 
time  considered  reputable  business  men,  and  men  high  in  the  church, 
and  of  good  standing  in  society  who  are  every  day  indulging  in  these 
practices  of  “corners”  that  would  not  touch  them  with  a ten-foot  pole 
if  they  were  made  unlawful.  They  would  not  put  themselves  in  the 
position  of  going  outside  of  the  law.  At  the  same  time  I recognize 
fully  the  frame  of  mind  that  you  are  in,  in  honestly  endeavoring  to 
limit  a recognized  evil  to  not  go  so  far  as  to  make  the  remedy  worse 
than  the  disease,  or  to  make  it  entirely  impracticable. 

Q.  I take  it  that  this  committee  is  endeavoring,  with  the  best  light 
that  it  can  obtain,  to  guide  it  toward  the  framing  of  a statute  that  will 
prohibit  these  evils.  What  we  are  trying  to  do  is,  to  find  out  how  we 
can  proceed  to  do  this,  how  we  can  draw  the  line  between  a legitimate 
sale  and  an  illegitimate  sale,  whether  we  can  prevent  contracts  from  be- 
ing made  — which  I presume  in  law  would  be  held  as  a legal  instrument, 
for  the  delivery  of  grain,  where  it  could  be  proven  in  the  court  that  there 
was  a prospect  of  possession.  I take  that  ground,  that  if  a man  shall 
send  his  agents  out  into  the  country  to  say  to  the  farmers,  “ I will  take 
your  crop,  it  may  be  100,000  bushels,  or  it  may  be  half  a million  bush- 
els, or  perhaps  fifty  bushels,  and  here  is  a deposit  in  shape  of  $1,000,. 
to  bind  the  contract,”  he  has,  to  that  extent,  made  a contract  for  the  re- 
ceipt of  all  the  grain  produced  by  that  farmer.  And  then  he  goes  on  to 
the  next,  and  in  this  way  he  gets  control  of,  we  will  say,  two-thirds  of 
the  grain  of  tlie  West,  and  then  he  comes  into  the  market  with  his 
“corner,”  for  he  has  already  formed  his  ‘^corner,”  and  then 
he  can  bull  up  the  market  as  high  as  he  pleases  and  make 
his  jti-ofit.  WTiat  I am  trying  to  lind  out  is  this : how  we  can  draw 
the  line  between  that  transaction,  and  a transaction  between  a miller 


363 


andafarmer,  or  between  a miller  and  a broker  at  Chicago,  who  expects 
to  grind  the  grain  up  and  make  flour  meal  of  it.  I admit  very  plainly,  that 
while  we  are  in  earnest,  and  while  we  desire  to  overcome,  that  it  has  so 
far  proved  to  be  a very  knotty  question.  I have  some  views 
of  my  own  which  I would  like  to  submit  to  you  here.  Do  you 
believe  it  would  be  a lawful  thing  to  prevent  daily  calls  ” on  ’Change  ? 
Because  it  has  been  asserted  by  a great  many  that  until  ‘‘calls”  were 
instituted,  or  sales  by  grade,  instead  of  by  sample  — when  grain  was 
sold  by  sample,  the  grain  was  there  or  a sample  of  it,  and  that  was 
bought,  so  many  bushels,  and  no  more,  because  they  couldn’t  give  a 
sample 'Of  what  they  didn’t  possess,  and  there  was  a prospect  of  actual 
delivery,  for  the  reason  that  the  grain  was  there,  and  it  was  before  the 
buyer  and  seller.  Since  they  have  abolished  the  method  of  selling  by 
sample  and  sell  by  grade,  it  is  not  necessary  to  look  at- the  grain- 
When  I buy  No.  2 oats,  or  No.  2 mixed,  or  No.  1 winter  wheat,  I 
know  what  I am  buying  without  looking  at  it,  and  the  product  of  a half- 
dozen  farms  are  dumped  into  the  same  elevator,  and  it  is  all  mixed  and 
becomes  one  article,  and  when  I buy,  I buy  just  that  article  and  no 
other.  And  that  gives  rise  to  speculation.  It  is  in  testimony,  that 
nearly  all  the  larg-e  sales  in  “futures”  and  nearly  all  the  money  that 
has  been  made  in  speculation,  and  that  is  to  speak  of  it  as  a business, 
was  inaugurated  at  the  time  the  change  was  made  from  selling  by  sam-^ 
pie  to  selling  by  grades,  and  the  principal  part  of  the  business  is  done 
on  ’Change,  before  or  after  the  “calls”  of  each  day,  because  the 
“calls”  fix  a market,  and  fix  the  quotations,  and  as  they  are  fixed,  the 
settlements  are  made  upon  those  quotations,  the  prices  are  made 
for  the  day  and  they  settle  at  those  prices,  and  the  question  is,  how 
can  we  prevent  by  a law,  daily calls  ” on ’Change.  Do  you  think 
that  can  be  done  ? 

A.  I would  answer  that  question  by  saying  that  my  idea.of  it  is,  we 
would  have  to  keep  two  salient  points  in  view  in  regulating  this 
method  of  dealing:  First,  any  combination  or  action  on  the  part  of  an 
individual  who  possessed  the  power  to  get  hold  of  the  necessaries  of 
life  and  tax  the  people  by  unduly  enhancing  its  value,  that  is,  by  get- 
ting control  of  it  as  you  have  described,  going  into  the  country  and 
buying  up  the  entire  available  supply,  and  then  making  the  mass  of 
the  people  pay  him  tribute  ; I would  make  that  unlawful,  on  the  prin- 
ciple that  no  man  has,  or  can  have,  the  inherent  right  to  make  all  the 
rest  of  the  people  tributary  to  him  by  such  a transaction,  and  if  that 
would  not  be  constitutional,  I would  make  it  constitutional  on  the 
broad  ground  of  the  common  law,  or  the  inherent  right  that  dwells  in 
the  whole  people.  Second,  as  a preliminary  step,  which  would  limit 
the  evil  that  we  are  seeking  to  remedy,  if  not  remedy  it  entirely ; I 


3G4 


would  make  the  basis  of  actual  delivery  iu  an  actual  legitimate  bus- 
iness, the  basis  of  a remedial  measure.  I would  draw  a distinction 
between  the  miller  pursuing  a legitimate  and  useful  occupation  in  the 
community,  and  the  speculator  who  simply  seeks  to  lay  the  mass  of  the 
people  under  tribute  by  his  operations.  With  those  two  points  clearly 
kept  in  view,  I think  that  it  in  some  degree  clears  away  the  clouds  for 
further  consideration  of  these  questions  that  you  have  just  put,  such 
as  the  prohibition  of calls on ’Change.  I do  not  know  that  tin*, 
simple  act  of  “calling  ” for  bids,  as  it  were  on  values,  is  any  thing 
wrong  or  detrimental,  but  there  would  be  a wrong  in  a combination  of 
people  to  bid  up  the  values  to  a point  which  would  make  the  commu- 
nity tributary  to  them,  and  which  is  not  justified  by  the  laws  of  supply 
and  demand  ; and  the  question  of  actual  delivery,  which  you  raised,  of 
graded  goods  which  are  represented  by  a certificate,  I should  say  that 
you  could  not  reach  at  present.  At  least,  I would  noi  think  it  ad- 
visable to  attempt  to  limit  the  frequency  with  which  those  certificates 
might  pass  from  hand  to  hand,  and  they  unquestionably  facilitate  to 
an  enormous  extent  this  system  of  speculation  ; but  I would  prohibit 
the  dealing  on  “ margins  ” and  would  make  every  man  pay  in  full  for 
his  certificate  that  he  gets. 

Q.  Is  that  the  principle  which  is  applied  toother  business?  If  you 
make  a buyer  pay  the  full  face  value  of  his  certificate,  wouldn’t  you  be 
carrying  into  that  transaction  a principle  that  is  not  adhered  to  in 
other  businesses  ? In  other  words,  where  a sale  is  made,  sometimes 
they  sell  on  thirty  days  or  six  months  ; in  other  cases  a man  might 
say,  “ I will  purchase  1200,000  worth  of  goods  and  pay  25  per  cent 
cash  ? ” 

A.  That  is  so,  undoubtedly,  and  I would  give  as  a reason  for  that, 
that  these  new  methods  of  doing  business  which  are  attended  by  new 
evils  must  be  met  with  new  remedies,  all  based  upon  the  broad,  gen- 
eral principle  of  the  welfare  of  the  many. 

Q.  Then  these  people  advance  this  as  an  argument  against  your 
statements  that  I may  go  into  the  West  and  buy  up,  and  obtain  con- 
trol of,  we  will  say,  two-thirds  of  the  grain  of  the  West  to  be  produced 
next  year,  and  that  is  a transaction  that  occurs  out  of  this  State,  and 
cannot  be  made  by  any  act  passed  here  an  unlawful  transaction;  when 
I come  into  this  market,  I simply  come  into  the  market  as  an  agent 
or  a seller  ; that  would  seem  then  to  call  for  an  action  of  law  ? 

A.  1 think  that  you  have  got  to  have,  in  a nation  having  a govern- 
nioiit  such  as  ours,  a sort  of  composite  government,  both  national  and 
State  l(;gislation,  to  j’ernedy  all  of  the  evils  which  accompany  the 
modern  development  of  commerce'  ; but  to  say  that  we  must  have  na- 
tional legislation  to  regulate  this  matter  before  we  should  have  State 
legislation  would  be  just  like  saying  that  we  must  have  a national 


3G5 


railroad  commission  before  we  would  have  a State  railroad  commis- 
sion. Certainly  one  must  precede  the  other  unless  you  can  get  them 
to  be  enacted  simultaneously,  which  you  j^robably  cannot.  That  is 
the  point  which  I illustrated  at  a meeting  of  the  Produce  Exchange. 
Certain  members  of  the  Produce  Exchange  who  were  getting  special 
rates  of  freight,  or  rather  preferential  rates  of  freight  (because  special 
rates  are  not  objectionable  if  they  are  given  to  all  alike  and  are  pub- 
lic) opposed  a railroad  commission  in  this  State,  because  it  would  in- 
terfere, they  thought,  with  the  general  freedom  of  trade,  and  their 
own  special  advantages,  and  when  we  were  seeking  a railroad  commis- 
sion in  this  State  they  did  not  want  it  here,  because  they  wanted  a 
national  one.  When  we  were  trying  to  get  a national  regulation  of 
the  same  question,  the  objection  was  raised  there  that  a considerable 
portion  of  this  problem  lay  within  the  limits  of  States  and  could  not 
be  reached  by  national  legislation,  and  the  railroads  raised  that  argu- 
ment at  Washington  and  reversed  it  at  Albany  within  a month,  try- 
ing to  stave  off  any  regulation  of  that  question.  I told  them  at  the 
Produce  Exchange  that  it  seemed  to  me  that  their  attitude  on  the  sub- 
ject of  a railroad  commission  was  like  the  Irish  railroad  superintendent 
who  put  up  a notice  at  the  crossing,  ‘‘trains  meeting  here  must  corner 
to  a full  stop,  and  neither  proceed  till  the  other  has  passed.’’  It  is 
very  evident  that  one  must  precede  the  other  or  else  nothing  would 
ever  be  done.  You  can’t  do  every  thing  by  legislation,  but  some  thing 
can  be  done  by  legislation  ; unless  we  go  at  it  in  a conservative,  reason- 
able, but  earnest  spirit,  none  of  these  great  abuses  will  be  remedied. 

Q.  Do  you  think  that  we  could  prevent  this  to  some  extent  by  mak- 
ing all  settlements — you  understand  what  a settlement  is  on  Exchange 
— by  making  all  settlements  unlawful  ? I agree  with  you  in  regard 
to  that  class  of  people  that  you  describe  as  standing  high  in  church 
and  society.  I know  myself  that  a great  many  people  who  teach 
Sunday  school  classes  are  engaged  in  this  business  on  the  floor  of  the 
Produce  Exchange,  and  they  call  it  a legitimate  business,  that  it  is 
not  unlawful,  and  while  others  engage  in  it  they  propose  to  do  so ; and 
they  make  large  fortunes ; but  I believe  if  such  a law  were  passed,  it 
would  have  the  effect  of  preventing  that  class  of  people  from  engaging 
in  this  kind  of  business.  If  I buy  for  delivery  in  January,  we  will  say, 
100,000  bushels  of  oats  ; on  the  last  day  of  January  we  make  a settle- 
ment, and  I pay  you,  or  you  pay  me,  the  difference.  If  I buy  und  grain 
goes  up,  you  pay  me  ; and  if  it  goes  down  I pay  you.  I believe  to  make 
that  transaction  an  unlawful  one,  a misdemeanor,  and  any  party  to  it, 
whether  it  is  the  clerk  who  takes  the  contract  and  makes  a record  of 
it  and  accepts  the  $10  from  the  parties  to  the  transaction,  who  expect 
to  be  directly  beneflted,  punishable  as  having  committed  a misde- 
meanor, it  would  have  a good  effect? 


360 


A.  That  strikes  me  favorably. 

Q.  To  declare  tliat  act  to  be  an  unlawful  one,  a settlement  without 
actual  delivery,  that  is  the  payment  by  the  seller  or  by  the  buyer,  in 
money,  without  delivery,  the  difference  between  the  price  at  which  it 
was  bought  and  the  price  of  the  market  on  that  day,  to  make  that  an 
unlawful  act  T think  would  be  a good  thing.  That  is  where  we  can 
get  at  the  actual  delivery  of  the  grain? 

Senator  Boyd — Unless  there  should  be  an  actual  delivery. 

Senator  Browning  — Then  they  don’t  pay  the  difference  they  de- 
liver. I was  of  the  opinion,  and  I am  yet  unless  I can  be  convinced  to  the 
contrary,  that  if  it  can  be  made  unlawful  to  have  a call  on  change,”  it 
would  have  a good  effect.  I can  recollect  on  the  floor  of  the  Produce  Ex- 
change, when  dealers  in  grain  would  come  in  there  with  a little  box  of 
samples,  and  they  would  display  them  on  the  tables,  and  make  putty  of 
it ; and  so  corn  and  oats  and  every  thing  was  sold  in  that  way.  People 
bought  and  people  sold,  and  they  made  money,  not  perhaps  as  rapidly  as 
they  are  making  it  to-day.  Now  to-day  the  fact  is,  that  of  all  those  sales,  I 
understand  there  are  not  more  than  three  or  five  per  cent  of  actual 
sales.  In  other  words,  95  per  cent  are  illegitimate  ; pure  speculations, 
and  it  is  on  account  of  the  calls.”  If  I buy  of  you  to  be  delivered 
in  January,  on  the  1st  of  January  I might  have  the  best  of  the  bar- 
gain ; grain  might  be  up  and  it  might  continue  above  the  price  that  I* 
have  agreed  to  pay  you  until  the  25th  of  January.  Then  Mr.  Keane 
or  some  other  gentleman  and  his  friends  may  come  in  and  bear  the 
market  down,  sell  for  less,  and  keep  bearing  it  down  until  the  last  day 
quotations  are  much  less  than  you  agree  to  sell  for,  and  the  result  is 
that  I have  to  pay  you.  Hence  the  quotation  and  the  ^*call”  and  the 
opportunities  to  bear  down  the  market,  or  to  bull  it  up,  affects  me 
and  affects  you,  and  if  we  can  prevent  that  .we  go  a long  Avays  to  pre- 
vent this  evil.  That  is  Avhy  I say  that  if  we  can  make ‘‘calls”  on 
’Change  unlawful  and  prevent  them,  it  would  be  a good  thing. 

A.  I agree  with  you  fully. 

Q.  And  then  that  in  conjunction  with  another  provision  of  the 
same  act  that  might  be  passed,  making  settlements  without  delivery 
an  unlawful  act,  punishable  if  he  can  be  discovered  and  found  out, 
and  subject  in  the  corporation  to  a forfeiture  of  its  charter  if  it  per- 
mits it  to  be  done,  that  would  go  a long  ways  perhaps  toAvard  pre- 
venting the  evil  in  our  OAvn  State  and  city;  but  then  again,  they  have, 
as  I just  discovered  yesterday,  Avhat  they  have  in  Buffalo,  Avhat  they 
have  on  a very  large  scale  in  Chicago,  places  that  they  call  “bucket- 
shops,”  Avherc  the  ])ro})rietors  carry  on  an  exclusively  “option”  busi- 
ness, never  handle  grain  and  never  ex])ect  to.  The  place  resembles 


367 


mutual  pool-rooms,  or  horse-races,  if  you  please.  They  will  have  a 
large  blackboard  with  all  the  different  grades  of  grain  marked  down, 
and  men  will  come  in  and  sit  down  and  occupy  the  chairs  and  watch 
the  quotations  as  they  come  in  by  telegraph,  and  are  marked  on  the 
blackboard,  and  when  they  think  such  and  such  a grain  is  going  up  or 
down,  they  go  up  to  the  captain’s  office  and  say,  Give  me  5,000 

bushels;  ” or,  ‘‘  I will  sell  5,000  bushels,”  and  they  go  back 
and  sit  jn  their  seat,  and  they  wait  there,  and  in  an  hour 
their  money  changes,  they  either  give  it  to  somebody  else  or 
go  up  and  get  something  that  is  coming  to  them  on  the  quo- 
tations showing  them  the  calls”  at  Chicago,  telegraphed  on,  or  at 
the  Exchange  here  which  indicates  the  price  at  which  he  settles.  In 
an  hour  his  ‘‘margin  ” is  wiped  out  that  he  puts  up  or  something  is 
coming  to  him,  and  he  quits  a winner  or  a loser,  as  the  case  may  be, 
in  a very  short  time.  We  have  two  such  places  I believe  in  this  city. 
One  is  called  the  Equitable  Exchange;  I think  it  is  73  Broadway, and 
there  is  another  here  in  abasement  on  Broadway.  We  shall,  I hope, 
invite  those  gentlemen  up  here  to  explain  how  they  carry  on  their 
business.  That  I believe  is  an  unlawful  act,  the  same  as  dealing  in 
policy  is  an  unlawful  act.  It  is  a lottery  of  chance  just  as  when  a 
man  puts  up  his  money  in  a Kentuckey  lottery,  and  if  it 
comes  out  2416  as  the  winner,  he  wins,  and  if  it  comes  out 
something  else  he  loses.  The  same  in  this  grain  gambling. 
If  grain  goes  up,  he  wins,  if  not,  he  is  out.  That,  I believe,  can  be 
prevented,  because  there  is  no  pretense  whatever  of  delivering  the 
grain.  Itis  a pure  matter  of  speculation  and  gambling.  That,  I think, 
can  be  prevented.  But,  they  say,  “ you  make  this  an  unlawful  act  in 
New  York  city  or  New  York  State,”  and  we  will  open  an  account  here 
with  a broker  on  Wall  street,  and  we  will  transact  business  in  Chicago. 
We  will  carry  on  the  business,  you  can’t  prevent  us.  We  will  simply 
go  to  a broker  in  Wall  street  and  say,  “ you  telegraph  for  me  and  buy 
in  the  Chicago  market  50,000  bushels  of  prime  wheat,  to  be  delivered 
in  January,  you  can’t  prevent  me  from  doing  that.”  So,  you  see,  we 
may  lock  up  the  Exchange  from  doing  tliis ; we  may  prevent  the 
bucket  shops,”  but  we  have  got  to  go  further  than  that,  we  have  got 
to  prevent  these  other  people  from  doing  so.  When  I go  as  far  as 
that  I get  over  my  head  ; I can’t  see  our  way  out  of  it;  but  we  can 
prevent  it  on  the  floor  of  the  Produce  Exchange,  there  is  no  doubt 
about  that,  I would  like  to  have  you  say  all  you  can  on  this  subject, 
because  you  have  had  a large  experience. 

A.  I may  say  that  I think  any  legislation  of  this  kind  is  attended 
witli  difficulties,  but  there  can  be  no  wrong  without  a remedy.  The 
public  welfare  is  paramount  to  every  thing.  You  may  get  decisions 
that  certain  legislation  is  unconstitutional.  Very  well;  let  the  people 


3G8 


make  it  constitutional.  You  must  agitate  and  work  until  it  can  be 
made  constitutional.  That  is  the  situation  as  I sec  it.  I am  not, 
perhaps,  as  familiar  as  you  are  with  some  of  the  technical  points  in- 
volved in  this  question,  and  some  of  the  difficulties  involved,  but  I am 
clearly  of  the  opinion  that  there  can  be  no  wrong  without  a remedy. 
You  may  not  be  able  to  remedy  it  entirely  and  prevent  it  entirely,  but 
you  can  remedy  it  to  a great  extent.  One  of  the  necessary  factors  in 
the  situation  is  an  intelligent,  vigorous  public  opinion.  You  can’t 
have  that  without  the  aid  of  just  laws,  and  you  can’t  have  either  one, 
can’t  bring  about  the  effect  that  you  seek,  you  can’t  get  either  one 
without  the  other  ; and  one  of  the  most  useful  things  in  this  investi- 
gation is  to  bring  out  clearly  the  facts,  so  that  the  public  opinion  of  a 
man  wdio,  perhaps,  may  not  have  a dollar,  but  who  is  a citizen  of  the 
United  States,  and  who  has  rights  as  a human  being,  may  be  brought 
to  bear  upon  these  things,  and  you  may  be  certain  that  wherever  you 
attack  a vested  right,  as  the  men  who  are  engaged  in  it  will  be  apt  to 
call  it,  but  which  may  be  a vested  abuse,  a vested  wrong,  you  will  find 
vigorous  protests  against  your  course,  and  especially  is  that  true 
wherever  you  attack  wealth,  and  the  power  which  wealth  gives.  You 
will  find  that  portion  of  the  press  which  is  under  the  control  of  such 
men  or  identified  with  them  in  some  way,  making  the  most  vigorous 
outcry.  They  will  call  it  a communistic  idea.  I have  had  to  meet 
that  in  advocating  certain  reforms  that  I have  had  at  heart,  and  I have 
had  not  only  to  meet  that,  but  on  the  part  of  the  real  communists  I 
have  had  to  meet  the  opposite  charge  of  being  a monopolist,  and  all 
that  any  man  can  do  is  to  look  at  both  sides  of  a question  and  en- 
deavor to  weigh  judicially  the  various  elements,  making  up  his  mind 
as  to  what  is  nearest  right,  and  then  go  straight  ahead  in  an  honest  at- 
tempt to  accomplish  a remedy.  You  (Senator  Browning)  were  one 
of  the  pioneers  in  attempts  to  regulate  the  combinations  against 
the  public  welfare  when  you  introduced  the  coal  resolution  to  in- 
vestigate the  coal  combinations,  and  while  we  have  not  been 
able  to  prevent  that  combination,  there  is  a feeling  going  on  in 
the  public  mind,  to-day,  that  will  remedy  that  evil  before  a great 
wliile,  and  if  these  men  persist  in  tying  down  the  safety  valve, 
they  will  have  only  themselves  to  blame  if  there  comes  an  ex- 
plosion. The  great  middle  class  of  capitalists  are  perhaps  as  largely 
interested  in  seeing  equal  and  exact  justice  done  between  all  classes  as 
any  otliers.  They  are  greatly  interested  in  preventing  the  financial 
free-booters  from  hoisting  the  black  flag  and  preying  on  the  com- 
merce of  tlie  country,  and  there  inust  be  some  regulation,  some 
law  of  the  high  seas,  to  use  a figure  of  sj)eech,  that  will  prevent  that, 
and  th(!se  modei’ii  usages  demand  modern  remedies,  f,  of  course, 
l)av(;  not  had  all  I, his  testimony  before  mo,  and  some  points  are  not  as 
clear,  perhaps,  to  me  as  they  would  be  if  I had  been  through  the  same 


369 


routine  that  you  have  been  through.  But  this  investigation  is  a most 
valuable  one,  and  because  a law  against  “ corners”  in  Chicago  has  not 
prevented  all  “corners”  there,  it  does  not  follow,  by  any  means,  that 
it  has  not  limited,  and  may  not,  in  the  future,  prevent  this  evil. 

Q.  I am  hrmly  of  the  opinion  that  if  we  prevent  “ calls”  on  ’Change 
in  Chicago,  that  we  would  prevent  the  opportunity  of  making  cor- 
ners,” for  the  very  reason  that,  the  call  ” is  what  gives  them  the  op- 
2:)ortunity  to  bull  up  or  bear  down  the  market  which  regulates  the 
price  at  which  grain  is  sold  and  settlements  are  made.  That  is  my 
opinion,  but  I do  not  know  that  any  one  has  sustained  me  before  in 
that. 

A.  You  will  notice  that  in  this  written  or  printed  statement  of 
mine,  I say,  Of  course  there  will  be  a great  outcry  against  this  propo- 
sition from  the  gamblers  and  the  brokers  who  profit  by  fostering  the 
gambling  spirit.  We  will  be  told  that  trade  will  be  driven  from  New 
York  to  rival  cities;  that  seats  in  the  Stock  and  the  Produce  and  the 
Cotton  Exchange  would  be  worth  little  or  nothing,  etc.,  etc.  To  this 
I would  answerdhat  Yew  York  prospered  before  these  practices  were 
tolerated  and  would  continue  to  prosper  without  them  ; that  the  same 
cry  was  raised  in  San  Francisco  when  the  new  Constitution  of  Califor- 
nia drove  out  the  mining  stock  gamblers,  and  for  a time  it  appeared 
as  if  it  had  come  true,  but  gradually  it  became  apparent  that  Ihe  body 
politic  was  better  for  having  sloughed  olf  the  gambling  ulcer,  and  to-day 
it  is  generally  admitted  that  business  has  settled  down  to  a more 
healthy  and  satisfactory  state  than  before.” 

Q.  And  that  is  a fact  ? 

A.  That  is  the  fact.  As  I am  told  by  friends  of  mine  recently  from 
San  Francisco,  that  for  a year  or  so  the  people  who  said  I told  you 
so”  had  the  best  of  the  argument,  and  you  would  probably  find  the 
same  state  of  things  here.  The  only  cpiestion  is  what  does  the  great- 
est good,  of  the  greatest  number  demand,  and  when  after  full  ex- 
amination that  question  is  answered,  it  is  the  duty  of  every  good  citi- 
zen to  yield  to  the  measures  which  are  necessary. 

Q.  There  is  argument  enough  in  favor  of  such  a bill,  for  the  very 
men  who  have  come  before  us  have  admitted  very  frankly  that  the 
buying  and  the  selling  of  an  “'option  ” was  simply  buying  what  they 
didn’t  want,  and  selling  what  they  didn’t  have.  The  evidence  is  full 
of  that  from  beginning  to  end.  I want  to  ask  one  more  question  and 
then  I am  done.  In  the  event  of  onr  being  unable  to  prevent  any 
thing  of  this  kind,  and  the  continuation  of  this  business,  would  it  not 
be  well  to  tax  every  sale  that  was  made  at  the  rate  of  two  cents  on 
every  one  hundred  dollars  of  the  selling  value  of  the  merchandise,  ar- 
ticle or  commodity  sold,  or  contracted  to  be  delivered  in  the  future, 
and  to  provide  a proper  method  for  its  collection  ? 

47 


370 


A.  It  would  really  more  than  pay  the  maintenance  of  our  State 
canals  twice  over. 

Senator  Boyd  — Wouldn’t  that  tend  to  increase  the  cost  of  these 
things  to  the  consumer  — wouldn’t  the  consumer  ultimately  bear  the 
burden  ? 

Senator  Browning  — That  is  a question.  Do  you  think  that 
would  be  a good  thing  to  do  ? 

A.  I think  so  far  as  the  principle  is  concerned  that  it  would  be  de- 
sirable. So  far  as  the  amount  is  concerned,  it  might  have  to 
be  varied  to  apply  equitably  to  the  different  classes  of  brokers,  because 
the  commissions  of  different  classes  of  brokers  vary  largely,  and  to 
make  it  a proportionate  tax,  there  might  have  to  be  some  discrimina- 
tion exercised.  I would  call  your  attention,  however,  to  a resolution 
adopfed  by  the  Produce  Exchange  in  regard  to  your  bill.  You  will 
find  it  on  page  66  of  the  Produce  Exchange  report  for  1881. 

Q.  Do  they  make  reference  to  it? 

A.  Yes. 

The  witness  then  read  from  the  annual  report  of  the  ^Yew  York 
Produce  Exchange  for  1881,  page  66,  as  follows ; 

‘‘Special  Tax  On  Brokers’  Sales.” 

“ At  a large  and  enthusiastic  meeting  of  the  ]!^ew  York  Produce 
Exchange,  held  May  23,  1881,  the  following  protest  against  the  pas- 
sage of  the  proposed  bill  imposing  a tax  upon  brokers’  sales  was  unan- 
imously adopted : 

“ Whereas,  A ‘bill  to  tax  brokers’  has  passed  the  Senate  of  this 
State,  and  been  read  twice  in  the  Assembly,  which  bill  imposes  a tax 
upon  the  sale  of  certain  articles  dealt  in  on  this  Exchange,  which 
would  take  from  the  brokers  in  crude  petroleum  and  pork  sixteen  per 
cent  of  their  income,  and  from  the  broker  in  wheat  options  no  less 
than  eighty  per  cent  of  his  gross  receipts  ; and, 

“ Whereas,  So  exorbitant  a tax  could  only  be  warranted  by  peril 
of  financial  revolution  or  menace  of  the  disasters  of  war  to  the  State 
or  Nation,  which  exigencies  do  not  exist  ; therefore, 

“ Jlesolved,  That  this  Exchange  most  earnestly  j:)rotosts  against  the 
injustice  of  such  a tax,  calculated  as  it  is  to  destroy  the  business  of 
jiersons  engaged  in  traffic  in  these  important  staples,  and  to  drive  the 
trade  away  from  this  State  to  the  cities  of  other  States,  where  every 
facility  is  given  to  increase  trade  by  freedom  from  taxation,  by  the  re- 
moval, as  far  as  possible,  of  all  charges  and  obstacles  which  would  tend 
to  hampei’  trade  ; 

“ linsolvefl,  d’hat  we  indignantly  iirotest  against  the  appointment  of 


371 


commissioners,  as  proposed  by  said  bill,  who  shall  be  vested  with 
power  to  demand  access  to  the  brokers’  books,  and  to  the  names  of  all 
parties  for  whom  he  transacts  business. 

Resolved^  That  we  are  surprised  that  a bill  so  exorbitant  in  its 
requirement,  and  so  odious  fh  its  proposed  mode  of  enforcement, 
should  so  rapidly  have  passed  the  Senate  and  gone  through  two  read- 
ings in  the  Assembly. 

“ Resolved,  That  a copy  of  these  resolutions  be  laid  before  the  Leg-  • 
islature  with  the  respectful  but  most  earnest  assurance  of  this 
Exchange  that  in  view  of  the  close  strife  for  trade  now  existing  in  the 
chief  commercial  cities  of  the  Union  which  has  reduced  the  rate  of 
brokerage  to  but  a tithe  of  what  it  was  ten  years  ago,  our  great  State 
should  seek  to  lessen  instead  of  increase  the  burden  of  taxation,  and 
that  any  other  course  will  arouse  a feeling  of  deep  resentment  in  the 
community.” 

Senator  Brownij^'G  — The  bill  that  that  refers  to  taxed  all  sales. 

^It  was  introduced  in  1881.  This  bill  was  introduced  in  1882,  and  it  only 
proposed  to  tax  sales  for  future  delivery,  in  other  words  ^‘options.” 
It  only  taxes  the  business  that  is  carried  on  by  speculation,  and 
exempts  all  legitimate  sales  where  there  is  actual  delivery.  It  really 
gives  the  actual  buyer  an  advantage  over  the  speculator,  and  that  fact 
would  overcome  the  objection  that  I think  the  Senator  (Senator  Boyd) 
raises,  for  the  reason  that  he  would  have  an  advantage  over  the  specu- 
lator, and  that  would  have  a tendency  to  reduce  the  terms  of  the 
speculator  rather  than  to  increase  them.  At  the  same  time  I do  not 
see  how  they  can  figure  out  eighty  per  cent,  for  the  reason  that  it  is  a 
tax  of  two  per  cent  on  the  selling  value  of  the  article,  two  cents  on 
eacli  $100  of  the  selling  value.  It  might  make  that  percentage  on  the 
actual  money  passed  between  the  brokers;  it  might  be  a large  tax  on 
the  margins  for  the  reason  that  it  is  not  a tax  on  the  margin,  it  is  a 
tax  on  the  selling  value. 

The  Witness — I think  that  the  principle  of  restriction  of  such 
transactions  is  right,  but  of  course  every  one  who  is  in  that  kind  of 
business  will  think  it  is  wrong,  and  so  far  as  the  arbitrary  character  of 
the  proposition  of  inspecting  their  books  and  of  appointing  com- 
mission, etc.,  is  concerned,  it  is  not  as  inquisitorial  as  the  provisions 
that  are  arbitrarily  levied  upon  the  merchants  of  the  Pacific  coast  by 
the  Central  Pacific  Eailroad  Company.  They  actually  make  the 
merchant  stipulate  in  his  contract  that  he  will  not  sell  any  goods 
directly  or  indirectly  to  any  person  who  gets  goods  around  the  Horn, 
and  that  his  books  shall  be  at  all  times  open  to  the  inspection  of  the 
agent  of  the  railroad  to  show  that  he  is  not  lying  about  it.  Corporations 
are  every  day  dictating  to  the  people  arbitrary  and  inquisitorial  things 
which,  if  dictated  by  legislative  representatives  of  the  people  for  the 


372 


good  of  the  whole  people,  would  be  termed  by  the  men  on  whose  corns 
they  trod  arbitrary  and  inquisitorial.  I think  that  if  grocers  should 
combine  to  advance  the  price  of  food  staples,  that  they  should  be  sub- 
ject to  this  same  principle.  I think  that  any  combination  or  act  on 
the  part  of  persons  possessing  great  poVer  to  make  the  rest  of  the 
community  tributary  to  them  is  wrong  in  principle,  and  if  the  com- 
mon law  does  not  provide  a remedy  that  is  adequate  and  sufficient,  the 
statute  law  ought  to,  and  that  the  necessary  machinery  of  commission 
or  otherwise  ought  to  be  ^irovided  to  make  such  laws  effective.  Of 
course  it  will  always  be  more  or  less  difficult  to  draw  the  line  where 
the  legitimate  a,ction  of  supply  and  demand  begins  and.  ends,  and 
where  illegitimate  speculations  or  ‘^corners”  begin  and  end;  but  I do 
not  think  that  those  difficulties  are  insurmountable,  and,  if  necessary, 
you  must  have*  for  the  public  good  certain  limits,  arbitrary  or  other- 
Avise,  placed  Avhere  they  will  begin  and  end,  and  certain  supervision 
and  control  of  those  affairs.  It  was  said  by  the  whisky  distillers 
Avhen  the  tax  Avas  put  on  whisky  that  you  could  not  collect  it,  and 
when  they  got  it  up  to  the  highest  point  it  did  proA^e  A'ery  difficult  of 
collection  ; but  the  Internal  Eevenue  Department  kept  adding  one 
regulation  after  another  that  Avas  thought  by  the  Avhisky  distillers  to 
be  arbitrary  in  the  extreme,  and  they  said  : Why  should  Ave  be  dis- 
criminated against  in  this  manner?  ” The  answer  Avas,  first,  that  the 
necessities  of  the  government  compelled  it ; second,  that  there  was  no 
other  line  of  trade  t^hat  could  be  so  well  legislated  against  in  con- 
nection with  the  public  Avelfare  to  attain  the  public  Avelfare  as  that  of 
the  distillers  of  liquors.  A great  many  violations  of  the  internal  reve- 
nue laAv  took  place,  but  gradually  they  perfected  the  system  so  that  noAV 
a very  large  tax  is  collected  and  pretty  thoroughly  collected  from  that 
article.  Everything  is  relative  in  this  world.  You  might  get  too  high 
a tax  on  whisky.  You  might  get  too  higli  a tax  on  gambling 
transactions.  But  I belicA^e  that  there  is  a happy  medium  that  can  be 
studied  out  that,  while  it  wouldn’t  suit  the  men  AA'ho  Avere  taxed, 
Avould  be  jiracticable  and  Avould  be  for  the  public  good. 

Q.  In  other  words,  if  Ave  can’t  prevent  this  evil,  tax  it  and  make  it 
pay  the  State  something.  I am  told  it  will  more  than  pay  for  the 
maintenance  of  the  canals,  and  it  may  be  only  a few  years  before  YeAV 
York  city  Avill  be  obliged  to  pay  for  tlie  maintenance  of  the  canals. 

A.  I think,  however,  that  in  beginning,  you  should  begin  below 
and  raise  it,  instead  of  beginning  higher  and  lowering  it.  The  gov- 
ernment ])egan  by  ])utting  the  12  tax  on  Avhisky.  If  they  had  begun 
by  putting  fifty  cents  on,  and  as  they  perfected  their  system,  raised  it,., 
it  would  have  been  better. 


373 


By  Senator  Boyd  : 

Q.  Is  there  not  this  difference  — the  manufacture  and  sale  of  whisky 
is  a legitimate  transaction,  whereas  a speculation  in  products,  in 

corners,”  is  a system  of  gambling  ? 

A.  I think  it  IS.  I merely  brought  forward  the  distillers  of  liquor, 
etc,,  as  illustrating  the  difficulties  that  would  be  experienced  probably 
in  the  collection,  and  tliat  there  would  have  to  be  a system  of  regula- 
tions established  wliich  would  be  considered  arbitrary  and  inquisitorial, 
in  order  to  collect  any  tax  which  might  be  thus  levied. 

Q.  But  granted  that  the  dealing  in  “futures”  and  corners”  is  an 
illegitimate  transaction,  a system  of  gambling,  would  a law  laying  a 
tax  upon  that  not  be  authorizing  by  the  law  of  the  State  that  which 
is  already  morally  illegal  ? 

A.  If  it  was  imposed  as  a restrictive  measure  I don’t  think  that  con- 
struction could  fairly  be  placed  upon  it. 

Q.  Supposing  faro  banks  and  other  gambling  institutions  should  be 
taxed  ? 

The  WiTN'ESS  — Would  it  be  best  to  impose  so  large  a tax  at  first 
until  you  had  felt  your  way  along?  It  is  just  like  a governor  to  a 
steam  engine.  You  don’t  want  to  put  it  on  so  strong  that  it  is  going 
to  shut  off  the  steam  altogether.  You  want  to  put  it  on  ajust  strong 
enough  spring,  so  it  will  control  without  shutting  it  off.  I merely 
raise  the  point. 

By  Senator  Browning  : 

Q.  I have  been  very  glad  to  hear  what  you  have  said.  I gather 
this  from  what  you  have  said  in  brief,  that  you  are  of  the  opinion 
that  if  it  would  he  a constitutional  thing  for  the  State  to  make  “ calls  ” 
on ’Change  an  unlawful  act,  and  the  settlements  without  actual  de- 
livery an  unlawful  act,  we  would  take  one  step,  or  perhaps  two  toward 
preventing  speculation  in  grain  ? 

A.  I would.  I would  take  well-considered  steps  forward  in  trying 
to  remedy  these  evils.  I have  not  thought  just  how  far  this  preven- 
tion of  “ calls  ” would  go  toward  prohibiting  them. 

Q.  That  fixes  the  quotation  ? 

A.  But  I am  clearly  of  the  opinion  now  as  regards  the  settlement 
that  I would  make  them  illegal. 

Q.  The  New  York  Produce  Exchange,  we  will  say,  is  a fine  institu- 
tion, we  all  grant  that.  Some  members  are  estimable  gentlemen.  Our 
best  citizens,  we  will  say,  belong  to  that  institution,  and  they  are  all 
engaged  in  what  they  consider  to  be  a perfectly  legitimate  business, an 
honorable  calling.  They  meet  on  ’Change  and  they  sell  or  buy,  and 
they  go  home  and  their  conscience  is  not  troubled  by  their  transac- 


374 


tions.  But  if  you  make  it  an  unlawful  act  for  them  to  settle  without 
delivery  upon  what  is  now  called  sottlenient  day,  which  is  the  last  day 
of  the  month,  it  would  be  different.  By  the  testimony,  I think,  of 
Mr.  Partridge,  who  is  present,  it  appears  that  the  Exchange  is  a 
party  to  the  transaction,  for  the  reason  that  when  you  and  I make  a 
contract  to  deliver  one  to  the  other  a certain  number  of  bushels  of 
grain  in  January  or  in  December,  we  go  down  to  some  clerk  in  that  Ex- 
change, and  pay  to  him  I believe  |10.  By  that  transaction,  and  the 
payment  of  the  $10,  the  Exchange  to  a certain  extent  becomes  stake- 
holder and  is  a party  to  the  transaction,  and  if  you  make  any  connec- 
tion with  an  act  of  settlement  an  unlawful  act,  for  which  the  Ex- 
change itself  can  be  held  accountable  by  the  State  or  some  one  repre- 
senting the  State,  I think  it  will  go  some  little  ways  toward  making 
this  business  obnoxious  to  the  eyes  of  the  people  and  to  men  them- 
selves who  are  engaged  in  it  ? 

A.  You  take,  for  instance,  this  system  of  options”  and “ futures  ” 
and  ‘^corners,”  until  they  are  prohibited,  Avell-meaning  men  will  rea- 
son with  themselves  in  this  way  : Well,  these  things  are  tolerated 
and  looked  upon  as  lawful,  and  I can’t  make  my  living,  and  can’t 
conduct  my  business  unless  I indulge  in  them,  the  same  as  others  do, 
and  while  I think  they  are  wrong  in  principle,  until  they  are  unlawful, 
I am  obliged  to  go  on  with  them.”  It  is  just  like  a man,  for  instance, 
like  myself,  on  special  rates  of  freight.  I may  say  that  I think  that 
special  rates  of  freight  are  wrong  ; but  as  long  as  they  are  tolerated 
and  I am  obliged  to  compete  with  others,  I have  to  avail  myself  of 
those  facilities.  At  the  same  time,  my  conscience  may  be  sufficiently 
vigorous  to  say  they  are  wrong,  and  I will  work  against  them,  and  I 
will  try  and  have  them  prohibited,  and  I will  try  and  have  everybody 
put  upon  the  same  basis  for  like  transactions,  so  there  will  be  no  fa- 
voritism or  any  thing  of  that  kind,  and  without  unduly  hampering  or 
crippling  a transportation  company,  oblige  them  to  be  more  open  and 
fair  in  their  transactions  than  they  have  been  in  the  habit  of  being. 

Senator  Boyd  — I once  heard  of  a banker,  who  had  been  in  the 
business  all  his  life,  say  that  he  knew  so  much  about  it,  that  he  was 
satisfied  there  were  a great  many  evils  existing  in  the  banking  busi- 
ness that  he  wanted  to  expose  and  prevent,  but  at  the  same  time,  while 
they  existed,  lie  wanted  to  take  advantage  of  them,  and  make  money. 

By  Senator  Boyd: 

(2-  Is  it  not  a conspiracy  against  human  life  for  a man  to  buy  and 
liold  from  use  the  necessaries  of  life  ? 

A.  1 think  it  is,  if  carried  to  that  extent.  As  I remarked  before, 
these  questions  are  relative  to  a great  extent,  and  if  the  necessaries  of 


375 


life  were  bought  and  held  by  a man,  or  a combination  of  men,  until 
the  people  were  starving,  of  course  it  would  be  a conspiracy  against 
human  life. 

Senator  Browning — I would  like  to  read  here,  and  get  in  testi- 
mony, an  extract  from  rule  30,  on  ‘^margins.’’  It  is  a rule  of  the 
New  York  Produce  Exchange  that  relates  to  the  grain  trade. 

Senator  Browning  then  read  the  following  from  the  Annual  Eeport 
of  the  New  York  Produce  Exchange,  for  1881,  page  185. 

Margins. 

“ Rule  30  — On  all  sales  or  purchases  of  grain  to  arrive,  or  for  future 
delivery,  either  party  to  the  contract  shall  have  the  right  to  call  an 
original  margin  of  ten  cents  per  bushel  on  wheat,  rye  and  barley,  and 
five  cents  per  bushel  on  corn  and  oats,  and  a further  margin  from  time 
to  time  to  the  extent  of  any  variation  in  the  market  value  from  the 
contract  price,  said  margin  to  be  deposited  in  such  bank  or  trust  com- 
pany as  may  have  been  designated  by  the  finance  committee  of  the 
Produce  Exchange.” 

They  really  become  a party  to  the  transaction. 

Hon.  William  Dotud,  being  duly  sworn,  was  interrogated  and  tes- 
tified as  follows  : 

By  Senator  Browning  : 

Q.  Where  do  you  reside  ? 

A.  New  York. 

Q.  What  is  your  business  ? 

A.  President  of  a bank  and  of  a railroad  corporation,  etc. 

Q.  Which  bank  are  you  president  of  ? 

A.  Bank  of  North  America. 

Q.  How  long  have  you  been  president  of  that  bank  ? 

A.  Nearly  nine  years. 

Q.  What  railroad  are  you  president  of  ? 

A.  The  Hannibal  and  St.  Jo.  Railroad  Company,  of  Missouri. 

Q.  How  long  have  you  been  president  of  that  road  ? 

A.  Five  years. 

Q.  Will  you  state  to  the  committee  your  opinion  in  relation  to  the 
whole  system  of  making  “corners”  and  dealing  in  “futures,”  with 
reference  to  its  effect  upon  commerce,  and  its  influence  upon  the  pub- 
lic welfare  ? 

A.  I think  “corners”  in  produce  are  injurious  to  the  producer  and 
consumer  ; often  to  the  producer  fixing  a fictitious  value,  and  to  the 
consumer  a price  that  is  burdensome  for  him  to  pay. 


Q.  Would  yon  designate  the  system  of  dealing  in ‘futures  ” as  a 
gambling  system  ? 

A.  In  general^  terms,  yes. 

Q.  Wbat  effect  has  the  system  of  making  corners  ” and  dealing  in 
‘‘  fiiLLirt's  ” upon  the  railroad  interests  of  the  country  ? 

A.  Injurious,  for  this  reason  : products  may  be  cornered  in  a cer- 
tain central  point,  and  they  lay  there,  and  when  they  do  come  «ut,  tliey 
come  out  in  such  quantities  that  railroads  are  not  able  to  do  tlie  busi- 
ness as  profitaldy  as  tliey  would  if  it  were  scattered  over  a longer  time. 

Q.  flow  does  that  affect  the  labor  interest? 

A.  At  times  making  it  in  great  demand,  and  at  other  times  making 
it  extremely  dull. 

Q,.  Thereby  occasionally  leaving  the  working  man  entirely  out  of 
employment? 

A.  Yes,  sir  ; and  at  other  times  overworked. 

Q.  What  effect  has  it  upon  the  price  of  the  necessaries  of  life? 

A.  As  I said  before,  fixing  an  unwarranted  value  at  times,  and 
thereby  affecting  the  consumer  unfavorably,  and  the  jiroducer  by  hold- 
ing out  hopes  of  future  prices  the  same  as  perhaps  he  is  getting  under 
this  corner. 

Q.  The  increase  of  price  of  bread,  meat  and  the  other  necessaries  of 
life,  thus  produced,  tends  to  diminish  the  value  of  the  laborer’s  wages, 
does  it  not? 

A.  Certainly,  as  it  decreases  the  purchasing  value  of  a day’s  work. 

Q.  AVhat  effect  has  this  system  of  speculation  upon  the  banking 
interests  of  the  country  ? 

A.  At  times  making  extraordinary  demands  for  money,  and  at  other 
times  it  not  being  wanted,  there  being  no  demand  for  it. 

Q.  Does  it  produce  an  unnatural  fluctuation  in  the  money  market  ? 

A.  Yes,  sir;  violent  fluctuations  at  times. 

Q..  Detrimental  to  the  general  interests  of  the  country  ? 

A.  It  is  always  better  to  have  the  products  of  a country,  and  the. 
labor  of  a country,  and  the  business  of  a railroad  moving  along  on  an 
even  keel,  doing  the  work  as  offered  to  them,  by  the  crops  coming  off 
at  the  proper  time  and  being  moved  as  they  should  be  at  the  proper 
time. 

(1.  Do  you  look  upon  the  system  of  dealing  in  futures”  and  mak- 
ingcorners  ” as  a great  public  evil  which  demands  remedy,  legis- 
lative and  otherwise  ? 

A.  Dealing  in  “futures”  and  “corners”  are  separated  from  each 
other  to  a great  extent ; there  are  many  legitimate  dealings  in  ^‘futures.’\ 

il-  I speak  of  the  illegitimate  system  of  speculation  ? 

A.  Of  course  that  is  injurious. 


377 


Q.  Do  you  think  it  is  the -duty  of  the  Legislature  to  interfere  for  the 
prevention  of  these  disastrous  transactions? 

A.  Certainly  ; it  is  the  duty  of  legislators  to  protect  the  whole 
people. 

Q.  Could  you  suggest  any  form  of  an  act  which  would  reach  this 
matter  ? 

A.  I could  not,  because  I know  nothing  of  the  modes  of  dealing  in 
“ futures.” 

Q.  Can  you  state  any  instances  wherein  the  banking  interests  of  the 
country  suffered  by  reason  of  any  of  those  illegitimate  transactions  in 
produce  ? 

A.  I don’t  know  that  banks  have  suffered  directly  ; they  have  suf- 
fered indirectly  by  the  disarrangement  of  their  business  as  I stated 
before,  at  times  very  active,  and  at  others  very  dull,  largely  produced 
by  this  speculation.  , 

By  Senator  BROWi^iKG: 

Q.  Do  I understand  you  that  you  do  business  on  the  Exchange  floor? 

A.  Oh,  no;  I am  president  of  a bank. 

Seth  Hastings  Grant,  being  duly  sworn,  was  interrogated  and  testi- 
fied as  follows : 

By  Senator  Boyd: 

Q.  Where  do  you  reside  ? 

A.  In  the  city  of  New  York. 

Q.  What  is  your  business  ? 

A.  Superintendent  of  the  New  York  Produce  Exchange, 

Q,  Are  you  familiar  with  all  the  rules  of  the  Produce  Exchange  ? 

A.  To  a certain  extent  I am. 

Q.  How  long  have  you  been  superintendent? 

A.  Nine  years  and  a half. 

Q.  State,  if  you  please,  your  opinion  in  relation  to  the  system  of 
dealing  in  ‘^margins”  as  carried  on  at  various  places  throughout  the. 
■State. 

A.  Allow  me  to  say,  my  duties  in  the  Exchange  are  purely  executive; 

I pay  no  attention  really  to  the  margins  at  all ; they  are  in  one  depart- 
ment of  the  Exchange  by  itself ; the  margins  all  pass  through  my  hands, 
and  that  is  about  all  that  I do  know  about  them. 

Q.  Explain  how  the  system  of  dealing  in  '‘margins”  is  carried  on  ? 

Y A person  will  make  a contract  with  another  for  a certain  amount 
of  grain,  it  may  be  of  pork  or  lard,  which  are  particularly  connected 
with  future  transactions  ; a contract  is  made  and  the  rules  demand, 
say  in  the  case  of  grain,  that  there  shall  be  a certain  amount  put  up 
48 


on  each  bushel  of  wheat  or  corn  or  oats,  as  the  case  may  be;  either 
party  has  the  right  to  make  a call  for  this  margin  on  the  original 
transaction  ; that  is  called  an  original  margin  ; then  he  has  the  right 
to  call,  either  party  as  the  case  may  be,  for  variations  in  the  market, 
in  whose  ever  favor  the  variation  may  be. 

By  Senator  Browning  : 

Q.  Is  there  a penalty 

A.  If  they  do  not  put  up  this  margin,  of  course  they  are  liable  to  be 
cited  before  the  committee  for  not  having  carried  out  what  the  rules 
call  for . 

By  Senator  Boyd  : 

Q.  Between  what  sums  do  the  margins  range' in  value  generally  ? 

A.  Usually  from  S250  to  $800  for  each  transaction. 

Q.  And  is  there  a margin  simply  on  the  gross  amount  of  grain  or 
per  bushel  ? 

A.  These  are  sold  usually  in  5,000  or  8,000  bushel  lots,  so  it  would 
be  $250  or  $800,  whichever  the  case  might  be. 

Q.  Then  the  buyer  puts  up  the  $250  or  $800  to  secure,  the  delivery 
of  so  much  grain  at  a future  date,  does  he  not  ? 

A.  Yes,  sir,  both  parties  are  supposed  to  put  up  the  original  mar- 
gin. 

Q.  Both  the  buyer  and  seller  ? 

A.  Yes,  sir. 

Q.  Please  explain  how  that  is  ? 

A.  It  is  in  one  case  to  secure  the  seller  that  he  will  deliver  the 
goods,  and  the  purchaser  that  he  will  obtain  the  goods. 

Q.  Then  if  the  prices  should  go  down,  the  buyer  puts  up  the  mar- 
gin to  make  that  good,  does  he  ? • 

A.  Yes,  sir  ; he  is  called  upon  for  an  additional  margin,  just  the 
amount  that  the  market  has  gone  down. 

Q.  And  if  it  should  go  against  the  seller  is  he  called  upon  for  an 
additional  margin  ? 

A.  He  is  called  upon  in  the  same  way. 

Q.  In  order  to  keep  even  with  the  market  rates  daily? 

A.  Yes,  sir. 

(2-  How  often  are  these  margins  called  for  between  the  time  when 
the  contract  is  made  and  tlie  time  named  for  delivery  ? 

A.  It  might  he  once  or  twice,  or  it  might  be  eight  or  ten  times,  ac- 
cording to  tin*  fluctuations  in  the  market. 

Then  the  fullilment  of  such  a contract  depends  upon  chances  to 
a great  extent,  so  far  as  the  parties  are  mutually  concerned? 


379 


A,  Yes,  sir,  I suppose  you  might  say  that. 

Q.  Would  you  call  this  gambling? 

A.  I should  term  it  speculation. 

Q.  Wherein  would  it  differ  from  an  ordinary  gambling  operation,  if 
at  all  ? 

A.  As  I am  not  acquainted  with  gambling  I hardly  can  say. 

Q.  I do  not  mean  to  say  practically,  but  we  all  have  our  theoretical 
knowledge? 

By  Senator  Browning  : 

Q.  Wherein  does  it  differ  from  a bet  and  wager  ? 

A.  I should  think  it  partook  of  that  nature. 

Q.  You  bet  it  will  go  up,  and  I bet  it  will  go  down  ; that  is  about 
the  size  of  it  ? 

A.  It  partakes  of  that  nature,  yes,  sir. 

By  Senator  Boyd  : 

Q.  To  what  extent  are  those  transactions  carried  on  in  the  Produce 
Exchange  ? 

A.  It  is  hundreds  of  thousands  of  bushels  a day,  probably  millions 
of  bushels  a day. 

Q.  Every  day  throughout  the  year? 

A.  Yes,  sir,  on  an  average. 

Q.  How  much  money  do  you  know  has  been  put  up  in  a single  day 
on  margins  of  that  kind  in  the  Produce  Exchange  ? 

A-  The  largest  amount  that  I know  of  was  put  up  day  before  yes- 
terday, and  that  was  $625,000,  which  was  about  $75,000  more  than 
any  other  day  that  I know  of. 

Q.  How  much  is  it  on  an  average  throughout  the  year  daily  ? 

A.  So  far  this  year,  up  to  the  1st  of  November,  there  have  been  put 
up  about  $17,000,000. 

Q.  From  the  1st  of  January  till  to-day  ? 

A.  Yes,  sir. 

Q.  And  these  transactions  are  all  purely  speculative,  are  they  not? 

A.  I suppose  the  great  majority  of  them  are  ; I do  not  suppose  that  all 
of  them  are  ; I suppose  that  many  of  them  are  legitimate  transactions 
between  the  parties  who  are  buying  for  future  delivery,  and  so  secure 
themselves. 

Q.  What  proportion  do  the  legitimate  transactions  bear  to  the  purely 
speculative  transactions  ? 

A-  T suppose  the  purely  speculative  are  largely  in  the  majority  ; I 
shouldn’t  care  to  say  what  proportion  it  would  be,  but  largely  in  the 
majority. 


380 


Q.  What  is  your  opinion  of  the  effect  produced  upon  commerce 
generally  by  such  a system  of  speculation? 

A.  I never  have  come  to  a clear  conviction  in  my  own  mind  as  to 
the  bearings  of  this  system  of  dealing  ; I knovv  tliat  it  began  on  tliis 
Exchange,  on  our  own  Exchange,  four  or  five  years  ago,  particularly, 
and  has  been  increasing  ever  since  ; but  I think  the  feeling  lias  been, 
that  it  was  productive  of  advantage  to  the  business  interests  of  the 
city. 

Q.  Has  it,  to  your  knowledge,  affected  the  legitimate  dealers  outside 

the  Produce  Exchange  ? 

A.  No,  sir. 

Q.  You  don’t  think  it  has  ? 

A.  No,  sir.  Here  is  corn  yesterday  $1.10.  It  touched  tlie  highest 
point  that,  perhaps,  it  has  almost  ever  touched,  and  I do  not  suppose 
corn  meal  is  one  cent  higher  than  it  was  two  weeks  ago  when  corn  was 
twenty  cents  lower. 

Q.  Do  you  know  of  any  business  failures  having  resulted  from 
speculation  ? 

A.  Very  few  indeed. 

Q.  You  know  of  some  ? 

V Yes,  sir. 

Q.  In  the  city  of  New  York  ? 

V.  Yes,  sir. 

Q.  How  many  within  the  past  year  ? 

A.  If  you  include  all  classes  of  provisions  as  well,  j.  suppose  there 
have  been  half  a dozen. 

Q.  Resulting  from  this  system  of  speculation  ? 

A.  As  far  as  I can  judge,  yes. 

Q.  Has  your  attention  been  drawn  to  the  existence  of  certain  so- 
called  business  places  named  ^^bucket-shops”  in  the  city? 

A.  It  has  not. 

Q.  Do  you  know  of  any  such  places  ? 

A.  I do  not  know  of  one. 

Q.  Have  you  ever  had  any  transaction  with  any  such  places  in  any 
part  of  the  State  ? 

A.  No,  sir. 

Q.  Would  you  just  take  this  book,  indorsed  The  New  York  Pro- 
duce Exchange,  Annual  Report  of  1881,”  and  look  at  page  104  and 
say  if  that  is  the  way  in  which  tlie  liusiness  is  carried  on  alone  at  pres- 
ent in  tlie  Produce  Exchange.  Please  read  tliat  section. 

'IMie  witness  then  read  from  tlie  book  as  indicated  as  follows: 

“ Skctiok  3. — 'fhe  ])ur})oses  of  said  corporation  shall  be  to  provide 
and  regulate  a suitable  room  or  rooms  for  a Produce  Exchange  in  the 


381 


city  of  ISTew  York,  to  inculcate  just  and  equitable  principles  in  trade, 
to  establish  and  maintain  uniformity  in  commercial  usages,  to  acquire, 
preserve,  and  disseminate  valuable  business  information,  and  to  adjust 
controversies  and  misunderstanding^  between  persons  engaged  in 
business.” 

Q.  Does  the  business,  as  now  carried  on  in  the  Produce  Exchange 
indicate  that  this  is  all  the  function  exercised  by  the  institution,  or 
does  it  exceed  this  ? 

A.  I do  not  know  wherein  it  exceeds  it.  These  dealings  have  to  be 
very  equitably  carried  out  if  the  person  expects  to  remain  a member  of 
the  Exchange. 

Q.  Then  suppose  a man  enters  into  a contract,  and  the  market  so 
changes  that  he  is  unable  to  fulfill  that  contract,  what  do  the  rules  of 
the  Exchange  require  in  such  a case  ? 

A,  In  the  grain  trade  it  provides  here  for  defaults  on  page  186,  that 
is  he  is  notified  in  writing  by  the  committee  on  grain  of  the  failure  to 
deliver,  “ and  the  committee  on  grain  shall,  at  the  next  call,  publicly 
read  such  notice,  and  buy  in  the  grain  for  account  of  the  party  direct- 
ing the  purchase,  but  no  unreasonable  price  shall  be  paid  arising  from 
manipulated  or  fictitious  markets,  or  unusual  detention  in  transporta- 
tion,” and  in  the  provision  rules  it  provides  that  they  shall  be  sold 
out. 

Q.  Will  you  turn  to  page  109  and  read  section  second  of  the 
by-laws  ? 

A.  It  is  the  same  very  nearly  as  that  section  of  the  charter  which 
was  referred  to. 

Q.  Will  you  please  read  section  second  ? 

The  witness  then  read  from  page  109  of  the  annual  report  before 
mentioned  as  follows  : 

Objects. 

^‘Section  2.  The  objects  of  this  association  are  to  provide  and 
regulate  a suitable  room  or  rooms  for  a Produce  Exchange  in  the  city 
of  Yew  York,  to  inculcate  just  and  equitable  principles  in  trade,  to 
establish  and  maintain  uniformity  in  commercial  usages,  to  acquire, 
preserve,  and  disseminate  valuable  business  information,  and  to  adjust 
controversies  and  misunderstandings  between  its  members.” 

Q.  There  is  nothing  in  that,  do  you  think,  that  would  imply  any 
provision  for  dealing  in  margins  ” or  futures  ? ” 

A.  Nothing  that  would  prevent  such  dealings. 

Q.  Nothing  to  provide  for  them,  however,  is  there  ? 

A.  Not  specifically  any  more  than  there  is  in  any  other  mode  of 
dealing. 

Q.  When  was  this  system  of  by-laws  adopted  ? 


382 


A.  In  April,  1873.  It  so  happens  that  it  was  the  first  work  tliat  I 
engaged  upon  in  coming  to  the  Exchange  to  re-cast  these  by-laws. 

Q.  Will  you  please  read  section  28,  page  123. 

The  witness  then  read  as  follows  : 

Settlemeots  by  and  with  Members  who  Fail  to  Meet  their 

Contracts. 

'‘Sec.  38.  It  shall  be  the  duty  of  any  member  failing  to  meet  his 
contracts  with  or  to  any  other  member  of  this  Exchange,  to  immedi- 
ately notify  the  president  in  writing  of  such  failure,  and  the  president 
shall  thereupon  cause  the  following  notice  to  be  posted  on  the  official 
bulletin  : 

“Notice  — Members  of  the  Exchange  are  hereby  notified  of  the 
inability  of  to  meet  his  (or  their)  mercantile  obli- 

gations. All  contracts  with  him  (or  them)  must  therefore  be  closed 
as  provided  in^  section  40  of  the  by-laws.” 

Q.  That  virtually  excludes  this  person  from  any  further  interest  in 
the  business  of  the  Exchange,  does  it  not? 

A.  No,  sir. 

Q.  What  effect  has  it  upon  him  ? 

A.  In  itself,  it  has  no  effect,  but  the  Board  have  since  adopted  a 
rule  which  is  found  on  page  137.  It  is  a floor  rule,  but  it  is  equally 
binding  upon  the  members  with  the  by-laws.  It  is  rule  10,  which 
reads  as  follows  : 

Kule  Ten. 

“ No  member  who  has  failed  to  meet  his  contracts  shall,  while  posted 
therefor,  have  the  privilege  of  offering  to  buy  or  sell  publicly  on  the 
floor  of  the  Exchange.” 

Q.  Then  the  posting,  means  this  notice  having  been  posted  up  that 
you  read  in  section  38  ? 

A.  Yes,  sir. 

Q.  Then  he  is  denied  any  privilege  of  offering  to  buy  or  sell  publicly  ? 

A.  Buying  or  selling  publicly;  that  means  on  a “call ; ” it  does  not 
affect  his  dealings  in  any  oilier  way. 

Q.  In  any  private  transaction  ? 

A.  No  ; the  reason  is  this,  that  if  it  wore  not  for  such  a rule,  if 
this  person  came  upo^i  the  “ call”  and  offered  to  buy  or  sell,  his  bid  or 
offer  would  have  to  be  taken  because  he  is  a member  of  the  Exchange 
in  good  standing,  and  this  is  to  prevent  his  coming  to  the  “call”  and 
olTei’ing  to  buy  or  sell  there. 

(2.  What  good  end  is  accomplished  by  so  dis(jualifying  this  person, 
if  any  ? 


383 


A.  He  has  shown  himself  as  financially  disabled,  and  consequently 
ought  not  to  have  the  same  privilege  with  a person  that  is  not  so. 

Q.  Turn  to  page  126,  section  47,  and  please  read  what  the  duties  of 
the  superintendent  are  ? 

A.  In  respect  to  “ margins  ? ” 

Q.  Any  of  the  duties  ? 

The  witness  then  read  as  follows : 

SuPERINTENDEl^T, 

‘‘  Sec.  47.  The  superintendent  shall,  under  the  direction  of  the  board 
of  managers,  take  charge  of  the  details  of  the  work  of  the  Board, 
and  of  the  various  standing  and  special  committees  thereof,  keeping 
and  preserving,  in  an  orderly  and  systematic  manner,  all  the  books 
and  documents  of  the  Exchange,  so  that  they  shall  at  all  times  be 
accessible  and  convenient  for  reference.  He  shall  collect  and  pay  over 
to  the  treasurer  all  moneys  due  to  the  Exchange  for  assessments,  fines, 
fees  or  otherwise.  He  shall  receive,  deposit  and  pay  over  such  margins 
on  contracts  as  members  may  be  required  to  place  in  his  hands  by  the 
rules  regulating  the  respective  trades  of  the  Exchange,  but  the  Ex- 
change shall  incur  no  pecuniary  responsibility  in  respect  to  such  mar- 
gins.’’ 

Q.  Then  this  rule  makes  it  the  duty  of  the  superintendent  to  pay 
over  the  margins,  and  in  fact  to  foster  the  dealing  in  ‘‘margins  ?” 

A.  Not  to  foster,  no,  sir  ; I shouldn’t  consider  it  so  ; I do  not  con- 
sider that  I have  any  responsibility  in  that  respect  whatever.  It  is  a 
mere  matter  of  business  routine. 

Q.  This  is  a rule  which  actually  provides  for  the  carrying  on  of  that 
system  of  trade  in  the  Exchange  ? 

A.  Yes,  sir;  this  facilitates  the  carrying  on  of  that  system  of  trade. 

Q.  Then  the  superintendent’s  duties  in  relation  to  “margins”  are 
that  “ he  shall  receive,  deposit  and  pay  over  such  margins  on  contracts 
as  members  may  be  required  to  place  in  his  hands  by  the  rules  regu- 
lating the  respective  trades  of  the  Exchange,  but  the  Exchange  shall 
incur  no  pecuniary  responsibility  in  respect  to  such  margins.”  The 
responsibility  falls  entirely  upon  the  persons  engaged  in  the  transaction? 

A. /Yes,  sir. 

Q.  With  whom  are  the  margins  deposited  ? 

A.  Do  you  mean  in  the  Exchange  ? 

Q.  Yes,  sir. 

A.  Technically  with  myself ; but  I have  a clerk  that  is  specially 
charged  with  that  duty,  so  that  I do  not  really  have  any  thing  to  do 
with  receiving  them. 

Q.  Are  they  not  deposited  with  the  president  generally  ? 


384 


A.  No,  sir. 

Q.  With  the  superintendent,  I mean  ? 

A.  Yes,  sir. 

Q.  You  are  the  superintendent  ? 

A.  Yes,  sir. 

Q.  Please  turn  to  page  138  and  read  the  rule  at  the  bottom  of  the 
page  ? 

The  witness  then  read  as  follows : 

Rule  relating  to  the  withdrawal  of  Margins,  Adopted  hy  the  Board  of 
Managers  March  7,  1882. 

“In  case  the  party  to  a contract,  for  the  fullillment  of  which  mar- 
gin has  been  deposited  with  the  superintendent,  shall  die,  make  an  as- 
signment, or  otherwise  become  disabled  to  perform  any  act  necessary 
for  the  proper  adjustment  or  payment  of  such  margin,  the  finance 
committee  shall  ascertain  the  amount  due  and  the  person  or  persons 
to  whom  such  margin  should  be  paid,  and  shall  instruct,  the  superin- 
tendent to  indorse  the  same,  as  so  aseertained,  over  his  own  signature 
for  payment.” 

Q.  Does  that  not  tend  to  foster  and  encourage  the  system  of  dealing 
in  margins  and  speculative  trading  ? 

A.  Not  that  rule,  sir ; that  is  to  provide  for  the  case  of  a person 
that  has,  as  it  says,  put  himself  in  such  a position  or  been  put  in  such 
a position,  that  he  cannot  legally  assign  the  contract  ; he  has  made  an 
assignment  or  he  has  died  ; consequently  he  can  no  longer  perform  his 
part  of  the  assigning  over  of  the  contract. 

Q.  Then  it  falls  to  the  superintendent  to  do  so  ? 

A.  It  now  falls  upon  the  finance  committee  to  direct  the’superintend- 
ent;  it  relieves  him  from  any  responsibility  in  the  matter, 

Q.  flow  many  “ calls  ” are  made  per  day  ? 

A.  There  are  two  on  grain  and  three  on  provisions. 

Q.  That  is  provided  for,  I believe,  in  these  rules  at  page  153;  will  you 
read  rule  1 ? 

The  witness  then  read  as  follows : 

“ Calls. 

‘‘  Rule  1.  There  shall  be  three  public  calls  each  day,  at  11  o’clock 
A.  M.,  at  12  M.,  and  1:30  p.  M.,  on  mess  pork,  lard  and  box  meats,  to  be 
conducted  by  the  superintendent  of  the  Exchange,  or,  in  his  absence, 
by  a j)erson  to  be  selected  by  the  majority  of  members  present.  The 
months  shall  he  called  in  their  order.” 

Q.  And  “ no  offer  to  huy  or  sell  shall  be  entertained  at  a less  differ- 
ence lhan  two  and  one-half  cents  per  hundred  pounds  on  lard  or  meats, 
and  five  cents  ])erh:irrel  on  pork,”  and  it  goes  on  to  provide  how  these 


385 


calls  shall  be  conducted.  Will  you  be  kind  enough  to  explain  the  na- 
ture of  those  “ calls  ? ” 

A.  A person  will  say,  ‘‘November  lard,  wliat  is  it  offered  at?”  It 
is  offered  at,  say  twelve  cents.  “What  is  bid?”  “11.30.”  And 
then  as  an  auctioneer  he  puts  it,  “11.30  — 12,  11.30  — 12,”  till  one 
party  drops  a little  or  the  other  party  advances  a little,  or  presently 
the  two  parties  agree,  and  one  person  says,  “ I will  take  it,”  then  the 
“caller”  says,  so-and-so  to  so-and-so  250  tierces  at  such  a price. 

Q.  Then  is  there  a margin  put  up? 

A.  That  is  optional  with  the  parties. 

Q.  If  tliere  is  no  margin  put  up  what  effect  will  the  transaction 
which  you  have  just  related  have  ? 

A.  It  is  binding  on  both  parties. 

Q.  That  is  to  say,  that  at  a certain  future  date,  so  much  lard  must 
be  delivered  by  the  one  offering  it  to  the  person  making  the  bid  at  the 
price  offered  ? 

A.  During  the  month  it  is  named,  yes,  sir.  ■ 

Q.  x\ny  time  during  the  month  ? 

A.  Yes,  sir  j at  the  option  of  the  seller. 

Q.  Do  they  sometimes  fix  particular  days  in  the  month  ? 

A.  Not  on  those  futures,  no,  sir. 

Q.  Only  on  the  month  ? 

A.  Yes,  sir. 

Q.  What  is  the  duty  of  the  superintendent  after  such  calls  have 
been  made  ? i 

A.  It  is  merely  to  receive  this  margin  that  is  placed  in  his  hands; 
to  see  that  it  is  deposited  in  a depository  designated  by  the  person  who 
puts  it  up;  he  draws  a check  to  the  order  of  one  of  those  depositors  ; 
it  is  sent  there  ; a certificate  is  obtained  from  that  depository  and 
handed  to  the  person  that  made  the  deposit,  and  notice  sent  to  the 
other  party  that  such  deposit  is  made.  , 

Q.  What  is  his  duty  in  relation  to  posting  the  call  on  the  bulletin  ? 

A.  He  has  to  post  at  the  close  of  each  “ call  ” the  prices  offered  and 
bid,  and  the  transactions  that  were  made. 

Q.  And  there  is  a rule  providing  for  that  at  page  154  ? 

A.  Yes,  sir. 

Q.  Will  you  please  read  the  rule  ? 

The  witness  then  read  as  follows  ; “ The  superintendent  shall, 
immediately  after  each  call,  cause  to  be  posted  on  the  bulletin  of  the 
Exchange  the  results  of  the  call,  setting  forth  the  bidding  and  selling 
prices  of  the  several  articles  dealt  in,  and  the  volume  of  transactions 
made.” 


49 


380 


Q.  Margins  are  provided  for,  by  rule  2,  on  page  154.  Will  you 
read  that  ? 

The  witness  then  read  as  follows  : 

Margins. 

‘'Rule  2 — Either  party  to  a contract,  prior  to  or  upon  the  same, 
shall  have  the  right  to  call  an  original  margin  of  two  dollars  per  tierce 
on  lard,  and  one  dollar  per  barrel  on  pork,  and  one-half  cent  per 
pound  on  all  other  meats  ; and  either  party  may  call  for  margins 
to  meet  variations  in  the  market.  All  margins  on  contracts 
shall  be  deposited  in  one  of  such  trust  companies,  banks  incorporated 
by  the  State,  or  national  banks,  as  may  have  been  designated  for  this 
purpose  by  the  linance  committee  of  the  New  York  Produce  Ex- 
change. When  margins  are  called  before  12  o’clock,  m.,  they  must  be 
deposited  before  3 o’clock,  p.  m.,  the  same  day  ; if  after  12  o’clock,  m., 
they  must  be  deposited  before  11  o’clock,  a.  m.,  the  next  day.  In  case 
of  failure  to  deposit  as  above,  then  the  party  calling  the  margins  shall 
notify  in  writing  the  party  on  whom  the  margins  were  called  of  his 
or  their  failure  to  make  the  required  deposit,  and  if  the  margins  are 
not  then  promptly  deposited  (and  if  the  party  in  default  fails  to  give 
the  notice  required  in  section  38  of  the  by-laws)  the  party  calling  the 
mars^ins  shall  have  the  right  to  cover  his  or  their  contract  at  discre- 
tion  for  account  of  2:)arty  failing  to  respond  to  the  call  for  margin, 
and  if  covered,  give  notice  in  writing  to  that  effect  to  the  party  in 
default.  In  case  of  failure  of  any  bank  or  trust  company  in  which 
such  margins  have  been  deposited,  it  shall  be  the  loss  of  the  party  or 
parties  to  whom  it  may  be  found  to  be  due,  taking  the  average  price 
of  like  deliveries  on  the  day  such  bank  or  trust  company  failed,  as  a 
basis  of  settlement.  When  margins  are  called,  original  or  for  varia- 
tions in  the  market,  certified  checks  must  be  drawn  to  the  order  of  the 
bank  or  trust  company  in  which  they  are  to  be  deposited.  Checks 
must  be  sent  to  the  superintendent  of  the  New  York  Produce  Ex- 
change, who  shall  deposit  them  and  get  a certificate  of  deposit,  made 
pavable  on  the  order  of  the  superintendent  of  the  New  York  Pro- 
duce Exchange,  and  to  the  order  of  the  buyer  and  seller.  As  soon  as 
the  superintendent  has  received  the  certificate,  he  shall  send  it  to  the 
partv  making  the  deposit,  and  an  abstract  of  the  same  to  the  party 
calling  the  margin.  In  settlement,  the  superintendent  shall  ascertain 
the  amount  due  eacli  on  the  certificate  over  his  own  signature,  as  in- 
structed by  both  ])arties.  In  case  the  two  piirtics  do  not  agree  as  to 
the  amount  due  on  a margin  receipt,  cither  of  them  may  refer  the 
matter  to  the  committee  on  lard  or  provisions,  as  the  case  may  be, 
f(}r  decision,  which  shall  be  linal.  On  the  decision  of  said  committee. 


387 


the  superintendent  of  the  Produce  Exchange,  on  being  informed 
thereof,  shall  promptly  indorse  to  each  party  the  amount  each  shall 
be  entitled  to  by  such  decision.” 

Q.  These  are  the  rules  at  present  in  operation  in  the  Produce  Ex- 
change, are  they  not  ? 

A.  Yes,  sir  ; they  are,  virtually.  There  have  been  some  slight 
changes  in  these,  lately,  these  provision  rules,  but  they  are  virtually 
the  same. 

Q.  Is  there  a contract  signed  by  the  parties  on  these  calls  ? 

A.  Usually  there  is  ; yes,  sir. 

Q.  On  the  calls  ? 

A.  On  sales  on  call  ? yes,  sir  ; there  usually  is. 

Q.  And  on  sales  on  margins  also,  I mean  when  they  put  up  margins, 
is  there  usually  a contract  signed  ? 

A.  It  does  not  vary  the  contract  that  was  made  at  the  time.  This 
margin  is  to  secure  a certain  contract  ; secure  its  fulfillment. 

Q.  Turn  to  pages  177  and  178,  in  reference  to  grain  calls,  and  explain 
the  rules. 

The  witness  then  read  as  follows : 

“ Calls. 

“ Eule  8 — There  shall  be  two  or  more  public  calls  of  grain  each 
day,  at  such  hours  and  of  such  grades  as  the  committee  on  grain  may, 
from  time  to  time,  with  the  approval  of  the  grain  trade  and  of  the 
floor  committee,  direct.  These  calls  shall  be  conducted  by  a person 
selected  by  the  majority  of  the  members  present.  The  months  shall 
be  called  in  their  respective  order.  The  first  offer  to  buy  or  sell  at  a 
price  shall  be  accepted  before  subsequent  offers  at  same  figures  may 
be  placed.  Subsequent  offers  to  sell  at  a lower  or  buy  at  a higher  price 
shall  vacate  prior  offers  to  sell  at  higher  or  buy  at  lower  prices.  A 
transaction  shall  vacate  all  previous  bids  and  offers,  except  as  provided 
in  rule  9,  section  1 as  to  transactions  in  stated  quantities.  All  dis- 
putes as  to  offers,  acceptances  or  withdrawals  (whether  in  time  or 
not)  shall  be  decided  on  the  spot  by  the  person  presiding  at  the  time, 
subject  to  an  appeal  to  the  members  present.  The  appeal  must  be 
promptly  taken,  and  a majority  of  the  members  present  and  voting 
shall  settle  the  disputed  point,  finally.” 

Q.  And  the  rules  in  relation  to  the  regulations  ? 

The  witness  read  as  follows  : 

Eule  9. — The  calls  of  grain  shall  be  subject  to  the  following  regu- 
lations : 

1.  Unless  otherwise  specified,  all  offers  to  buy  or  sell  shall  be  un- 
derstood to  be  in  lots  of  eight  thousand  bushels,  except  oats  and  bar- 
ley, which  shall  be  in  lots  of  five  thousand  bushels.  Offers  to  buy  or 
sell  in  larger  quantities  than  above  specified  shall  be  in  multiples 


388 


thereof,  and  offers  to  buy  or  sell  any  part  of  the  amount  which  may 
he  named  shall  take  precedence  of  stated  quantities;  but  if  stated 
quantities  are  offered  or  bid  for,  transactions  in  smaller  parcels  shall 
not  vacate  such  offers  to  sell  or  buy,  but  same  shall  be  governed  by 
conditions  of  Rule  8. 

“ 2.  Price  per  bushel,  and  in  fractions  of  not  less  than  one-eighth 
of  a cent. 

“ 3.  Deliveries  on  sales  of  cash  grain,  on  the  afternoon  call,  shall  be 
made  before  three  o’clock,  p.  m.,  of  the  same  day. 

‘^4.  The  rules  governing  the  sales,  deliveries  (except  as  provided  in 
the  preceding  regulation),  margins  and  payments  already  existing 
shall  govern  all  transactions  under  the  calls.  Nothing  in  this  rule 
shall  be  construed  as  interfering  with  transactions  in  towing  lots, 
which  shall  be  considered  to  mean  not  less  than  4,000  nor  more  than 
5,000  bushels.” 

Q.  It  says  : “ A transaction  shall  vacate  all  previous  bids  and  of- 

fers.” Please  explain  about  that  ? 

A.  The  bidding  and  offering  has  to  start  afresh  ; as  soon  as  any  one 
person  has  made  a transaction  with  another,  the  caller  immediately 
asks,  What  is  it  offered  at?”  Again,  just  as  though  nothing  had 
been  done  and  “ What  is  bid  ? ” and  so  it  takes  a new  start. 

Q.  And  each  is  a separate  transaction  by  itself  between  the  parties  ? 

A.  Yes,  sir. 

By  Senator  Browni^tg  : 

Q.  In  other  words,  that  is  a different  pool  ? 

A.  It  IS  a new  point  of  departure. 

By  Senator  Boyd  : 

Q.  And  in  these  cases,  it  is  not  necessary  that  there  should  be  any 
real  delivery  of  the  grain  at  all,  nor  is  there  any  thing  delivered  ? 

A.  As  I understand  it,  there  must  be  a delivery  of  the  grain  in  all 
cases. 

Q.  In  all  cases  ? 

A.  So  I understand  it. 

Q.  Is  it  not  a fact  that  a great  many  transactions  occur  in  which 
the  grain  is  never  delivered  ? 

A.  I could  not  tell  you,  sir,  nevei’  having  been  a dealer  in  any  way 
or  form  ; I could  not  tell  you  if  that  ever  occurs  ; I know  it  is  con- 
sidered that  the  grain  is  to  be  delivered  in  all  cases, 

Q.  That  is  the  theory  ? 

A.  Yes,  sir. 

Q.  But  the  practice  ? 


389 


A.  I couldn’t  tell  you  whether  that  is  ever  varied  from  or  not. 

Q.  Turn  to  page  179,  section  4,  and  please  read  that? 

The  witness  then  read  as  follows  : 

‘‘Sec.  4. — At  the  close  of  the  call  board  each  morning,  the  set- 
tling prices  of  grain  for  that  day  shall  be  announced  by  the  person 
•conducting  the  call,  subject  to  appeal  to  the  trade  there  assembled. 
These  prices  shall  be  used  only  for  the  settlement  of  differences  on  de- 
liveries of  contract  grain.” 

Q.  Do  those  prices  regulate  the  general  market  or  influence  it  in 
any  way  ? 

A.  I should  say  not. 

Q.  They  are  merely  arbitrary  prices,  are  they  not  ? 

A.  To  a certain  extent;  but  they  are  based  upon  prices  at  which 
they  were  offered. 

Q.  On  the  speculative  prices  ? 

A.  At  the  call. 

Q.  That  is  a speculative  price,  is  it  not?  The  price  fixed  upon  by 
the  “ call  ” is  a speculative  price,  is  it  not  ? 

A.  As  these  are  all  “ futures,”  I suppose  it  is  a speculative  price. 

Q.  And  that  regulates  the  general  price  of  grain  throughout  the 
entire  market  ? 

A.  No,  sir. 

Q.  'It  is  taken  as  a standard,  is  it  not  ? 

A.  No,  sir,  not  at  all. 

Q.  It  is  not  ? 

A.  No,  sir,  I should  not  say  that  it  was.  It  is  a particular  grade 
that  is  bid  for,  and  sometimes  that  grade  may  be  very  scarce  and  other 
grades  may  be  very  abundant. 

Q.  But  it  would  tend  to  fix  the  market  price  for  that  grade,  would 
it  not  ? 

A.  Certainly  it  would.  And  yet  I am  not  so  familiar  with  this 
matter  of  buying  and  selling  that  I could  pronounce  definitely.  But 
I should  say  this,  that  it  sometimes  happens  that  a bid  of  a particular 
month  on  the  “ call  ” may  be  higher  than  what  you  could  go  out  and 
buy  that  for  cash  for. 

Q.  And  you  may  make  individual  deals  or  transactions,  of  course  ; 
but  I am  speaking  generally.  What  effect  has  it  upon  the  general 
market  price  ? 

A.  I should  say  that  it  established  the  market  price. 

Q.  Then  the  market  price  generally  is  controlled  by  this  price  fixed 
upon  by  the  “call”  as  referred  to  in  rule  four? 

A.  It  is  defined  by  that. 


390 


Q.  So  that  we  might  safely  arrive  at  the  conclusion  that  the  prices 
arbitrarily  fixed  by  the  Produce  Exchange  regulate  our  markets  as  a 
general  thing  ? 

A.  I could  not  admit  that  general  statement  of  the  fact  at  all. 

Q.  How  far  could  you  admit  it  ? 

A.  I shouldn’t  be  able  to  tell  you,  sir.  It  is  a matter  entirely 
beyond  my  province. 

Q.  You  have  not  had  any  experience  in  private  transactions  based 
upon  such  prices  ? 

A.  No,  sir. 

Q.  Will  you  look  at  page  180  and  refer  to  the  transferable  order  and 
explain  about  that  ? 

A.  I know  that  that  is  the  form  that  is  adopted  for  carrying  a tran- 
saction through  to  its  conclusion,  or  passing  it  from  one  person  to 
another,  as  the  case  may  be. 

Q.  That  is — 

Tkaksferable  Order. 

New  York,  18 

M 

Deliver  to  the  order  of  M 

on contract  sale  to dated 18.. 

at cents  per  bushel bushels 

— what  is  usually  inserted  ? 

A.  Messrs,  so-and-so  deliver  to  the  order  of  Messrs,  so-and-so  on 
our  contract  sale  to  them,  dated  such  a date,  at  such  a price  per  bushel, 
so  many  bushels  of  such  a grade  of  grain  which  is  to  be  received  by 
the  last  indorser  hereon,  who  must  pay  us  for  the  same  at  the  rate  of 
so  many  cents  per  bushel  cash,  “except  as  provided  in  rule  10  of  the 
grain  rules.” 

Q.  How  is  that  transferable  ? 

A.  As  I never  carried  a transaction  through,  I must  say  that  I am  a 
little  at  a loss  myself  to  answer  that. 

Q.  You  know  from  general  principles,  I presume,  that  this  order 
may  be  transferred  through  various  parties  without  any  actual  delivery 
of  the  produce  ? 

A.  Yes.  . 

Q.  And  each  delivery  would  make  a separate  transaction,  would  it 
not  y 

A.  No,  sir  ; it  would  be  a part  of  tlie  same  original  transaction,  I 
think.  I could  not  tell  you  tlio  detail  of  tliat. 

Q.  This  is  the  form  of  contract  used  in  all  cases  of  dealing  in 
“ futures?” 

A.  Tliat  is  the  form  of  transferable  order,  and  differs  from  the  form 
of  contract,  which  is  given  on  page  177. 


Q.  The  form  of  contract  is  one  that  must  be  consummated  between 
the  parties  to  the  original  trapsaction  ? 

A.  Yes,  sir. 

Q.  And  this  may  be  transferred  through  various  others  ? 

A,  Yes,  sir. 

Q.  That  is  the  only  difference  ? 

A.  This  refers  to  that  original  contract  that  was  made. 

Q.  Pages  185  and  186  refer  to  something  further  about  margins,  rule 
30.  What  are  the  provisions  generally  of  this  rule  ? 

A.  That  an  original  margin  of  ten  cents  per  busliel  on  wheat,  rye 
and  barley,  and  hve  cents  per  bushel  on  corn  and  oats  may  be  called 
by  either  party  to  the  contract,  and  then  a further  margin,  from  time 
to  time,  to  the  extent  of  any  variation  in  the  market  value  from  the 
contract  price.  It  provides  for  an  original  margin  between  the  two 
parties,  which  is  kept  good,  as  they  say.  If  the  market  goes  up  and 
down,  either  party  may  call  for  a margin  to  cover  that  variation  if  he 
sees  fit.  . 

Q.  And  what  has  the  superintendent  to  do  ? 

A.  Merely  to  receive  that  margin  when  it  is  handed  in. 

The  witness  then  read,  at  the  request  of  Senator  Boyd,  the  follow- 
ing: 

“Margins. 

“ Rule  30  — On  all  sales  or  purchases  of  grain  to  arrive,  or  for  fu- 
ture delivery,  either  party  to  the  contract  shall  have  the  right  to  call 
an  original  margin  of  ten  cents  per  bushel  on  wheat,  rye  and  barley, 
and  five  cents  per  bushel  on  corn  and  oats,  and  a further  margin  from 
time  to  time  to  the  extent  of  any  variation  in  the  market  valne  from 
the  contract  price,  said  margin  to  be  deposited  in  such  bank  or  trust 
company  as  may  have  been  designated  by  the  finance  committee  of 
the  Produce  Exchange,  provided  that  such  bank  or  trust  company 
shall  not  be  expressly  objected  to  at  the  time  of  making  the  call.  In 
case  of  such  objection,  then  the  deposit  to  be  made  in  some  duly  au- 
thorized bank  or  trust  company  not  objected  to.  When  margins  are 
called  before  1:30  p.  m.,  they  must  be  deposited  before  3 p.  m.  of  the 
same  day;  if  called  after  1:30  p.  they  must  be  deposited  before  11 
A.  M.  of  the  following  day.  In  case  of  failure  to  deposit  as  above,  then 
the  party  calling  the  margin  shall  have  the  right  to  cover  his  or  their 
contract  at  discretion,  for  account  of  the  party  failing  to  respond  to 
the  call  for  margin.  In  case  of  failure  of  any  bank  or  trust  company 
in  which  such  margins  have  been  deposited,  the  loss  shall  be  borne  by 
the  party  or  parties  to  whom  it  may  be  found  said  margins  are  due. 


taking  the  average  price  of  like  deliveries  on  the  day  such  banker 
trust  company  failed  as  a basis  of  settlement.  When  margin.s  are 
called  (original  or  for  variations  in  the  market)  certitied  checks  must 
be  drawn  to  the  order  of  the  bank  or  trust  company  in  wliich  they  are 
to  be  deposited,  and  sent  to  the  superintendent  of  the  Exchange,  who 
shall  deposit  the  same,  and  receive  a certificate  of  de})osit,  made  paya- 
ble on  the  order  of  the  superintendent  of  the  Exchange,  and  to  the  or- 
der of  the  buyer  and  seller.  Tiie  superintendent  shall  i)rom[)tly  send 
such  certificate  to  the  party  making  the  de})osit,  and  a co})y  of  the 
same  to  the  party  calling  the  margin.  In  settlement  the  superintend- 
ent shall  indorse  the  amount  due  on  the  certificate  over  his  own  siir- 
nature,  as  instructed  by  both  parties  to  the  contract.  In  case  the  two 
parties  do  not  agree  as  to  the  amount  due  on  the  margin  certificate, 
the  same  shall  be  submitted  to  arbitration  for  fimil  adjustment.  In  case 
of  the  absence  of  the  superintendent,  the  president  of  the  Produce 
Exchange,  or  the  chairman  of  the  finance  committee,  shall  act  in  his 
stead  under  this  rule.  This  rule  shall  be  governed  in  its  privileges 
and  restrictions  by  rule  32.” 

The  witness  also  then  read,  at  the  request  of  Senator  Boyd,  as  fol- 
lows : 

Defaults. 

‘‘Rule  32  — Sec.  1 — In  case  any  property,  contracted  for  future  de- 
livery, be  not  delivered  at  maturity  of  contract,  the  purchaser  shall 
notify,  in  writing,  the  committee  on  grain,  of  the  failure  to  deliver, 
and  the  committee  on  grain  shall,  at  the  next  call,  publicly  read  such 
notice,  and  buy  in  the  grain  for  account  of  the  party  directing  the  pur- 
chase, but  no  unreasonable  price  shall  be  paid,  arising  from  manipu- 
lated or  fictitious  markets,  or  unusual  detention  in  transportation. 
Any  legitimate  loss  resulting  to  the  buyer  shall  be  paid  by  the  party 
in  default,  and  the  grain  so  bought  in  shall  be  a good  delivery  on  de- 
faulted contracts  maturing  that  day. 

“Sec.  2 — In  case  any  property  contracted  for  delivery  is  not  re- 
ceived and  paid  for  when  properly  tendered,  it  shall  be  the  duty  of 
the  seller  — in  order  to  establish  any  claim  on  the  purchaser — to  sell 
it  on  the  market  at  any  time  during  the  next  twenty-four  hours,  at 
Ills  discretion,  after  such  default  shall  liave  been  made,  notifying  the 
})urchaser  within  one  hour  of  such  sale,  and  any  loss  resulting  to  the 
selkn*  sliall  be  paid  by  the  party  in  default.” 

Q.  Rule  33  — Brokers  making  transactions  for  account  of  persons 
not  members  of  the  Exchange,  or  for  linns  or  ^corporations  having  no 
representative  member  of  the  Exchange  authorized  and  empowered  to 


393 


\ 


bind  them  in  contracts  under  these  rules,  shall  make  contracts  in  their 
own  name.”  Why  has  tlie  Exchange  inserted  a rule  of  this  kind  ? 

A.  I suppose  it  is  tliat  they  may  hold  two  parties  responsible.  The 
buyer  or  seller  on  one  side,  and  the  broker,  if  he  does  not  furnish  a 
principal  Avho  is  a member  of  the  Exchange,  who  can  be  reached  by 
the  rules  of  the  Exchange,  must  himself  be  held  responsible. 

Q.  Then  it  becomes  an  ordinary  legal  transaction  between  the 
parties  as  citizens,  without  reference  to  the  rules  of  the  Exchange? 

A.  No,  sir  ; it  is  the  other  way  ; the  Exchange  has  no  jurisdiction 
over  any  excepting  its  own  members,  and  so  as  this  party  for  whom 
the  transaction  is  made  is  not  a member,  the  brokers  must  be  respon- 
sible. ~ ^ 

Q.  To  the  person  who  is  a member  of  the  Exchange  ? 

A.  To  the  other  person  who  is  a member,  this  broker  being  a mem- 
ber; so  that  the  rules  of  the  Exchange  may  be  brought  to  bear  upon 
both  parties,  so  that  he  can’t  step  out  and  say,  my  principal  is  so- 
and-so  who  can’t  be  reached  by  the  rules  of  the  Exchange.” 

Q.  Turn  to  page  206  and  see  whether  grades  of  grain  are  provided 
for  by  the  rules  of  the  Exchange? 

A.  They  are,  sir. 

The  following  are  the  rules  as  found  on  page  206  : 

‘‘Grades  oe  Graik,  established  by  the  Committee  oh  Graih  of 

THE  New  York  Produce  Exchange  in  accordance  with  the 

foregoing  Eules. 

Winter  Wheat. 

“ Extra  white  winter  wheat  shall  be  bright,  sound,  dry,  plump  and 
well  cleaned. 

“ No.  1 white  winter  wheat  shall  be  sound,  dry  and  reasonably  clean. 

“ No.  2 white  winter  wheat  shall  consist  of  sound  white  winter  wheat 
unfit  to  grade  No.  1. 

“No.  3 white  winter  wheat  shall  consist  of  sound  white  winter 
wheat  unfit  to  grade  No.  2. 

“ No.  1 amber  winter  wheat  shall  be  bright,  sound,  dry,  plump  and 
well  cleaned. 

No,  1 red  winter  wheat  shall  be  sound,  dry,  long  berried  and  well 
cleaned. 

“ No.  2 red  winter  wheat  shall  be  sound,  dry  and  reasonably  clean, 
and  shall  not  contain  over  ten  per  cent  white  wheat. 

“No.  3 red  winter  wheat  shall  consist  of  sound  winter  wheat  unfit 
to  grade  No  2 red. 

“No.  4 winter  wheat  shall  include  all  sound  winter  wheat  unfit  to 
grade  No.  3 red. 

50 


304 


Mixed  winter  wheats  shall  be  all  white  and  red  wheats  mixed,  and 
shall  be  equal  to  No.  2 red  in  all  otlier  respects. 

“ (Note. — All  No.  1 amber,  No.  1 red  and  No.  2 red  wheats  that 
grade  Steamer  shall  be  graded  Steamer  No.  2 red.) 

Spring  Wheat. 

No.  1 north-west  spring  wheat  shall  be  sound  and  well  cleaned, 
and  weighing  not  less  than  58^  pounds  to  the  bushel. 

“ No.  2 north-west  spring  wheat  shall  be  sound  and  reasonably  clean^ 
and  weighing  not  less  than  56|  pounds  to  the  bushel. 

No.  3 north-west  spring  wheat  shall  be  sound  and  reasonably  clean, 
unfit  to  grade  No.  2,  but  weighing  not  less  than  53i  pounds  to  the 
bushel. 

“(Note. — The  grades  of  north-west  wheat  are  to  include  such  whe  ils 
as  are  grown  in  the  north-west,  and  to  correspond,  as  far  as  practicable, 
in  color  and  general  character,  with  the  Milwaukee  and  Dulutlj 
grades.) 

“ No.  l"spring  wheat  shall  be  sound  and  well  cleaned,  and  weighing 
not  less  than  58-^  pounds  to  the  bushel. 

No.  2 spring  wheat  shall  be  sound  and  reasonably  clean,  and  weigh- 
ing not  less  than  564  pounds  to  the  bushel. 

“ No.  3 spring  wheat  shall  be  sound  and  reasonably  clean,  unfit  to 
grade  No.  2,  but  weighing  not  less  than  53^  pounds  to  the  bushel. 

“ Steamer  spring  wheat,  wheat  which  shall  be  equal  in  all  respects 
as  to  quality  to  the  above  grades,  but  which  shall  be  slightly  soft  or 
damp,  shall  have  the  word  ^‘steamer”  prefixed  to  the  grade. 

“ Eeiected  spring  wheat  shall  include  all  merchantable  spring  wheat 
unfit  for  No.  3.’’ 

Q.  When  was  the  system  of  grading  commenced  ? 

A.  I think  the  system  of  grading  was  carried  into  effect  in  1876  or 
1877;  that  the  system  of  grading  grain  in  the  port  of  New  York  was 
established  about  that  time. 

Q.  For  what  purpose  was  it  established. 

A.  I can  give  you  my  judgment  of  it;  of  course  I do  not  say  that 
that  is  the  exact  state  of  things ; it  was  felt  that  the  business  was  get- 
ting too  large  to  be  conducted  in  the  way  in  which  it  had  been  con- 
ducted before,  by  selling  every  thing,  every  identical  parcel  by  itself, 
and  by  sami)le,  and  therefoi*e  that  the  grain  l)usiness  would  be  greatly 
facilitated  if  there  could  bo  a certain"griido  established,  and  a certificate 
issued  for  the  amount  that  the  ])ergon  was  entitled  to,  and  that  certi- 
ficate could  j)ass  from  hand  to  hand  instead  of  referring  it  back  to  the 
identical  j)arcel  in  that  case. 

il.  Then  every  time  a certificate  changes  hands,  it  is  a separate 
transaction,  is  it  not  ? 


395 


A.  Yes,  sir. 

Q,  And  upon  calls  made  in  the  Exchange  may  certificates  be  passed 
instead  of  the  articles  ? 

A.  Yes,  sir ; that  constitutes  a delivery. 

Q.  Is  grading  necessary  in  the  option  business  ? 

A.  Grain  could  be  bought  or  sold  without  reference  to  it;  if  there 
had  been  no  grading  system  there  could  still,  I suppose,  be  an  option, 
but  the  option  system,  as  it  is  now  carried  on,  is  greatly  facilitated,  I 
should  say,  by  the  grading  of  grain.  A person  must  know  just  what 
he  is  going  to  receive  if  he  buys ; just  what  quality  of  goods  he  buys. 

Q.  Is  the  system  of  grading  fully  illustrated  or  explained  in  this 
exposition  of  grades  of  grain  in  the  rules  of  the  Exchange  ? 

A.  I do  not  know. 

Q.  The  second  rule  of  the  grain  rules  provides  for  establishing  these 
grades  ? 

The  witness  then  read  as  follows  : 

Grades  of  Grain. 

“ Eule  2. — The  committee  on  grain  shall,  as  early  as  practicable 
each  year,  establish  the  grades  of  grain.  It  shall  also  be  the  duty  of 
the  committee  on  grain  to  report  from  time  to  time  to  the  trade  for 
adoption  such  regulations  as  they  may  think  necessary  for  the  inspec- 
tion of  grain,  and  no  change  shall  be  made  in  such  regulations,  or  in 
the  grades  so  established,  except  at  a meeting  of  the  trade  to  be  called 
by  the  committee  on  grain,  due  notice  of  the  changes  proposed  being 
posted  on  the  bulletin  of  the  Exchange.” 

A.  And  then  this  whole  matter  of  grading  has  to  be  largely  a mat- 
ter of  agreement  between  the  Exchange  and  the  railroads,  and  so  here 
are  the  articles  of  agreement  between  the  Exchange  and  the  railroads, 
on  page  188,  extending  through  to  page  199: 

Articles  of  Agreement  between  the  New  York  Produce 

Exchange  and  the  New  York  Central  and  Hudson  Kiver 

Eailroad  Co.,  Erie  Eailwat  Co.  and  Pennsylvania  Eatlkoad 

Co. — Kelating  to  the  Inspection,  Grading,  Consolidation 

AND  Delivery  of  Grain  arriving  by  rail  at  the  port  of  New 

York. — Adopted  September  1,  1875,  and  amended  April  Sand 

August  8,  1876,  and  March  15,  1881 : 

First.  In  order  to  facilitate  deliveries  of  grain  arriving  by  rail  at 
the  port  of  New  York,  it  is  hereby  mutually  agreed  by  and  between 
the  parties  hereto,  in  consideration  of  the  adoption  and  enforcement 
of  the  following  rules  by  the  said  parties  respectively,  in  the  manner 
and  to  the  extent  hereinafter  set  forth,  and  also  for  other  good  and 
valuable  considerations,  as  follows  : 


39G 


“ Second.  The  milroad  companies,  parties  hereto,  may  put  togetlier 
in  warehouses,  boats  or  otlier  receptacles,  provided  by  themselves  for 
that  purpose,  grain  of  the  same  kind  and  grade,  without  regard  to  the 
ownership,  after  the  same  has  been  inspected,  graded  and  weighed,  in 
accordance  with  the  rules  of  the  Produce  Exchange,  as  hereinafter  set 
forth  ; but  nothing  herein  contained  shall  be  construed  as  depriving 
shippers  of  the  right  of  preserving  the  identity  of  grain  consigned  to 
this  market,  if  they  shall  so  elect,  subject  only  to  such  uniform  con- 
ditions as  may  be  made  by  the  railroad  companies  parties  hereto,  for 
that  purpose. 

Third.  It  is  hereby  further  agreed  that  all  questions  of  differ- 
ence between  the  New  York  Produce  Exchange,  or  any  member 
thereof,  and  the  railroad  companies,  or  either  of  them,  growing  out  of 
the  inspection  and  delivery  of  grain,  shall  be  settled  by  a private  arbi- 
tration committee,  consisting  of  three  persons,  one  of  whom  shall  be 
selected  by  the  president  of  the  New  York  Produce  Exchange,  subject 
to  the  approval  of  the  committee  on  grain,  one  by  the  railroad  com- 
panies, or  the  company  with  which  the  controversy  may  arise,  and 
these  two  to  select  a third ; and  the  decision  of  a majority  of  such  ar- 
bitration committee  shall  be  final  as  to  the  case  presented. 

Fourth.  Any  of  the  parties  to  this  agreement  desiring  any  altera- 
tion of  or  amendment  to  any  of  the  following  rules  may  give  notice 
in  writing  to  each  of  the  other  parties  hereto,  which  notice  shall  con- 
tain the  substance  of  the  proposed  alteration  or  amendment,  and  shall 
designate  the  time  and  place  (in  the  city  of  New  York)  for  a meeting 
of  the  said  parties  to  consider  and  act  on  the  same,  and  which 
time  shall  be  at  least  thirty  days  subsequent  to  the  date  of  said  notice. 

“ Fifth.  The  New  York  Produce  Exchange  agrees  to  adopt  and  en- 
force, as  far  as  it  legally  may,  the  following  rules,  to  be  known  as 
‘‘  Rules  of  the  Neic  York  Produce  Exchange  for  grading  grain.’^ 

Q.  Does  the  same  system  of  grading  prevail  in  different  cities,  say 
New  York,  Chicago,  St  Louis  and  Toledo  ? 

A.  There  is  a similar  system  in  the  larger  cities. 

Q.  Is  there  an  understanding  [between  the  various  Exchanges  of 
these  cities  as  to  what  the  grades  will  be  ? 

A.  No,  sir;  each  one  establishes  a grade  for  itself. 

Q.  In  transactions  between  New  York  and  Chicago,  if  there  is  not 
a uniform  system,  how  do  they  know  in  Chicago  what  No.  1 New  York 
grade  would  be  ? 

A.  fi’lie  transactions  here  iii  the  city  are  upon  our  own  grades. 

(2-  And  in  carrying  on  transactions  with  Chicago  or  other  cities, 
how  is  it  done  ? 

A.  VVe  buy  on  their  grades. 


397 


Q.  And  supposing  their  grades  should  vary  from  yours,  when  the 
grain  arrives  here  you  fix  the  grade? 

A.  It  is  inspected  without  regard  to  that. 

Q.  And  if  it  should  not  come  up  to  your  standard,  I suppose  you 
would  have  to  place  it  in  another  grade  ? 

A.  It  is  graded  with  regard  to  the  provisions  made  for  our  inspection. 

Q.  But  I suppose  that  the  majority  of  the  transactions  are  carried 
on  without  the  transfer  of  any  amount  of  the  grain  ? 

A.  That,  as  I said  before,  I could  not  say  ; it  may  be  that  the  grain 
is  transferred  in  every  case  ; my  idea  is  that  that  is  the  case. 

Q.  In  all  these  transactions  that  you  have  stated,  I suppose  a great 
amount  of  money  passes  from  hand  to  hand,  and  the  majority  of  those 
engaged  in  the  trade  profit  by  it,  do  they  not  — profit  by  the  transac- 
tions— as  a general  thing  the  members  of  the  Produce  Exchange 
profit  by  their  speculations  in  grain,  do  they  not  ? 

A.  If  he  is  a broker  he  expects  a profit  because  he  gets  his  brokerage 
on  the  transaction,  no  matter  what  the  ultimate  result  of  it  may 
be;  if  he  is  a principal,  he  has  to  take  his  chances. 

Q.  To  your  knowledge  the  majority  of  the  gentlemen  engaged  in 
that  business  make  it  profitable,  do  they  not  ? 

A.  I suppose  they  do. 

Q.  Who  bears  the  expense  of  that  extra  tax  upon  the  grain  which  is 
necessary  in  order  to  make  these  men  proceed  profitably  ? 

A.  As  far  as  the  broker  is  concerned,  he  gets  his  payment  from  his 
principal,  and  his  principal  has  to  bear  the  brokerage  in  the  transac- 
tion ; as  far  as  the  principal  is  concerned,  he  takes  his  risk  whether  it 
is  a gain  or  a loss. 

Q.  But  in  case  it  is  a gain,  who  ultimately  bears  the  burden  of  that 
gain  ? 

A.  It  very  often  happens  that  that  is  divided  up  a good  deal ; one 
person  may  buy  and  sell  and  make  a small  loss,  and  another  person 
make  a small  gain  of  it. 

Q.  But  in  the  end  they  all  profit  by  it  ? 

A.  I could  not  say  that . 

By  Senator  Browj^'ING  : 

Q.  Does  it  fall  on  the  people,  the  consumers  ? 

A.  I do  not  see  that  it  necessarily  has  any  relation  to  the  consumer 
if  he  can  buy  his  flour  without  reference  to  this  price. 

Q,  Then  if  it  makes  no  difference  to  the  consumer,  the  system  must 
be  one  in  which  speculators  live  and  get  rich  upon  one  another  ? 

A.  I suppose  they  do  upon  one  another,  yes,  sir. 


898 


Q.  Have  you  any  other  information  you  would  like  to  give  the  com- 
mittee now  ? 

A.  No,  sir;  I don’t  think  I have. 

Q.  You  say  that  there  are  millions  of  bushels  of  grain  sold  daily  on 
call  ? 

A.  On  call,  yes,  sir, 

Q.  Can  you  tell  what  percentage  of  those  sales  are  legitimate  ? 

A.  I was  asked  that  question  in  the  outset. 

Q.  Do  you  think  ten  per  cent  are  legitimate  ? 

A.  I should  think  it  very  doubtful  if  they  were. 

Q.  Do  you  think  five  per  cent  are  legitimate  ? 

A.  I couldn^t  say  that  in  our  market  ten  percent  might  not  oe  legiti- 
m’ate.  I can’t  tell  how  much  of  this  is  bought  for  export. 

Q.  I am  told  that  of  the  sales,  about  three  per  cent  are  legitimate  ? 

A.  In  this  city  ? 

Q.  On  call  in  this  city. 

A.  I wouldn’t  say  in  regard  to  that.  I should  think  that  in  Chi- 
cago that  would  be  a very  large  percentage,  it  would  exceed,  by  far, 
the  legitimate  percentage,  as  far  as  I have  been  able  to  judge  any  thing 
of  the  Chicago  transactions. 

Q.  Then  of  the  sales  at  Chicago,  not  three  per  cent  are  legitimate  ? 

A.  That  is  my  idea. 

Q.  Do  you  think  about  three  per  cent  of  the  sales  here  are  legitimate  ? 

A.  As  I say,  I could  not  tell  how  much  of  this  is  bought  for  ex- 
port, for  future  market.  I wouldn’t  like  to  state. 

Q.  You  began  selling  by  grade  about  five  or  six  years  ago  ? 

A.  Yes,  sir. 

Q.  And  before  that,  was  there  a great  deal  of  speculation  in  grain 
compared  with  what  is  carried  on  to-day  ? 

A.  No,  sir  ; it  has  increased  very  much  during  that  time. 

Q.  That  gave  rise  to  speculation,  and  from  that  date  it  has  been  in- 
creasing, down  to  the  present  time.  Is  that  your  judgment  ? 

A.  I should  say  it  was.  If  you  will  look  on  page  53,  you  will  see 
the  increase  that  has  taken  place  in  the  sales  on  call. 

Q.  Will  you  be  kind  enough  to  read  that  ? 

A.  In  the  year  18^0  there  was  no  grain  sold  upon  call;  in  1877, 
there  was  of  wheat,  15,000,000  ; in  1878,  there  was  of  wheat,  15,000,- 
OOO  ; in  1879,  there  was  of  wheat,  34,000,000  ; in  1880,  there  was  of 
wheat,  40,000,000  ; in  1881,  there  was  of  wheat,  44,000,000  ; so  that  it 
lias  increased  from  15,000,000  to  44,000,000. 

Q.  That  refers  to  wheat  ? 

A.  Yes,  sir. 

Q.  Have  you  oats  there  ? 


399 


A.  Oats  they  didn’t  put  upon  call  until  the  year  1880,  when  4,725,- 
€00  were  sold,  and  in  1881,  15,690,000. 

Q.  Showing  a large  increase  ? 

A.  Yes,  sir. 

Q.  Can  you  tell  me  Rie  price  of  an  Exchange  ticket,  at  the  time  you 
sold  by  sample  — a membership  ticket  ? 

A.  We  have  that  all  given  here  on  page  46. 

Q.  What  are  they  quoted  at  ? 

A.  This  is  the  original  price  in  the  Exchange  in  1874.  The  certifi- 
cates were  sold  by  the  Exchange  at  $500. 

Q.  What  could  they  be  bought  for  on  the  market  ? 

A.  At  that  time  they  had  actually  increased  to  above  $500  ; before  | 
the  Exchange  changed  the  price  at  that  time  to  $1,000. 

Qs  What  are  they  worth,  to-day  ? 

A.  To-day,  $2,850  is  bid,  and  $2,800  asked. 

Q.  And  what  is  the  Exchange  selling  them  at  ? 

A.  The  last  price  the  Exchange  sold  them  at  was  $2,500. 

Q.  So  that  they  sell  for  more  than  the  face  value  — there  is  a pre- 
mium on  the  membership  ? 

A.  Yes,  sir. 

Q.  How  do  you  account  for  that  ? 

A.  One  reason  is,  that  the  Exchange  limited  its  membership  to 
3,000.  All  of  these  have  been  sold,  and  consequently  none  of  them 
can  be  bought,  excepting  as  they  may  get  them  from  third  parties. 
That  is  one  reason,  and  the  other  is,  that  we  have  established  a gratu 
ity  fund,  which  also  would  tend  to  enhance  the  value. 

Q.  If  you  should  abolish  calls,  what  effect  would  that  have  upon  the 
value  of  a membership  ticket  ? 

A.  Of  course,  that  is  a difficult  question  to  answer. 

Q.  What  effect  would  the  abolishment  of  calls  have  upon  the  busi- 
ness of  the  Exchange  ? 

A.  I think  it  would  lessen  it  considerably. 

Q.  You  say  that  there  have  been  a few  failures  that  have  come 
under  your  notice.  Can  you  give  us  an  idea  of  how  many  failures 
would  have  occurred  a few  months  ago,  if  there  had  not  been  a com- 
promise between  the  contracting  parties  — I think  it  was  in  June 
when  they  compromised  at  $1.35  on  wheat? 

A.  I do  not  recall  the  circumstances  of  that,  at  all. 

Q.  There  was  a compromise,  I recollect  very  decidedly,  I think  it 
was  at  $1.35.  You  have  stated  that  you  do  not  know  of  any  bucket- 
shops.”  Do  you  know  of  the  Equitable  Exchange,  on  Broadway  ? 

A.  I do  not. 

Q.  Is  the  last  sale  on  call”  the  market  price  for  that  article  until 
a new  call  ” is  had  ? 


400 


A,  Oh,  no,  sir ; they  can  begin  dealing  immediately  after  the 
“ call.” 

Q.  Until  there  is  a new  ‘‘  call  ” ? 

A.  Oh,  no;  they  can  begin  dealing  at  once  among  themselves. 

Q.  Suppose  we  take  the  last  “call  ” on  ’Change  as  an  example.  Is 
that  the  market  price  ? Is  that  quoted  then  as  the  market  price  ? 

A.  No,  sir.  We  keep  busy  until  four  o’clock  and  then  we  close  the 
doors,  and  that  would  be  considered  the  closing  price  of  the  day. 

Q.  Do  you  have  one  day  in  the  month  that  you  call  settlement  day — 
the  last  day  of  the  month  ? 

A.  The  last  day. 

Q.  The  last  day  of  the  month  is  settlement  day  ? 

A.  Yes,  sir. 

Q.  What  governs  the  standard  of  value  for  settlement — the  last 
public  sale  ? 

A.  Yes,  sir. 

Q.  I notice  here  section  4.  It  reads  as  follows : “ These  prices 

shall  be  used  only  for  the  settlement  of  differences  on  deliveries  or 
contract  grain.”  I construe  that  to  mean,  that  if  you  and  I make  an 
agreement  to-day,  that  I shall  deliver  you  in  December  5,000  bushels 
of  wheat,  that  on  settlement  day,  you  shall  pay  me,  or  I shall  pay 
you  tlie  difference  between  the  price  that  I agreed  to  sell,  or  that  yon 
agreed  to  buy  at,  the  difference  between  that  price  and  the  price  fixed 
by  some  sale  in  accordance  with  this  rule  on  that  day.  Am  I right  ? 
lam  speaking  now  of  section  4 on  page  179,  which  reads  as  follows  : 

Sec.  4.  At  the  close  of  the  call  board  each  morning,  the 
settling  prices  of  grain  for  that  day  shall  be  announced  by  the  person 
conducting  the  call,  subject  to  appeal  to  the  trade  there  assembled. 
These  prices  shall  be  used  only  for  the  settlement  of  differences  on 
deliveries  of  contract  grain.”  What  do  you  mean  by  that  ? 

A.  The  caller  forms  his  own  opinion  as  to  what  would  be  what  he 
calls  a settling  price  on  the  first  month  that  is  called,  he  only  makes 
a settling  price  for  a single  month,  that  is  the  current  month,  and 
that  price  would  govern  the  closing  out  of  any  contracts  between  that 
and  the  next  day  at  that  time. 

Q.  How  does  .he  arrive  at  a conclusion  from  which  he  forms  this 
opinion  — is  it  the  number  of  sales  that  he  has  conducted  ? 

A.  No,  sir.  If  I may  give  an  illustration,  if  $1.10  was  bid  and  it 
was  offered  at  $1.11,  the  probability  is,  that  he  would  make  the  settling 
price  $1.10^-  and  then  he  announces  that  settling  price  at  the  close  of 
the  “call,”  and  if  it  is  not  acceptable  to  the  trade  present,  they  can,  by 


401 


Yoting,  make  it  what  they  think  it  ought  to  be.  If  they  eay  nothing  it 
stands  as  the  settling  price. 

Q.  And  the  fact  that  was  offered  and  it  was  offered  at  $1.11 

leads  him  to  that  conclusion  ? 

A.  Yes,  sir. 

Q.  So  that  the  call  and  its  results  help  to  make  up  his  opinion  as  to 
the  proper  amount  at  which  settlements  ought  to  be  made  ? 

A.  Yes,  sir. 

Q.  You  receive  these  margins.  You  have  told  us  how  you  receive 
them.  How  do  you  pay  them  out  ? 

A.  When  a contract  is  settled  between  the  two  parties,  in  theory,  a 
certain  proportion  of  the  margin  is  to  be  paid  to  one  and  a certain 
proportion  to  the  other.  In  practice  it  is  not  so  at  all.  I have  never 
known  such  a case  since  I have  had  to  do  with  margins. 

Q.  What  is  the  practice  ? 

A.  The  practice  is  that  they  settle  whatever  differences  may  be 
coming  to  one  or  the  other  between  themselves,  and  the  one  party 
indorses  the  margin  over  to  the  other  party,  and  it  is  usually  the  party 
that  puts  it  up,  and  so  it  is  taken  down  with  any  accumulated  interest 
that  there  may  be  upon  it. 

Q.  In  addition  to  this  margin,  do  you  receive  a fee  or  a retainer  of 
the  amount  of  $10,  or  any  other  sum,  when  the  contract  is  made  with 
this  clerk  ? 

A.  No,  sir,  we  receive  nothing  whatever. 

Q.  Does  the  Exchange  get  any  commission  from  this  margin  ? 

A.  None  at  all,  sir. 

Q.  Every  thing  is  handed  back,  even  with  the  interest  ? 

A.  Every  thing  is  handed  back,  including  the  interest. 

Q.  Every  thing  ? 

A.  Every  thing. 

Q.  And  do  you  keep  a record  of  all  sales  made  by  contract  that  are 
brough  t to  you  for  that  purpose  ? 

,A.  We  take  no  notice  whatever  of  the  contracts.  We  keep  a memo- 
randum of  the  margins  and  know  nothing  about  the  contracts  that 
stand  behind  them. 

Q.  You  do  not  know  any  thing  about  the  contracts  that  stand  be- 
hind them  ? 

A.  No,  sir,  nothing  at  all. 

Q.  You  do  not  know  any  thing  about  the  selling  value  nor  of  the 
size  of  the  lot  ? 

A.  No,  sir. 

' 51 


Q.  It  is  not  recorded  and  you  do  not  inquire  into  it? 

A.  No,  sir  ; we  have  nothing  to  do  with  that. 

Q.  These  calls  are  had  twice  a day  ? 

A.  On  grain,  and  on  provisions  three  times. 

Q.  Could  not  the  Exchange  get  along  without  these  calls  and  sat- 
isfy all  legitimate  trade  ? 

A.  You  can  see  what  their  judgment  of  it  is. 

Q.  I am  asking  you  for  your  judgment ; you  are  about  to  pass  out 
of  the  Exchange,  I understand,  and  into  the  mayor’s  office  ; I do  not 
mean  by  that,  that  you  are  prejudiced,  that  the  fact  of  your  being 
there  would  make  you  prejudiced  one  way  or  the  other,  but  you  are 
going  to  serve  the  city  now  instead  of  the  Exchange  and  we  want  your 
experience,  we  want  to  know  if  you  believe  that  the  legitimate  demands 
of  trade  could  get  along  without  these  calls  ? 

A.  I do  not  know  that  I am  qualified  to  judge. 

Q.  I have  asked  you  if  they  could  get  along  without  them  ; do  you 
think  they  are  absolutely  necessary? 

A.  I think  they  have  an  advantage  to  legitimate  dealers  if  that  is 
what  you  want  to  know,  in  establishing  an  open  market  so  that  every- 
body knows  what  the  current  price  is  of  the  article  ; I think  it  has 
that  advantage. 

Q.  But  is  it  not  a fact  that  a few  men  can  go  into  the  Exchange, 
io  m a syndicate,  and  have  somebody  operate  for  them  and  bear  down 
or  bull  up  the  market,  and  in  that  way  cause  disastrous  results  to 
legitimate  business  ? 

A.  I do  not  know  that  it  necessarily  affects  legitimate  business. 

Q.  Suppose  all  settlements,  excepting  where  there  is  an  actual  de- 
livery of  the  grain,  were  to  be  made  unlawful,  what  result  do  you 
think  that  would  have  upon  speculations  — what  effect  would  that 
have  upon  the  number  of  legitimate  transactions  in  the  Exchange  — 
do  vou  think  it  would  have  a tendency  to  reduce  speculation  or  check 
it  ? 

A.  If  I understand  the  question  right,  I should  think  it  would,  very 
seriously. 

Q.  To  what  extent  ? 

A.  1 would  like  to  have  that  question  again. 

Q.  Suppose  I agree  to  sell  to  you,  to  deliver  to  you  in  December 
.50,000  bushels  of  No.  2 mixed  oats,  we  will  say,  and  it  is  a pure  mat- 
ter of  speculation  between  you  and  me  — I do  not  propose  to  deliver  to 
you,  and  you  do  not  [propose  to  take  from  me,  because  you  do  not  want 
what  I am  selling  you,  and  I haven’t  got,  or  do  not  expect  to  have 
what  I am  selling  — and  it  goes  along,  and  when  settlement  day  arrives, 
we  stej)  up  to  the  captain’s  oliicc,  and  I pay  you  the  difference  that  is 
coming  to  you,  or  you  pay  me  the  difference  that  is  coming  to  me  ; 


403 


there  is  no  actual  delivery  in  that  transaction,  and  I ask  if  that  should, 
be  made  an  unlawful  act,  and  all  parties  to  it  were  deemed  to  be  parties 
to  an  unlawful  act,  including  the  Exchange  and  its  managers,  what 
effect  would  that  have  upon  these  illegitimate  transactions  ? 

A,  I think  it  would  have  a very  great  effect  on  future  transactions. 

Q.  Do  you  think  it  would  prevent  speculation  to  a great  extent  ? 

A.  I think  a person  that  engaged  in  it  would  do  it  at  his  peril. 

Q.  And  from  your  knowledge  of  the  gentlemen  who  are  connected, 
with  the  Exchange,  do  you  think  they  are  a law-abiding  people  and. 
would  not  engage  in  it  to  the  extent  that  they  do  ? 

A.  I certainly  think  if  there  was  a penalty  for  engaging  in  such  busi- 
ness, they  would  be  very  careful  to  refrain  from  rendering  themselves 
liable  to  such  a penalty  ; the  instinct  of  self-preservation  I should  think 
would  keep  them  from  it. 

By  Senator  Boyd  : 

Q.  All  the  legitimate  requirements  of  trade  arising  under  the  law 
of  supply  and  demand  could  be  carried  on  without  calls,  couldn’t 
they  ? 

A.  They  could,  certainly. 

Q.  Will  you  turn  again  to  page  53  and  just  for  information,  state 
Bow  rapidly  the  amounts  deposited  on  margins  have  accumulated  from 
1878  up  to  1881  ? 

A.  In  1876  they  began  at  $271,000 ; the  next  year,  $674,000;  the 
next  year,  $726,000  ; in  1879,  $2,784,000;  in  1880,  $6,052,000  ; in  1881, 
^10,717,000. 

Q.  It  is  a very  rapid  increase  ? 

A.  Yes,  sir. 

• Q.  And  also  refer  to  the  number  of  bushels  of  corn  sold  in  this  way? 

A.  It  has  increased  from  17,862,000  in  1877  to  41,912,000  in  1881. 

Q.  What  is  the  cause  of  the  failing  oft  in  pork,  in  transactions  in 
pork? 

A.  New  York  city  is  not  a packing  point ; Chicago  is  the  principal 
packing  point  of  the  country,  and  the  stock  is  there  in  Chicago ; and 
so  in  provisions,  future  sales  there  far  transcend  what  they  are  in  this 
city. 

Q.  And  has  their  system  of  carrying  on  transactions  and  sales  in 
Chicago  any  thing  to  do  with  the  diminishing  of  the  amount  of  trans- 
actions in  New  York  city  ? 

A.  I do  not  know  that  it  has. 

The  committee  then  adjourned  until  Saturday,  November  25,  1882, 
at  10  A,  M. 


404 


f 

» 


New  York,  November  25,  1882. 

The  committee  met  at  the  Metropolitan  Hotel  in  the  city  of  New,, 
pursuant  to  adjournment. 

Present  — Senators  Boyd  and  Browning,  of  the  committee,  John 
AV.  Corning,  Sergeant-at-Arms  of  the  Senate,  and  Daniel  A.  Cooney,, 
clerk  of  the  committee. 

William  E.  Ferguson,  being  duly  sworn  and  interrogated,  testified 
as  follows  : 

By  Senator  Boyd  : 

Q.  Where  do  you  reside? 

A.  Montclair,  New  Jersey. 

Q.  What  is  your  business? 

A.  My  business  is  fitting  vessels’  for  in  cargoes. 

Q.  Ocean  vessels? 

A.  Yes,  sir. 

Q.  Exclusively  ? 

A.  Yes,  sir. 

Q.  How  long  have  you  been  in  that  business? 

A.  Twenty  years. 

Q.  What  transportation  companies  have  you  generally  done  busi- 
ness for  ? 

A.  I have  done  business  for  all  the  ship-builders  of  New  York  city 
that  have  vessels  chartered  to  load  grain. 

Q.  What  is  your  opinion  in  relation  to  the  whole  system  of  making 
corners  and  dealing  in  futures  with  reference  to  its  effect  upon  com- 
merce, and  its  influence  upon  the  public  welfare  ? 

A.  That  is  something  I do  not  know  any  thing  about. 

Q.  Do  you  recollect  any  corners  that  were  made  in  grain  in  the 
country  within  the  past  few  years  ? 

A.  I remember  one  in  the  winter  of  1880  ; it  was  called  the  Keene 
corner,’’  I believe. 

Q.  Do  you  understand  how  that  corner  was  made  ? 

A.  No,  sir. 

Q,  Do  you  understand  to  what  extent  it  was  made  ? 

A.  No,  sir. 

Q.  Can  you  explain  what  effect  that  corner  had  upon  the  shipping 
interests  of  the  country  ? 

A.  In  the  winter  montlis  of  1880  it  tied  up  a large  amount  of  sail- 
ing tonnage  in  tlie  port  of  New  York;  there  was  a large  fleet  that 
had  been  engaged  in  the  grain  trade  during  the  summer  months  of 
1870  ; tliey  came  to  New  York  seeking  business,  and  they  didn’t  oh- 


405 


tain  it,  and  the  result  was  they  waited  two  or  three  months,  and  then 
they  took  very  low  rates  to  get  out  of  the  port  of  New  York. 

Q.  How  long  did  that  condition  of  affairs  continue  ? 

A.  In  December,  1879,  January,  1880,  February  and  March. 

Q.  What  was  the  ultimate  result  of  that  upon  our  commercial  in- 
terests? 

A.  When  the  vessels  got  away  from  New  York,  then  they  didn’t  re- 
turn very  soon. 

Q.  Do  you  think  it  had  the  effect  of  sending  many  shippers  to  trade 
with  foreign  ports  instead  of  seeking  trade  with  the  port  of  New 
York  ? 

A.  I don’t  know  any  thing  about  that. 

Q.  You  simply  know  the  effect  ? 

A.  I know  the  effect,  yes,  sir. 

Q.  About  how  many  vessels  were  sent  away  in  that  way  by  that  in- 
fluence from  this  port  ? . 

A.  I could  not  tell  you  the  exact  number;  there  was  what  we  con- 
sidered a large  number  ; that  would  be  200  or  300  vessels. 

Q.  Is  that  the  only  instance  of  which  you  know  of  corners  ” hav- 
ing had  an  injurious  effect  upon  our  commercial  and  shipping  in- 
terests ? 

A.  It  is  the  only  one  that  I have  any  recollection  of,  or  any  knowl- 
edge of  whatever  that  affected  our  commerce. 

Q,.  Oar  foreign  commerce;  foreign  shipping  interests  ? 

A.  Yes,  sir ; that  is  what  I am  speaking  about. 

Q.  Have  you  had  any  knowledge  of  its  effect  upon  our  internal 
shipping  interests  ? 

A.  None  whatever. 

Q.  Is  there  any  other  information  you  desire  to  give  us  ? 

A.  I can  show  you  some  statistics  of  our  exports  for  that  time. 

Q.  If  you  please  we  will  have  them. 

The  witness  then  read  the  following  statements  : 


1879. 

January  . . . , 
February  . . 

March 

April 

May 

Jane 

July 

August  .... 
September  . , 
October .... 
November  . 
December. . . 


Exports  by  sail. 

2,944,223 

3,464,9a0 

4.014.253 
4,666,289 
3,684,672 

6.322.128 
4,950,413 

6.312.253 
8,192,386 

7.495.128 
3,674,909 
3,188,408 


58,910,022 


Exports  by  steam . 

1,754,188 

2,239,026 

2,007,995 

2,732,558 

2,263,345 

4,115,270 

3,565,402 

5,418,946 

6,117,875 

3,633,347 

3,243,218 

3,408,888 


40,500,058 


Tot.  by  sail  & steam. 

4,698,411 

5,703,986 

6,022,248 

7,398,847 

5,948,017 

10,437,398 

8,515,815 

11,731,199 

14,310,261 

11,128,475 

6,918,127 

6,597,296 


99,410,080 


406 


1880. 

Exports  by  sail. 

Exports  by  steam . 

Tot.  by  sail  & steam. 

January 

1,883,615 

2,248,203 

4, 

131,818 

February  

2,336,210 

1,882,524 

4, 

218,743 

March 

5,116,875 

3,201,767 

8, 

318,642 

April 

3,991,004 

9, 

148,346 

May 

4,835,739 

9, 

000,080 

June 

0,519,304 

5,036,487 

• 14, 

555,791 

July 

8,377,689 

6,296, 152 

14, 

673,841 

August 

6,086,788 

12, 

576,213 

September 

5.834,399 

5,690,639 

11, 

525,038 

October 

4,685,772 

13, 

011,552 

November 

4,212,341 

3,139,080 

7, 

351,421 

December 

2,872,424 

4, 

831,678 

63,376,584 

49,966,579 

114, 

,343,163 

The  WiTN’ESS — Those  are  the  exports  of  December,  1879,  and  of 
those  months  following.  Yon  can  see  the  falling  off.  You  can  see 
how  they  increase  here  and  fall  off.  You  can  see  the  shipments  there 
of  September  were  14,000,000  bushels,  and  the  shipments  of  Decem- 
ber were  6,000,000,  and  the  shipments  of  January  were  4,000,000 
bushels,  and  the  shipments  of  June  were  14,000,000  bushels.  The 
price  of  wheat  at  the  time  of  that  shipment  in  June  there  I think  was 
$1.10. 

Q.  It  had  decreased  in  price  ? 

A.  Yes,  wheat  was  down  to  its  true  value  then.  In  December,  1879, 
was  when  the  corner  commenced  to  work. 

Q.  In  June  you  say  that  wheat  had  got  down  to  its  legitimate 
value  ? 

A.  Yes,  sir,  I think  so. 

Q.  What  was  the  cause  of  the  reduction  of  the  amount  in  Novem- 
ber and  December  ? 

A.  That  was  owing  to  the  crops  of  that  year  and  the  market  on  the 
other  side.  The  conditions  were  altered  you  see. 

Q.  The  crops  on  the  other  side  were  bountiful,  and  the  crops  in  thi^ 
country  were  not  so  good  ? 

A.  Yes,  sir. 

Q,  You  are  a sealer  of  vessels  ? 

A.  Yes,  sir,  the  fitting  of  grain  vessels.  I compile  these  statistics. 

The  witness  then  submitted  the  following  statement  to  the  com- 
mittee : 

“ The  estimated  yearly  consumption  of  wlieat  in  the  United  States, 
or  its  eipiivalent  in  Hour,  is  about  3()0,()()(),()00  bushels;  the  daily  con- 
sumption, therefore,  would  average  about  800,000  bushels,  the  equiva- 
lent of  til  is  in  Hour  being  160,000  barrels. 


4or 

“ On  this  immediate  consumption  the  market  price  must  be  paid, 
and  if  a ‘corner’  has  been  worked  on  the  market,  tlie  price  of  bread 
must  necessarily  be  governed  by  it.  When  a ‘ corner’  is  turned,  and 
the  market  reacts,  prices  very  often  fall  below  the  real  value  of  the 
article  ; but  this  is  soon  checked  by  the  export  demand,  which  imme- 
diately sets  in  as  soon  as  prices  approach  the  shipping  point,  the 
exporter’s  limit  being  the  true  value  of  our  crops’  surplus.” 

Q.  Have  you  any  other  statistics  ? 

A.  No,  sir. 

Q.  Is -it  a fact  that  all  that  is  shipped  abroad  is  our  surplus  ? 

A.  (Jertainly.  We  import  very  little.  If  it  comes  from  Canada  it 
has  to  pay  twenty  cents  a bushel  duty,  and  passes  through  here  in 
bond  if  it  is  exported.  Our  millers  cannot  afford  to  pay  twenty  cents 
duty  for  grain  from  Canada.  I do  not  think  our  farmers  need  pro- 
tection in  that  quarter.  This  statement  is  simply  the  export  of 
grain.  That  includes  all  kinds  of  grain.  There  is  no  flour  in  that 
at  all. 

By  Senator  Browning: 

Q.  Do  you  recollect,  some  years  ago,  that  they  used  to  burn  wheat 
out  West  ? 

A.  No,  sir. 

Q.  Was  there  ever  any  truth  in  that  statement  ? 

A.  I do  not  think  so.  I never  knew  any  thing  about  it.  I do  not 
believe  it. 

Q.  Or  corn  ? 

A.  There  was  talk  about  burning  corn,  but  I do  not  believe  they 
ever  burned  much.  They  burnt  the  cobs  ; but  I do  not  think  the  corn 
was  ever  burnt.  They  burnt  the  cobs.  They  make  very  nice  fuel. 
I don’t  believe  they  ever  burnt  any  corn  in  this  country. 

Edivard  Hincken,  being  duly  sworn,  was  interrogated  and  testified 
as  follows : 

By  Senator  Boyd  . 

Q.  Where  do  you  reside  ? 

A.  I reside  in  Long  Island.  My  place  of  business  is  No.  3 William  st. 

Q.  What  is  your  business  ? 

A.  Ship-brokers. 

Are  you  a member  of  a firm  ? 

A.  Yes,  sir. 

Q,  What  is  the  name  of  your  firm  ? 

A.  Boyd  & Hincken. 


408 


Q.  How  long  have  you  been  in  that  business  ? 

A.  Since  1832,  man  and  boy. 

Q.  What  is  the  extent  of  your  business — I mean  with  what  ship- 
owners do  you  do  business,  or  wliat  companies? 

A.  We  are  ship-owners,  and  ship-brokers  and  freighters,  contractois 
and  every  tiling  connected  with  freights. 

Q.  Will  you  state  to  the  committee  your  opinion  with  reference  to 
the  whole  system  of  making  corners  and  dealing  in  futures  with  ivler 
ence  to  its  effect  upon  commerce  and  its  inffuence  upon  the  public 
welfare  ? 

A.  That  is  a very  broad  question,  but  I can’t  say  much  against  tr;. - 
ing  to  make  corners.  Tor  this  last  thirty  years  I have  been  trying  to 
corner  the  freight  market;  sometimes  1 hit  it  and  sometimes  i don’t 
and  fail.  I had  contracts  offered  to  me  that  1 wouldn’t  take.  If  you 
call  that  cornering  the  market,  refusing  or  taking  contracts  ahead, 
that  is  my  business,  and  I think  it  is  legitimate  as  a carrier.  If  you 
ask  me,  what  will  you  carry  10,000  barrels  of  oil  or  ten  quarters  of 
grain  each  month  for  next  year,  and  I name  a price  for  it,  1 believe  it 
is  legitimate  for  me  to  name  a price  and  carry  it.  If  I sometimes  do 
make  a mistake,  I have  to  stand  up  and  pay  the  loss,  and  so  with  th(‘ 
contracts  in  futures.  If  I sell  10,000  bushels  of  grain,  I have  a right 
to  do  it,  and  if  I do  not  deliver  it  I must  pay  the  penalty.  I look 
upon  the  corners  of  grain  as  legitimate.  They  can’t  make  a corner, 
unless  there  is  a buyer,  and  they  can’t  make  a corner  unless  there 
is  a seller. 

Q.  So  far  as  the  legitimate  trade  is  concerned,  we  do  not  find  any 
fault  with  that,  but  there  is  a system  of  speculating  in  grain  in  which 
persons  who  never  own  a bushel  of  grain  sell  by  a certificate  and  l^y 
grades;  do  you  call  that  legitimate  ? 

A.  Well,  it  is  not  legitimate  commerce,  but  as  far  as  I can  go  back 
there  has  always  been  that  kind  of  sales  ; that  kind  of  sales  has  in- 
creased recently  with  telegraph  and  steam,  and  all  those  things,  but 
there  always  were  that  kind  of  contracts  within  my  memory. 

Q.  Do  you  know  when  the  system  of  selling  grain  by  grades  com- 
menced ? 

A.  I should  say  about  two  years  ago,  perhaps  three  years  ago  ; in 
1881,  I think,  they  perfected  the  first  grading  system  ; 1 think  the 
first  grading  system  was  about  three  years  ago  ; I am  not  positive 
about  the  time. 

(2.  Is  it  not  true  that  the  system  of  dealing  in  futures  and  margins 
has  ificreased  very  greatly  since  the  selling  by  grade  ? 

A.  I think  that  it  has. 

Q.  Do  you  recollect  any  great  corners  that  iiave  been  made  in  grain 
recently  witliin  the  last  few  years  in  the  country  ? 


409 


A.  Yes,  there  was  what  they  called  the  Keene  corner. 

Q.  When  was  that  made  ? ^ 

A.  It  appears  to  me  that  was  the  winter  of  1879. 

Q.  State  from  your  knowledge  of  shipping  in  that  year,  what  the 
effect  of  that  corner  was  upon  our  foreign  commerce  and  our  carrying 
trade  ? 

A.  It  stopped  shipments  till  well  along  in  the  next  year,  perhaps 
March  or  April. 

Q,  To  what  extent  did  it  stop  them  during  that  time  ? 

A.  Well,  I suppose  fifty  per  cent. 

Q.  How  did  that  affect  our  shipping  interests  and  the  business  of 
the  port  of  New  York  ? 

A,  The  ships  had  been  getting  good  rates  in  the  early  part  of  the 
year,  and  they  came  back  with  the  expectation  of  getting  lair  rates  in 
the  fall,  and  they  found  they  had  come  to  the  wrong  market ; that  is 
all;  some  of  them  laid  it  out  and  they  all  got  something  or  other  ; 
but  they  didn’t  get  six  shillings;  sonie  of  them  took  three  shillings 
and  went;  they  all  got  away  finally  and  were  not  in  a hurry  to  come 
back,  and  like  the  swing  of  a pendulum,  when  the  grain  did  begin  to 
move,  then  those  ships  that  were  here  profited  by  it,  so  that  in  the 
end  it  was  like  the  swing  of  a pendulum  ; you  can’t  hold  the  pendu- 
lum one  way  but  what  it  will  swing  the  other. 

Q.  Do  you  think  that  it  regulated  itself  then  ? 

A.  I think  so. 

^Q.  Do  you  believe  that  any  of  those  ships  that  went  away  lightly 
laden  at  that  time  returned  to  this  port  since  ? 

A.  I have  no  doubt  that  they  returned  finally;  that  they  came  back 
unless  they  found  other  business. 

Q.  Do  you  know  any  ship-owners  who  directed  their  vessels  to  trade 
with  other  ports  instead  of  this,  in  consequence  of  that  depreciation  in 
the  export  business  ? 

A.  I think  we  sent  ships  away  from  here  to  load  at  other  ports  ; we 
sent  many  down  to  Mobile,  some  to  Baltimore,  some  to  New  Orleans, 
Charleston  and  Savannah,  and  the  wood  ports  of  the  South,  because 
we  could  get  better  rates  at  other  places  than  we  could  get  here. 

Q.  During  the  existence  of  that  Keene  corner  ? ” 

A.  Yes  sir  ; but  1 do  not  think  any  thing  went  away  in  ballast. 

By  Senator  Browni^^g  : ^ 

Q.  How  long  did  that  corner  last  ? 

A.  From  the  closing  of  the  corner  to  the  re-opening  of  the  corner,  I 
should  say  from  December  to  April. 

52 


410 


By  Senator  Boyd  : 

Q.  Do  yon  know  the  effect  it  had  upon  the  canal  interest? 

A.  Bhe  canals  were  closed  ; tliis  was  a winter  corner. 

Q.  Are  you  familiar  with  t he  cotton  trade  ? 

A.  No,  sir,  except  as  a carrier. 

Q.  Do  you  know  any  thing  about  cotton  contracts  having  passed 
through  various  hands  before  any  delivery  of  the  article  ? 

A.  Yes,  sir,  I do ; I sold  a lot  not  a great  while  ago  ; I sold  a con- 
tract for,  I think,  250  bales  tliat  had  sixty-four  indorsements  on  it; 
it  had  passed  through  sixty-four  hands. 

Q.  Without  any  delivery  of  tlie  goods  ? 

A.  It  hadn’t  been  delivered  when  I saw  it ; I don’t  know  how  much 
more  it  was  run  up,  but  I saw  the  same  house  on  it  three  different 
times. 

Q.  What  is  your  opinion  of  the  effect  of  such  transactions  upon  the 
public  welfare,  upon  our  commercial  interests  — wliat  is  the  influence 
of  them  ? ^ 

A.  I think  it  would  be  better  if  there  were  not  those  fluctuations  ; 
but  I do  not  see  the  remedy  for  it. 

By  Senator  Biiowking  : 

Q.  Do  you  think  passing  the  contract  through  sixty-four  hands  is 
proper  — do  you  look  upon  that  in  the  same  way  as  you  look  upon  a 
fifty  dollar  bank  note  passing  from  one  hand  to  the  other  — do  you 
look  upon  a certificate  for  50,000  bushels  of  grain,  we  will  say,  in  the 
same  way  that  you  look  upon  a national  bank  note  — as  a medium  of 
exchange  between  parties  ? 

A.  If  I wanted  the  grain  I should  say,  ‘^Mr.  Smith,  there  is  your 
contract  for  64,000  bushels  of  grain,  I Avant  it.”  If  my  name  is  on 
that  contract,  and  it  is  brought  to  me,  I say  I don’t  Avant  the  grain? 
I have  transferred  it  to  John  Jones.”  John  Jones  has  the  right  of 
calling  for  the  grain  or  passing  it  to  somebody  he  has  sold  it  to.  A 
contract  for  grain  may  be  like  a contract  for  cotton.  Somebody,  be 
fore  it  is  run  out,  as  they  call  it,  Avill  say  I Avant  the  cotton.”  It  is 
what  we  call  legitimate, 

Q.  You  spoke  about  the  same  house  being  on  the  contract  three 
times  ? 

A.  Yes,  sir. 

In  other  Avords,  that  contract  passed  through  their  hands  three 
times  ? 

A.  Yes,  sir. 

il.  4'he  fifty  dollar  bank  note  might  pass  through  your  hands  a, 
dozen  times  as  a medium  of  excluingc  ? 


411 


A.  Yes,  sir. 

Q.  So  you  look  upon  that  contract  the  same  as  a medium  of  ex- 
change ? 

A.  A medium  of  exchange. 

Q.  The  same  as  a fifty  dollar  bank  note  ? 

A.  Perhaps  I have  bought  250  bales  of  cotton  and  have  sold  250 
bales  of  cotton.  You  present  me  with  an  order  for  250  bales  and  I 
do  not  want  the  cotton,  and  I hand  it  over  to  one  who  does,  and  I sell 
it.  So  it  is  really  the  same  as  a bank  note  in  that  respect. 

Q.  It  is  a medium  of  exchange  ? 

A.  Yes,  sir. 

Q.  That  is  the  way  you  regard  it  as  a business  man  ? 

A.  Yes,  sir. 

By  Senator  Boyd  : 

Q.  Is  there  not  this  difference,  that  a bank  note  always  has  the  same 
value,  Avhereas  this  contract  for  grain  may  be  sold  at  different  prices 
on  each  transaction  ? 

A.  Yes,  no  doubt  that  is  so.  It  has  a value  of  250  bales  ot  cotton, 
whether  it  is  worth  a dollar  or  fifty  cents. 

By  Senator  Beowi^^ihg  : 

Q.  It  always  calls  for  the  same  number  of  bushels  of  grain  or  bales 
of  cotton  ? 

A.  Yes,  sir  ; I do  not  know  how  iyou  are  going  to  prevent  corners. 
As  I came  down  from  my  house  this  morning  through  the  fields,  I 
saw  a farmer  trying  to  raise  a corner  by  burying  his  potatoes  and 
his  turnips,  burying  them  to  keep  them  for  a better  market.  That 
man  is  interested  in  a corner  just  the  same  as  if  I bought  8,000 
bushels  of  grain  and  held  it  until  next  spring. 

Q.  Is  there  a brokerage  on  each  transaction  ? 

A.  I presume  there  is. 

Q.  Do  you  know  the  amount  of  the  brokerage  ? 

A.  I believe  the  brokerage  on  cotton  is  12-^  cents  to  the  buyer,  and 
12:^  cents  to  the  seller.  It  may  be  reduced. 

Q.  12i  ? 

A.  12-^  cents  a bale. 

Q.  Is  that  a charge  on  the  cotton  ? 

A.  That  follows  the  contract ; if  I,  as  a broker,  sell  two  hundred 
and  fifty  bales  of  cotton  to  you,  I charge  you  twelve  and  one-half 
cents  and  twelve  and  one-half  cents  to  the  other. 

Q.  That  is  twenty-five  cents  ? 

A.  That  is  twenty-five  cents  a bale. 


/ 


412 

Q.  And  if  a contract  passes  through  sixty-four  hands  it  is  sixty-four 
times  twenty-five  ? 

A.  Yes,  sir. 

Q.  Multiplied  by  the  number  of  bales  in  the  contract  ?. 

A.  Yes,  sir. 

Q.  That  is  a pretty  good  charge  on  the  cotton  then  by  the  time  it 
reaches  the  last  person  ? 

A.  Yes,  sir. 

By  Senator  Boyd  : 

Q.  Then  of  course  it  differs  from  a bank  note  in  that  particular  ? 

A.  Yes,  sir  ; on  sixty-four  that  would  be  about  $16  ; about  33  1-3 
per  cent  would  go  to  the  brokers  ; that  is  why  we  all  make  money. 

Q.  And  ultimately  who  has  to  pay  — on  whom  does  the  burden 
fall  ? 

A.  It  is  all  borne  by  the  cotton. 

By  Senator  Browning  : 

Q.  The  man  that  wears  the  shirt  pays  for  it  ? 

A.  Yes,  I believe  so. 

Q.  The  consumer  has  ultimately  to  pay  ? 

A.  Yes,  sir;  we  send  the  cotton  abroad  and  the  foreign  miller  has 
to  reimburse  us  for  all  expenses. 

Q.  In  ijsing  the  figure  you  referred  to,  where  the  farmer  buried  his 
potatoes  and  turnips  to  create  a corner,  supposing  all  the  farmers 
in  the  country  did  that,  or  supposing  that  certain  speculators  should 
go  and  buy  up  all  the  farm  products  in  the  country  and  create  such  a 
corner,  Avhat  effect  would  it  have  ? 

A.  I think  you  overlook  the  covetousness  of  man;  I think  man’s  • 
desire  to  gain  if  he  has  bought  at  a dollar  and  he  can  sell  at  a profit 
will  cause  him  to  sell,  and  so  it  Avill  be  with  the  farmer ; if  he  thinks 
that  grain  is  worth  a dollar,  to-day  and  by  holding  it  sixty  days  he  can 
get  $1.05  or  $1.10,  he  will  hold  it,  and  I think  that  the  greed  of  man 
is  the  remedy  for  this  thing.  As  I sa}^  there  is  no  seller  without  a 
buyer,  and  there  is  no  buyer  without  a seller,  and  it  is  a struggle  be- 
tween the  buyer  and  the  seller  that  makes  commerce. 

Q.  Supposing  the  speculator,  the  mere  speculator,  comes  in  between 
the  purchaser  and  the  consumer  and  locks  up  the  produce  of  the 
country  so  that  the  consumer  can’t  get  it,  what  would  you  term  that  ? 

A.  1 should  think  it  was  bad  for  the  consumer  if  he  can’t  pay  suffi- 
cient to  induce  the  holder  to  part  with  it. 

. (2-  d’hen  he  must  starve  ? 

A.  lie  must  starve  ; those  things  do  not  occur;  those  are  extreme 


413 


cases;  there  is  always  a price  that  you  can  buy  at;  I never  saw  the  day 
yet  but  what  I could  get  out  of  my  snarls  by  paying  a price  ; I have 
had  to  pay  prices. 

Q.  Supposing  the  system  was  carried  to  that  extent  — when  it  is 
permitted  to  exist  at  all  it  may  be  carried  still  further  and  combina- 
tions may  be  formed  by  which  the  products  of  the  country  may  be 
locked  up  — don’t  you  believe  it  is  the  duty  of  the  people  to  interfere 
through  their  Legislature  to  prevent  such  things  ? 

A.  I believe  if  your  extreme  cases  were  possible,  then  it  would  be- 
the  duty  of  the  Legislature  to  interfere;  but  I believe  the  only  legisla- 
tive interference  that  I could  say  would  be  a benefit,  would  be  to  take 
the  brief  rule  of  commerce  ^nd  of  honesty,  that  promises  made  must 
be  fulfilled.  If  John  Smith  sells  me  10,000  bushels  of  wheat,  deliv- 
erable in  January,  he  should  not  be  allowed  to  play  the  baby  act,  and 
call  me  a gambler,  and  get  out  of  it,  and  call  it  a gambling  transac- 
tion, because  he  hadn’t  the  wheat,  when  perhaps  I had  a legitimate 
use  for  that  wheat  when  I bought  it. 

Q.  You  believe  then  every  man  should  be  held  to  a strict  fulfillment 
of  his  contract  ? 

A.  To  a strict  fulfillment  of  his  contract,  and  if  I do  not  want  the 
wheat  I bought,  and  1 have  sold  it  to  somebody  else  in  advance,  that 
man  should  have  his  wheat ; he  should  look  to  him  for  it. 

Q.  Do  you  know  of  such  cases  as  you  have  cited  where  men  have 
played  the  baby  act  ? ^ 

A.  Yes,  men  have  played  it. 

Q.  State  when  and  where? 

A.  It  was  played  on  our  Exchange. 

Q.  When  ? 

A.  Here  last  winter. 

Q.  By  whom  ? 

A.  By  a man  unfortunately  whose  name  only  differs  in  one  vowel 
from  mine  ; his  name  was  Hencken. 

Q.  What  did  they  do  with  hiin  ? 

A.  They  expelled  him. 

Q.  Did  he  ever  go  into  court  ? 

A.  He  went  into  court. 

Q.  What  did  he  do  there  ? 

A.  So  far  as  I believe  the  courts  have  supported  the  Exchange. 

Q.  Was  it  taken  into  the  Supreme  Court? 

A.  I do  not  know  how  far  it  was  carried  ; there  was  a decision  here 
a day  or  two  ago,  I know,  confirming  the  decision ; we  have  had  several 


'414 


of  those  cases  where  they  liave  contested  the  decision  of  tlie  Exchanj^e 
and  I believe  the  Exchange  liave  always  been  supported  in  their 
view. 

Q.  Do  you  think  it  would  he  a good  thing  to  amend  the  charter  of 
the  Exchange,  preventing  them  from  expelling  a member  who  could 
not  meet  his  obligations  in  that  way? 

A.  No,  I think  not. 

Q.  You  think  it  is  a good  thing  to  expel  a member  ? 

A.  If  I go  on  that  Exchange  and  make  a bargain,  I ought  to  be 
made  to  fulfill  that  bargain  ; he  comes  on  the  Exchange,  and  every 
member  of  the  Exchange  knows  its  rules  and  regulations  when  he 
joins  it ; and  if  he  don’t  approve  them  he  should  not  join,  but  having 
once  joined  and  pledged  his  honor  that  should  be  enforced. 

Q.  Do  you  speak  of  that  with  reference  to  contracts  made  upon  a 
purely  speculative  basis,  or  do  you  mean  contracts  made  with  the  pros- 
pect of  actual  delivery? 

A.  I do  not  know  how  you  can  separate  the  two  contracts. 

Q.  That  is  not  clear  to  your  mind  ? 

A.  No,  sir  ; I do  not  see  how  you  can  separate  the  two  contracts. 

Q.  So  you  would  make  the  rule  apply  in  all  cases  ? 

A.  Yes,  sir;  they  are  all  supposed  to  be  legitimate  contracts. 
Senator  Brow'ning  — Until  settlement  day. 

By  Senalpr  Boyd  : 

Q.  Do  you  understand  the  system  of  dealing  in  “ margins  ? ” 

A.  I do  not. 

Q.  You  know  that  such  a system  is  provided  for  in  the  Produce  Ex- 
change ? 

A.  Yes,  sir ; there  are  rules  for  that ; they  have  to  put  up  their  mar- 
gins; if  I put  up  $800,  and  the  market  goes  up,  the  purchaser  has  a 
right  to  call  on  me  for  additional  margins  if  my  $800  or  $1,000  or  $8,- 

000  or  whatever  is  called  for,  won’t  cover  and  keep  him  safe ; he  is  pro- 
tected by  margins  against  any  defalcation  or  any  failure  by  me  to 
fulfill  that  contract. 

Q.  Do  you  look  upon  that  system  of  transacting  business  as  a spec- 
ulative or  gambling  system  ? 

A.  All  commerce  is  gamblingmore  or  less  ; when  I take  a ship  to 
arrive,  I am  a gambler  in  a measure;  I am  dependent  upon  the  winds. 

])y  Senator  Bkowking  : 

(^.  You  are  betting  the  ship  will  bo  here? 

A.  I guarantee  to  carry  for  you  20,000  <piarters  or  bushels  of  grain  ; 

1 have  had  -those  contracts  within  a month,  and  here  for  sixty  days 


415 


the  wind  has  been  to  the  northward  and  eastward,  and  I have  paid  for 
it ; that  is  just  my  idea  of  gambling;  I gamble  on  the  winds. 

By  Senator  Boyd  : 

Q,  You  are  betting  against  the  forces  of  nature  ? • 

A.  My  business  is  to  provide  a means  of  carrying  freight  abroad ; 
that  has  been  my  business  since  ’24= ; sometimes  we  are  compelled  to 
cover  our  contracts  by  taking  vessels  to  arrive. 

Q.  Would  you  not  term  that  rather  a risk  than  a gambling  opera- 
tion — a risk  of  trade  ? 

A.  I take  it  with  a legitimate  object  in  view. 

Q.  Subject  to  certain  risks  ? 

A.  Subject  to  certain  risks. 

Q.  But  there  is  no  gambling  in  that  ? 

A.  I do  not  consider  it  gambling. 

Q.  But  do  you  not  think  that  dealing  in  margins  is  a system  of  bet- 
ting upon  the  condition  of  the  market  at  a future  date  ? 

A.  Yes,  you  may  construe  it  that  way  ; if  a man  goes  into  the  mar- 
ket simply  to  pocket  a difference  on  the  margins  it  is  one  thing,  but 
if  he  goes  in  as  many  of  those  transactions  on  ’Change  are  made,  with 
legitimate  dealers,  I shouldn’t  call  that  gambling. 

Q.  Do  you  know  to  what  extent  the  dealing  in  “ margins”  is  carried 
on  in  the  Produce  Exchange  ? 

A.  I do  not  know  sufficiently  about  the  margins  ” to  give  an  opin. 
ion  on  that. 

Q,  Do 'you  know  any  other  place  where  speculative  dealing  in  grain 
is  carried  on  in  the  city  of  New  York  than  the  Produce  Exchange  ? 

A.  I do  not  know  that  there  are  any  other  places  except  the  brokers’ 
offices ; there  are  lots  of  contracts  made  in  brokers’  offices  that  are  not 
made  at  the  Exchange. 

By  Senator  Browking  : 

Q.  Were  you  ever  an  officer  of  the  Produce  Exchange  ? 

A.  I was  president  for  three  terms. 

Q.  Are  you  a member  of  any  other  exchange  ? 

A,  I am  a member  of  the  Maritime  Exchange. 

Q.  Were  you  ever  an  officer  there  ? 

A.  Yes,  sir. 

Q.  What  office  did  you  hold  there  ? 

A.  I held  the  office  of  president. 

Q.  So  that  you  have  had  a large  experience  in  commercial  business 
in  this  city  ? 

A.  I have  been  in  it  since  1832 ; nothing  else  much. 


410 


Henry  IF.  Edye,  being  duly  sworn,  was  interrogated  and  testified  as 
follows : 

By  Senator  Boyd  : 

*Q.  Where  do  you  reside? 

A.  28  East  Twenty-third  street. 

Q.  In  this  city  ? 

A.  Yes,  sir. 

Q.  What  is  your  business  ? 

A.  I am  a ship-builder  and  steamship  agent. 

Q.  Are  you  a member  of  any  firm  ? 

A.  Funch,  Ed  ye  & Co. 

Q.  Where  is  your  place  of  business  ? 

A.  27  South  William  street. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  Since  January  1,  1862. 

Q.  Are  you  familiar  with  the  system  of  making  corners”  and  deal- 
ingin  ‘‘futures?” 

A.  I am  not  particularly  familiar  with  it  except  what  I see  in  the 
way  of  my  business,  and  the  way  it  affects  it. 

Q.  Will  you  please  state  how  it  affects  your  business? 

A.  At  times  very  adversely. 

Q.  Will  you  please  state,  if  you  can  recollect,  any  particular 
times  when  it  has  specially  affected  your  business  ? 

A,  The  “Keene  corner”  is  the  one  I am  the  most  familiar  with. 
That  commenced  I think  in  the  fall  of  1879  and  ended  I think  about 
May  or  June,  1880. 

Q.  State  how  that  “ corner ” originated  if  3^11  know;  how  long  it 
lasted,  and  how  it  affected  your  business  generally  ? 

A.  As  far  as  I know  about  the  “corner’’  it  was  brought  about  by 
purchases  of  Mr.  Keene,  who  thought  that  the  people  on  the  other 
side  were  very  short  of  grain  and  were  bound  to  pay  whatever  price 
he,  if  he  held  the  grain,  was  able  to  put  upon  it.  It  commenced  with 
the  ending  of  the  canal  navigation  and  ended  about  May  or  June,  just 
before  the  canaFnavigation  was  opened  here,  or  about  the  time  shortly 
after  perhaps.  We  had  at  that  time  something  like  120  unchartered- 
ships  in  port  at  one  time,  and  I believe  we  had  them  almost  altogether 
until  March.  There  was  very  little  doing  in  petroleum,  and  the  bulk 
of  the  ships  were  in  our  office  until  March — April,  and  then  in  May 
we  disposed  of  a great  many  of  them  for  grain,  when  the  grain  “cor- 
ner ” was  opened. 

Q.  What  was  the  icsiut  upon  the  shipping  interests  of  the  port  of 
'New  York? 


417 


A.  It  was  disastrous  to  all  those  vessels  that  were  here  at  the  time. 

Q.  And  how  did  it  affect  the  commerce  of  the  couhtry  ? 

A.  It  almost  thoroughly  clogg(^  it  as  far  as  grain  was  concerned. 
A little  grain  went  out  I suppose  in  the  steamers ; went  out  in  drib- 
lets. 

Q.  And  what  would  the  result  of  such  a system  of  ‘‘  cornering’’  be 
upon  the  commercial  interests  of  the  country,  were  it  continued  ? 

A.  It  would  stop  all  exportation. 

Q.  Would  it  tend  to  drive  away  ships  from  the  port  ? 

A.  It  decidedly  would,  yes. 

Q.  Send  them  to  other  ports  in  order  to  obtain  cargoes? 

A.  Yes. 

Q.  Does  that  result  in  a pecuniary  loss  to  our  country  ? 

A.  I think  it  would  finally  in  this  way.  During  the  “Keene  cor- 
ner” the  bulk  of  the  grain  was  in  Mr.  Keene’s  hands,  consequently 
the  country  at  large  had  no  particular  interest  in  it,  except  I suppose, 
that  those  people  that  had  not  sold  would  be  apt  to  get  more  for  the 
grain  they  still  had  in  hand,  but  finally  these  ships  having  been  driven 
away,  whenever  we  had  any  thing  to  export,  we  should  have  a very 
much  smaller  number  of  ships  than  usual,  and  consequently  the 
freights  would  be  enhanced,  and  as  Europe  would  not  pay  any  more 
than  a certain  price  for  the  grain  delivered  there,  the  price  of  grain 
would  have  to  decline  quite  materially  in  order  to  pay  for  the  en- 
hanced freights. 

Q.  Do  you  recollect  any  other  occasion  when  your  business  was 
affected  by  the  “ cornering  ” system  ? 

A.  Kot  so  particularly;  there  has  been,  you  know,  from  time  to 
time — there  is  hardly  a month  passes  now  — I do  not  say  a month  — 
but  perhaps  two  or  three  times  a year  toward  the  end  of  the  month 
there  is  some  trouble  about  “ shorts  ” covering,  and  the  price  is  put 
up  upon  those  that  are  short,  and  naturally,  for  the  time  being,  there 
is  a decline  in  shipping  and  interruption  to  it. 

Q.  In  various  articles  of  produce,  I suppose? 

A.  In  various  articles  of  produce;  yes,  sir. 

Q.  Does  any  such  condition  of  things  arise  in  the  petroleum  trade  ? 

A.  Yot  in  a large  measure,  the  article  being  so  very  cheap;  it  is 
mainly  grain,  cotton  and  provisions. 

Q.  And  when  these  things  do  occur,  the  tendency  is  I presume  to 
create  a depression  in  the  shipping  trade  ? 

A.  Yes,  the  shipping  trade  is  the  first  to  feel  it  of  course. 

Q.  And  thereby  it  causes  a fluctuation  in  various  other  industries  ? 

A.  Yes,  every  thing  must  indirectly  suffer. 


committee  ? 


A.  I jirn  afraid  I could  not  give  tHem  very  much  information  about 
it.  I think  you  spoke  about  the  system  of  dealing  in  futures.”  I 
think  if  you  could  disconnect  that  from  corners  ” of  tiourse  it  would 
be  beneficial  to  this  trade.  I think  since  we  have  been  dealing  in 
grain  in  “ futures  ” our  business  has  increased  very  much. 

Q.  You  have  now  reference  to  dealings  in  futures  ”? 

A.  Yes,  sir. 

Q.  You  have  no  reference  to  the  merely  speculative  or  gambling 
system  ? 

A.  No,  the  trouble  is  you  can’t  well  disconnect  one  from  the  other. 
As  soon  as  you  give  a man  a chance  to  make  money  in  this  easy  way, 
he  will  embrace  it,  but  I think  the  legitimate  business  is  very  good 
that  it  has  been  benefited  by  the  grading  system  and  dealing  in 

options  ” and  “futures.”  Some  years  ago  before  this  was  entered 
into,  it  Was  always  an  amount  of  risk  for  a merchant  for  instance,  to 
take  ships  to  arrive  here  and  to  load  up.  Now  the  risk  is  very  much 
smaller,  because  he  knows  exactly  what  grain  he  is  going  to  get,  he  is 
going  to  get  a graded  grain  and  when  his  vessels  arrive,  he  buys 
contracts  from  anybody  that  sells  them.  He  knows  he  is  going  to  get 
his  grain  for  the  ship.  Before  this  every  thing  was  bought  by  the 
boat-load,  and  you  could  not  tell  whether  the  grain  suited  you  or 
whether  you  wanted  it  before  the  boat  arrived  Suppose  a man  buys 
12  or  15  loads  in  Buffalo,  and  then  by  the  time  it  arrives  here,  it  is 
not  in  good  condition,  he  would  have  to  run  the  risk. 

Q.  You  are  speaking  now  of  the  interests  of  shipping  brokers  ? 

A.  Yes,  sir ; of  merchants  dealing  in  grain  who  want  to  make 
shipments  of  grain  to  the  other  side,  who  take  ships  on  the  other  side 
to  carry  this  grain. 

Q.  But  when  we  get  to  the  speculative  system  as  this  is  carried  on 
in  dealing  in  margins,  what  is  your  opinion  of  that  as  to  its  effect 
upon  the  public  welfare  ? . ^ 

A.  It  certainly  must  act  very  adversely.  It  you  could  find  out  any 
system  to  disconnect  the  legitimate  from  the  illegitimate  trading,  of 
course  it  would  be  a great  boon. 

Q.  Have  you  any  suggestion  as  to  what  method  could  be  pursued  by 
the  Legislature  in  remedying  tiiecvil  without  affecting  that  portion  of 
the  business  which  is  beneficial  ? 

A.*  1 am  afraid  not.  I am  afraid  it  would  be  a very  difficult  matter, 
because  it  strikes  me  no  matter  what  laws  may  be  enacted,  they  can 
always  lie  got  around.  Men  will  speculate  and  they  will  find  the 
moans  of  doing  so. 


419 


Q.  But  you  believe  it  is  the  duty  of  the  people  through  their  Legisla- 
ture to  remedy  any  evils  that  may  be  existing  among  them,  so  far  as 
they  can  ? 

A.  Yes,  I decidedly  think  so. 

By  Senator  Browning  : 

Q.  When  did  that-‘^  Keene  corner  ’’  commence  ? 

A.  As  far  as  my  recollection  goes,  about  November,  1879. 

Q.  And  how  long  did  it  continue  ? 

A.  Until  May  or  June,  1880. 

Q.  It  was  a corner  in  what  ? 

A.  It  was  wheat. 

Q.  How  much  did  the  price  of  wheat  raise  on  account  of  that 
corner  ? 

A.  I really  could  not  tell  you ; I am  sorry  to  say  it  is  out  of  my 
province. 

Q.  Have  you  any  idea  ? 

A.  I think  it  must  have  been  about  20  or  25  cents  at  least. 

Q.  On  a bushel  ? 

A.  Yes,  sir,  perhaps  30,  perhaps  more.  It  was  a very  large  amount 
■of  money. 

Q.  It  increased  about  25  cents  a bushel  ? 

A.  Yes,  and  the  result  was  very  bad  too  in  this  way,  independently 
of  the  internal  question,  to  the  country.  We  had  advanced  our  prices 
to  such  an  extent  that  Europe,  our  purchaser,  went  everywhere  they 
could  find  grain.  They  imported  wheat  from  countries  which  they 
had  never  imported  from  before,  at  least  to  any  extent.  They  im- 
ported grain  from  Calcutta,  from  Bombay,  and  wherever  there  was 
wheat  to  be  had  they  imported  it,  and  that  was  the  reason  they  burst 
the  corner.” 

Q.  The  corner  broke  in  May  ? 

A.  In  May.  Mr.  Keene  was  then  compelled  to  make  shipments  and 
he  couldn’t  sell  them.  He  had  to  consign  them  and  the  result  I, 
understand  it  was  disastrous. 

Q.  Did  he  unload  before  the  break  ? 

A.  Of  course  I only  give  you  what  I am  told,  I cannot  vouch  for 
any  thing.  He  went  to  work  and  shipped  bn  his  own  account.  He 
was  compelled  to.  He  couldn’t  find  any  purchasers  here  at  his  prices 
and  he  thought  he  would  save  himself  by  making  shipments  to  the 
other  side,  and  I think  he  shipped  about  fifty  or  sixty  cargoes. 

Q.  And  that  gave  relief  ? 

A.  That  ended  the  corner.  As  far  as  that  is  concerned,  it  gave  relief 
to  the  ships  that  had  been  tied  up  here. 


420 


Q.  Do  you  know  of  a “ corner  ” to-day  in  corn,  or  an  attempt  to 
make  a “ corner  ? ” 

A.  I have  been  told  so.  Of  course  I can  see  the  prices. 

Q.  Do  you  know  who  is  behind  that  ? 

A.  That  I do  not  know. 

Q.  You  have  not  heard  ? 

A.  I couldn’t  say  that  with  any  accuracy  at  all.  I want  to  say, 
however,  with  regard  to  this  corner,  that  I do  not  think  it  hurts  any- 
body, because  the  corn,  even  at  the  lower  price,  is  entirely  too  high  to 
serve  as  an  article  of  exi)ort.  Before  it  gets  down  to  about  seventy-five 
cents  or  so,  I do  not  think  we  shall  have  any  to  export. 

Q.  What  proportion  of  the  grains  arriving  at  this  port  remain  here, 
and  what  proportion  are  shipped  abroad  ? 

A.  1 don’t  think  I could  tell  you  very  much  about  it ; but,  of  course, 
the  larger  proportion  of  what  arrives  here  g'oes  forvvard  by  far. 

Q.  Moves  right  forward  ? 

xV.  Moves  right  forvvard,  yes,  sir.  The  mills  here  are  not  very  large. 
Of  course  there  is  some  milling  done  here. 

Q.  But  most  of  the  grains  that  arrive  here  go  right  forward  ? 

A.  Yes,  sir. 

Q.  That  is  a fact  ? 

A.  Yes,  sir,  except  at  this  time  of  year,  toward  the  winter  season, 
there  is  a certain  amount  of  grain  always  put  in  store  for  the  winter 
use,  with  a view,  eventually,  to  be  mainly  exported,  I take  it. 

By  Senator  Boyd  : 

Q.  Upon  which  of  the  foreign  markets  does  this  country  depend  for 
the  consumption  of  its  surplus  wheat  and  other  grains  ? 

A.  Mainly  England.  England  is  a steady  customer  ; and  then  the 
continent,  too,  especially  of  late  years,  will  import  of  our  wheat  at  ail 
times,  even  if  they  have  a fair  crop,  because  they  use  a portion  of  our 
wheat  in  order  to  mix  with  their  own.  They  have  found  the  advantage 
of  it,  and  they  will  always  import  to  a certain  extent.  Then  as  soon  as 
France  is  not  very  well  supplied,  she  imports  largely.  Portugal  and 
Spain  are  importing  now  pretty  heavily  for  their  wants. 

■ Q.  And  is  the  average  quality  of  American  wheat  better  than  that 
of  Eui  opean  ? 

A.  There  seem  to  be  some  qualities  which  make  it  preferable.  They 
soon  found  out,  during  the  Keene  corner,  when  they  had  this  Bombay 
wheat.  They  found  it  was  very  dry,  and  they  could  not  do  any  thing 
at  all  with  it,  except  with  a mixture  of  our  old  No.  2 red.  That  made 
fair  bread  of  it,  but  any  how  it  is  not  as  good  as  bread  made  from  our 
wheat  entirely. 


421 


Q.  What  other  countries  are  competitors  with  America  ? 

A.  First  Russia,  and  then  Hungary. 

Q.  And  after  them  is  there  any  other  ? 

A.  Well,  France  in  good  years  exports  some  of  her  fine  wheats  to 
England,  and  then  takes  the  coarser  grades  from  here. 

Q.  Is  there  much  wheat  imported  into  England  or  into  Europe  from 
Asia  ? 

A.  It  depends  very  largely  upon  the  demand.  I believe  that  the 
capacity  of  Asia  has  not  been  begun  to  be  exhausted  yet  or  even  tried. 

Q.  Which  are  the  chief  wheat-producing  countries  of  Asia  ? 

A.  It  is  Bengal,  I think.  That  is  the  main  point  ; and  then  wheat 
is  exported,  you  know,  from  Australia  in  good  years.  Last  year  the 
crop  was  poor,  and  we  exported  wheat  even  . from  San  Francisco  and 
Oregon  to  Australia  ; but  in  ordinary  years  they  export  quite  a good 
deal  of  wheat,  and  that  is  of  a very  fine  quality. 

Q.  The  amount  of  our  production  is  annually  increasing,  is  it  not  ? 

A.  It  is  in  good  years,  yes,  sir ; the  tendency  is  that  way  of  course. 

• Q.  And  the  system  of  making  corners,’’  if  carried  out  to  any  great 
extent,  would  materially  injure  our  commerce  generally,  would  it  not  ? 

A.  It  would  do  that,  because  it  would  teach  people  to  get  their  wheat 
somewhere  else.  It  appears  to  me  that,  with  the  enormous  progress 
we  are  making  in  agriculture,  we  ought  to  look  to  it  that  we  have  our 
customers,  we  ought  to  cultivate  them  very  carefully. 

Q.  And  then  it  is  the  duty  of  the  government  to  prevent  any  evils 
which  might  affect  our  trade  with  our  customers  ? 

A.  If  they  can  do  so,  decidedly. 

Q.  When  corners  ” are  made,  in  addition  to  the  evil  influence 
which  they  exercise  upon  commerce,  what  other  evils  result  from 
them  ? 

A.  Of  course  it  makes  the  bread  for  the  masses  here  so  much  dearer 
for  the  time  being,  although  the  corners  ” are  very  rarely  of  such 
long  duration.  As  “corners  ” are  worked,  now-a-days,  I don’t  think, 
really,  they  have  a very  great  effect.  The  corners  ’’  seem  to  be,  now, 
just  for  a few  days  toward  the  ends  of  the  month,  in  order  to  catch 
those  people,  and  punish  them,  that  have  sold  what  they  have  not  got. 

Q.  But  when  they  exist,  or  are  created,  to  the  extent  that  they  were 
created  by  the  Keene  corner”  ? 

A.  Then  they  are  positively  injurious,  of  course. 

Q.  To  all  classes  of  consumers  ? 

A.  To  everybody,  of  course.  But  there  is  one  thing  about  “ corners,” 
too,  that,  of  course,  they  have  a little  advantage  in  some  respects.  It 
is  this,  tliat  any  particular  high  price  will  draw  out  stuff  and,  event- 
ually, will  cheapen  it  again.  For  instance,  this  corn  corner,”  I sup- 
pose, will  draw  corn  from  all  directions  and  cause  a great  many  farmers, 


422 


that  have  been  holding  back  their  stuff,  to  send  it  to  market,  and,  eventu- 
ally, we  will  have  some  benefit  from  it.  There  is  no  question  about  it. 

Q.  Do  we  export  much  corn  to  foreign  countries  ? 

A.  We  do,  when  corn  is  cheap. 

Q.  Are  we  exporting  mucli  this  year  ? 

A.  So  far,  very  little.  Tlie  price  has  been  too  high.  The  corn  crop 
of  1881  was  a partial  failure. 

Q.  Are  there  any  other  corn-producing  countries  in  the  world  which 
export  as  much  as  we  do  ? 

A.  I think  Russia  pretty  nearly  does  ; from  the  Danubian  i)rovin- 
ces  in  Southern  Russia. 

Q.  Indian  corn  ? 

I A.  Indian  corn,  yes,  sir  ; the  Danubian  provinces  export  very  largely. 

Q.  Of  Indian  corn  ? 

A.  Yes,  sir, 

Q.  To  what  countries  do  fhey  export  ? 

A.  Mainly,  England.  The  corn,  of  late,  when  it  is  cheap,  has  com- 
menced to  become  a very  large  article  of  food  to  horses  and  cattle  gen-* 
erally  ; but  only  when  it  is  cheap.  As  soon  as  it  gets  to  present  prices, 
then  they  can’t  import  it  ; then  they  have  got  their  own  stuff,  which 
comes  cheaper. 

Jo/m  C.  Welcliy  being  duly  sworn,  was  interrogated  and  testified  as 
follows : 

By  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  In  this  city. 

Q.  What  is  your  business  ? 

A.  My  business  pertains  to  petroleum.  I have  connections 
throughout  this  country,  and  other  parts  of  the  world,  and  my  busi-  • 
ness  is  in  furnishing  them  information  by  mail  and  by  cable,  and  by 
reports  issued  daily  and  monthly. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  Since  1874,  in  the  oil  country,  until  the  beginning  of  this  year;, 
although  I have  had  an  office  in  this  city  for  several  years. 

Q.  Where  is  your  office  in  this  city? 

A.  T2  Beaver  street. 

Q.  And  in  which  portion  of  the  oil  country  were  yon  ? 

A.  1 lived  at  Oil  City,  but  I covered  the  whole  country  in  my  inti- 
mate knowledge  of  the  country. 

(2-  Will  you  state,  if  you  please,  generally,  your  opinion  in  relation 
to  the  whole  system  of  making  “ corners  ” and  dealing  in  “futures,” 
wit  ii  reference  to  its  effect  upon  commerce  and  its  influence  upon  the 
j>n hlic  welfare  ? 


423 


A.  That  has  been  shown  a good  deal  in  dealing  in  petroleum,  taking 
that  first,  and  a great  deal  of  it  is  legitimate.  Petroleum  has  to  he 
sold  on  future  contracts  very  considerably.  Crude  petroleum  can  be 
held  very  easily  for  an  undefined  time,  but  refined  petroleum  cannot 
be  held  very  well.  Ordinarily,  refined  petroleum  is  put  into  barrels  nt 
once,  on  the  completion  of  its  manufacture,  and  it  is  desirable  to  get 
it  forward  as  soon  as  possible,  so  that  it  is  not  held  in  stock. 

Foreign  dealers  like  to  buy  for  future  delivery.  They  have  their 
trade  in  their  special  countries  and  they  know  ordinarily  about  what 
quantity  they  will  want  and  they  like  to  buy  it  ahead;  so  that 
that  makes  it  necessary  for  dealers  in  this  country  to  make  contracts 
ahead  in  the  refined  branch  of  the  business.  These  future  contracts 
make  cornering  possible  at  times  and  a good  chance  for  speculation, 
and  these  opportunities  have  been  used  without  stint  by  people  who 
dealt  in  refined  petroleum.  The  Standard  Oil  Company,  which  in- 
cludes a great  many  organizations  acting  under  the  general  direction 
of  the  Standard  Oil  Company,  those  organizations  being  in  fact  and 
substantially  one  concern,  have  got  the  business  chiefly  in  their  own 
hands,  and  the  future  deliveries  have  been  a great  source  of  strength 
to  them.  A very  marked  case  was  in  1876;  we  had  a period  of  de- 
pression in  petroleum  for  two  or  three  j^ears  wherein  crude  petroleum 
had  gone  down  to  40  and  50  cents  a barrel,  and  during  the  period  of 
that  cheap  oil,  there  had  been  a constant  expectation  of  an  advance  in 
values  in  crude  oil,  and  consequently  in  refined  oil,  and  foreign  deal- 
ers had  been  in  the  habit  of  carrying  large  stocks;  but  after  a couple 
of  years  or  so  of  v^arrying  those  stocks  they  became  tired  of  carrying 
them  and  they  accepted  it  as  a permanent  position  in  the  trade  that 
this  very  large  production  would  continue,  and  they  concluded  that  it 
wmuld  be  policy  not  to  carry  such  stocks.  It  is  expensive  carrying 
such  stocks  in  Europe.  They  have  to  carry  them  in  warehouses  estab- 
lished especially  for  the  purpose,  chiefly  at  seaports.  There  are  some 
six  or  eight  prominent  ports  in  Europe  that  supply  nearly  the  whok' 
of  Europe.  In  the  beginning  of  1876,  they  had  become  very  tired  of 
carrying  those  large  stocks,  and  crude  oil  had  advanced  to  $1.50  a 
barrel  about,  and  foreign  dealers  had  concluded  that  they  had  better 
close  out  their  stocks.  This  idea  was  contributed  to  by  refiners;  by 
the  Standard  Oil  Company  particularly,  in  this  country  ; and  it  is  no 
doubt  the  case  that  they  used  every  inducement  they  could  to  keep 
Europe  short.  The  result  was  that  the  foreign  trade  did  not  buy  any 
oil  much  until  July,  and  then  they  had  an  enormous  quantity  to  take 
from  that  time  until  the  close  of  the  year.  The  Standard  Oil  Com- 
inny  had  declined  to  sell  oil  much  for  foreign  delivery,  contrary  to 
the  usual  custom  of  the  trade.  They  had  not  sold  oil  for  foreign  de- 


424 


livery,  jind  wlien  the  trade  came  in  in  tlie  month  of  July,  it  came  in 
witli  such  excited  buyers,  that  they  I’an  tlie  market  up  frotii  ahf)nt 
15  cents  per  gallon  foi*  refined  oil,to2G  cents  ])er  gallon  ; and  then  they 
concluded  that  they  didn’t  want  oil  particularly,  not  so  had  as  they 
thought  they  had,  and  they  dropped  on  their  bids;  but  the  Standard 
Oil  Company  concluded  they  would  not  sell  any  oil  for  less  than  2(1 
cents,  and  their  power  in  the  trade  was  so  great  that  they  held  the 
market  at  20  cents  for  some  months,  and  finally  when  Europe  did 
conclude  to  come  in  and  buy,  they  ran  the  market  up  to  32  cents  and 
loaded  the  world  up,  and  then  in  the  following  year  it  dro))ped  back 
very  gradually,  and  commencing  in  1877  and  1878  we  had  another 
depression  in  crude  oil,  and  the  market  has  been  down  to  as  low  as 
50  cents  a barrel,  and  a little  below,  this  season,  which  was  the  lowest 
])oint  it  had  reached  since  1874. 

Q.  Do  you  ascribe  the  present  position  of  the  Standard  Oil  Com- 
})any  to  an  important  degree, to  the  system  of  dealing  in  futures  ?” 

A.  They  made  a very  large  capital  in  1870  by  withholding  futures 
by  keeping  Europe  short,  and  they  did  that  same  thing  again  in  1870. 
There  had  been  a great  depression  in  the  business  in  this  country  in 
1879,  which  was  caused,  not  so  much  by  the  conditions  of  the  supply, 
but  from  the  fact  that  there  was  a power  which  came  into  the  trade 
which  proposed  to  compete  with  tlie  Standard  Oil  Company  in  taking 
oil  from  the  wells,  storing  it  in  the  oil  countiT,  moving  it  to  the  sea- 
board, and  selling  it  to  tlie  trade  throughout  the  world  ; that  was  the 
Tidewater  Pipe  Company;  the  Standard  Oil  Company  entered  upon  a 
policy  to  drive  that  company  out  of  business;  they  had  diuven  every 
other  concern  out  of  business  and  they  now  proposed  to  drive  the 
Tidewater  Pipe  Company  out  of  business  ; they  entered  upon  an  ar- 
rangement with  the  railroads.  There  was  a secret  compact  entered 
into  with  the  railroads  on  June  5,  1879,  at  Xiagara  Falls,  by  which 
the  railroads  agreed  to  make  an  immense  reduction  in  their  transpor- 
tation of  oil  to  the  sea-board  ; this  arrangement  was  made  retroactive 
to  the  extent  that  tlie  arrangement  was  to  commence  on  the  1st  of 
June  and  this  arrangement  was  made  on  the  5th  of  June.  The  testi- 
mony of  this  secret  compact  came  out  in  the  Hepburn  committee  in- 
vestigation ; immediately  upon  this  arrangement  being  made  lietween 
the  Standard  Oil  Company  and  the  representatives  of  the  different 
trunk  lines,  the  Standard  Oil  Company  commenced  selling  oil  regard- 
less of  every  thing  except  to  make  a contract  approximating  to  the 
price  that  had  been  ruling  and  pushing  those  sales  and  those  contracts 
as  hal'd  as  it  was  ])0ssible  for  them  to  do;  those  contracts  ran  through 
the  summer  and  into  the  fall.  On  the  23d  of  June,  that  same  month, 
the  public  obtained  odicial  knowledge  that  these  rates  had  been  re- 


425 


diiced  ; but  the  Standard  Oil  Company  had  been  selling  millions  of 
barrels  of  oil  during  the  early  part  of  June,  1879,  without  the  public 
knowing  that  the  railroads  had  reduced  those  nites.  The  effect 
was  immediately  that  the  price  of  refined  oil  declined  greatly  and 
the  Standard  Oil  Company  had  a profit  on  those  contracts  at  once,  I 
will  say,  of  some  millions  of  dollars  — at  once  had  a profit.  But  the 
Standard  Oil  Company  had  come  into  this  arrangement  very  suddenly 
and  they  had  notoil  provided  for  those  contracts.  In  fact,  they  were 
short  sales,  and  through  my  reports,  reporting  intimately  the  situation 
in  New  York  at  the  time,  by  daily  reports  issued  here,  and  following 
it  intimately  in  the  oil  country  through  a daily  report  issued  there,  — 
I saw  the  situation  and  I noted  it  in  my  reports,  and  the  whole  oil 
country  at  once  grasped  the  idea  that  the  Standard  Oil  Company 
were  heavily  short  upon  the  market.  At  that  same  time  or  within 
a few  weeks,  the  Bradford  oil  field,  which  had  been  the  cause 
of  the  great  depression  in  crude  oil  .since  1877,  began  to  show 
signs  of  limitation  in  its  area,  and  to  show  signs  of  declin- 
ing production,  which  became  quite  pronounced  in  September, 
and  at  that  time  we  had  a great  business  boom  which  struck 
the  country  in  September,  1879,  and  this  condition  of  the  Standard 
Oil  Company,  being  short  on  the  market  for  crude  oil  or  refined  oil — 
the  sale  was  out  for  refined  oil — and  the  condition  of  the  Bradford  field 
becoming  more  favorable  at  once,  and  the  general  business  confidence 
continuing,  the  price  of  crude  oil  ran  up  from  about  sixty  cents,  which 
was  no  doubt  the  basis  on  which  the  Standard  Oil  Company  expected 
to  get  their  oil,  to  as  high  as  $1.27  a barrel,  and  it  was  bad  for  the 
Standard  Oil  Company  at  that  time  ; that  was  1879  ; the  foreign  trade 
had  taken  their  oil  on  the  basis  of  about  $1  per  barrel  for  bringing  it 
from  the  oil  country  to  the  sea-board,  and  at  the  same  time  the  Stand- 
ard Oil  Company  was  getting  it  moved  for  about  twenty  cents  per  barrel; 
but  the  Standard  Oil  Company,  while  they  made  money  upon  those  con- 
tracts, lost  ultimately,  because  the  crude  oil  w’as  crowded  up  so  much 
upon  them;  that  had  quite  an  important  bearing  upon  the  business  of 
the  following  year,  which  was  an  immensely  profitable  business,  and 
they  have  testified  in  court  in  Pennsylvania  recently,  that  in  1880 
they  made  over  $10,000,000;  I can  see  readily  wherein  they  did  that; 
I have  set  it  forth  in  a report  which  I issued  in  April,  1881. 

Q.  Had  that  any  relation  to ‘^corners”  and  ‘^futures,”  that  im- 
mense profit  ? 

A.  Yes,  sir. 

Q.  Please  state  how  f 

A.  They  had  the  benefit  of  this  immense  reduction  in  railroad 
rates  from  the  1st  of  June  until  the  1st  of  the  following  April;  from 
54 


42G 


the  1st  of  June,  1879,  until  the  1st  of  April,  1880;  and  after  the  year’s 
business  of  1879  was  clone,  the  Standard  Oil  Company  liad  three  or 
four  months  of  those  extraordinary  low  rates,  say  twenty  cents  a barrel 
to  get  oil  forward,  and  they  moved  a large  (piantity  and  put  it  in  store 
East;  the  shipments  for  the  first  three  montlis  were  as  heavy  as  they  had 
ever  been,  or  heavier,  during  the  busy  shipping  season  which  is  ordinar- 
ily in  the  summer  and  fall ; that  enaliles  tliem  to  load  up  very  heavily 
with  oil  in  the  East ; then  they  commenced  a policy  of  depressing  the 
markets;  they  wiped  out  the  manufacturers’  profit  on  refined  oil,  and 
the  price  here  and  in  Europe  was  much  below  the  price  at  which  it  could 
be  moved  and  at  which  it  could  be  sold  in  Europe;  I figured  thatin  Jan- 
uary there  was.again  of  $74  upon  1,000  barrels  ; that  was  in  New  York 
— a thousand  barrels  of  refined  oil — a gain  of  $111  in  February ; then  in 
March,  April  and  May,  I figured  a loss  ranging  from  $250  to  $G85  per 
1,000  barrels  ; during  that  time  stocks  in  Europe  were  being  reduced,  by 
shipments  to  the  interior,  and  the  trade  became  demoralized  there  ; tiien 
in  June,  they  commenced  to  show  a profit,  and  the  foreign  trade  were 
kept  out  by  all  sorts  of  manceuvers ; the  Standard  Oil  Company  declined 
to  sell  for  future  delivery  ; this  is  a case  Avhere  there  is  a disadvantage  in 
not  making  sales  for  future  deliA^ery  ; and  their  profits  kept  I’unning  up 
and  on  up,  until  in  October,  I figured  a profit  of  $2,000  and  over  per 
1,000  barrels  ; at  the  same  time  I think  that  they  Avere  selling  oil  in 
Europe  that  they  had  bought  there,  of  the  stock  there,  and  by  this 
immense  profit  Avhich  they  Avere  making  in  this  country  of  $2,000  in 
the  fall,  and  the  profits  which  I believe  they  made  in  Europe  on  oil 
Avhich  they  bought  of  the  stock  there,  I can  easily  account  for  their 
making  $10,000,000  during  the  year  1880. 

Q.  By  reports  in  this  morning’s  papers,  one  of  Avhich  I have  before 
me  noAV,  in  an  article  of  this  morning’s  edition  of  the  Ncav  York  Sun, 
there  appears  to  be  a \"ery  troubled  and  excited  state  of  the  oil  mar- 
ket. Can  you  give  any  explanation  of  that,  or  trace  any  relation  be- 
tAveen  the  conditions  Avhich  caused  this  excitement,  and  the  subjects 
before  this  committee  ? 

A.  The  connection  is  not  very  close.  The  Standard  Oil  Company  by 
tlieir  accumulation  of  their  immense  capital  through  the  favors  Avliich 
tliey  received  from  railroads — and  another  feature  of  their  forward 
sales,  is,  tliey  Avould  hold  some  times  and  then  at  other  times  they 
Avould  load  up  the  whole  world  Avitli  oil.  When  the  Avorld  has  got 
confidence  in  the  situation  they  will  sell  ahead  a good  many  months 
and  thmi  the  markets  break  back  from  that,  and  they  get  an  immense 
jirofitiii  that  way — with  all  the  cajiital  Avhich  they  have  accumulated 
)>y  their  favors  from  i-aili*oads  and  by  their  Avithholding  forward  sales 
and  making  forward  sales  ])revious  to  a break,  it  has  put  them  in  such 


427 


a position  in  the  control  of  capital  that  they  can  control  our  immedi- 
ate market  such  as  the  market  of  yesterday.  I ascribe  this  very  ex- 
cited condition  of  the  yesterday’s  market  to  their  making  what  we  call 
the  carrying  rates  in  the  trade,  wliich  is  the  interest  required  to  carry 
oil  in  the  oil  country,  exceedingly  high  — and  also  in  Pittsburgh.  The 
carrying  rates  now  for  a considerable  time  for  carrying  oil  from  day 
to  day  which  people  who  operate  upon  margins  and  witli  small  cap- 
ital have  to  do,  they  have  had  to  pay  as  high  as  one  hundred  per  cent 
right  along  to  carry  their  oil,  and  I am  convinced  from  facts  which 
have  come  to  me,  that  the  Standard  Oil  Company  has  made  a special 
movement  in  Pittsburgh,  which  is  an  important  point  for  speculating 
in  petroleum,  to  get  tlie  banks  to  withhold  'money  from  being  ad- 
vanced on  oil  certificates.  We  have  had  a new  well  in  the  oil  country 
recently  which  made  some  promise  of  opening  a future  territory  which 
naturally  has  a depressing  effect  and  destroys  the  bullish  aspects  of 
the  situation  in  a considerable  measure.  Then  taken  in  connection 
with  the  very  large  amount  of  oil  carried  upon  margins  by  weak  hold- 
ers, all  that  was  needed  was  a somewhat  excited  decline,  and  that 
would  frighten  banks  and  brokers  who  were  holding  oil  for  their  custom- 
ers on  margins,  and  they  would  throw  it  on  the  market,  and  in  that  way 
it  is  perfectly  accounted  for  why  'we  have  had  this  excited  break  of 
the  last  few  days  from  81.15  to  86  cents,  and  it  is  regarded  in  the 
trade  generally  as  a manipulation  of  the  Standard  Oil  Company  to 
depress. 

Q.  Do  you  know  how  the  oil  companies  nappened  to  get  such  fa- 
vorable rates  from  the  railroads  at  the  time  that  you  speak  of  ? 

A.  That  is  a question  that  has  been  a great  deal  mooted  ; the  opin- 
ion has  prevailed  very  extensively  that  there  were  very  decided  advan- 
tages which  accrued  to  railroad  officials  through  the  building  up  of 
the  power  of  the  Standard  Oil  Company  ; that  has  been  generally 
denied  by  railroad  officials;  in  fact  they  were  not  very  cognizant,  I 
don’t  think,  of  the  situation  in  petroleum,  and  what  was  happening  in 
the  way  of  the  Standard  Oil  Company  building  up  this  power ; in  fact 
Mr.  Jewett  testified  before  the  Hepburn  committee  that  he  believed  it 
was  best  that  the  oil  business  should  be  in  the  hands  of  one  or  a few 
men  who  could  follow  it  through  its  shif tings  and  make  a profit  out  of 
it  by  various  devices;  which  the  Standard  Oil  Company  have  done 
very  effectually,  making  810,000,000,  as  they  testified  in  1880;  but  the 
great  source  no  doubt  of  those  favors  was,  that  the  Standard  Oil  Com- 
pany got  an  upper  hand  in  the  business,  I think  from  being  fortunate- 
in  getting  lower  rates  than  others  originally  between  Oil  City  and  Cleve- 
land, and  finding  it  a profitable  vein  to  Avork  and  the  general  trade  in 
petroleum  not  knowing  that  those  advantages  were  to  be  obtained  they 


428 


worked  on  that  line  secretly  for  months  and  for  years ; it  was  not 
understood  that  there  were  any  special  favors  to  any  particular  ship- 
pers and  the  standard  Oil  Company  worked  it  with  great  secrecy  and 
finally  got  such  a position  that  the  railroads  were  in  a measure  depend- 
ent upon  them.,  and  nothing  but  some  heroic  action  on  the  part  of  some 
of  the  railroad,  managers  could  overthrow  the  control  of  the  Standard 
Oil  Company  over  the  shipments  in  the  refined  oil ; that  might  have 
been  done  if  they  had  taken  a stand,  which  they  did  not  do. 

Q.  Are  the  members  of  the  Standard  Oil  Com])auy  interested  in 
railroad  enterprises  to  any  extent  ? 

A.  Yes,  sir;  they  are  understood  to  be  very  largely  interested  in 
railroads  at  present. 

Q.  Can  you  name  any  of  the  leading  lines  in  which  they  are  inter- 
ested ? 

A.  I have  no  special  knowledge  upon  that  branch  ; they  are  believed 
to  be  heavy  speculators  in  railroad  stocks. 

Q.  Do  you  know  any  of  the  prominent  railroad  managers,  stock- 
holders, who  are  also  stockholders  in  or  members  of  the  Standard  Oil 
Company  ? 

A.  Mr.  Vanderbilt  has  had  interests  either  individually  or  in  his 
railroad  coinjianies  in  the  United  Pipe  Line  and  in  the  Standard  Oil 
Company. 

Q.  Where  does  the  United  Pipe  Line  originate  and  terminate  ? 

A.  It  originates  at  the  oil  wells  in  Pennsylvania  and  Western  New 
York,  and  terminates  at  their  storage  tanks  ; it  takes  oil  from  the  oil 
wells  to  these  storage  tanks  which  are  located  chiefly  at  the  railroad 
points  of  the  oil  country. 

Q.  At  various  railroad  points  ? 

A.  At  various  railroad  points. 

Q.  Do  they  own  the  Pipe  Line  terminating  at  Jersey  City. 

A.  That  is  another  division  ; in  regard  to  that  I can’t  say  exactly 
what  name  those  pipes  go  under,  but  it  is  not  under  the  name  of  the 
United  Pipe  Line  ; it  is  another  branch  of  the  Standard  Oil  Company. 

Q.  From  your  knowledge,  then,  the  Standard  Oil  Company  is 
master  of  tlie  situation  in  the  oil  trade  ? 

A.  C^uite  com])letely  , subject  to  some  modifications  ; in  the  first 
place,  til  ere  is  the  Tidewater  Pipe  Company  which  is  moving  oil  from 
the  oil  country  and  refining  it ; I do  not  suppose  they  handle  over  five 
per  cent  of  the  oil. 

Py  Senator  PuowNiN’a ; 

Q.  Where  does  that  pipe  start  from  — where  does  it  take  the  oil  ? 

A.  That  starts  from  the  oil  wells. 


Q.  And  wliere  does  it  deliver  ? 

A.  It  delivers  it  near  Philadelphia  by  pipe  and  from  that  point  it 
carries  it  to  Philadelphia  and  to  Bayonne. 

Q.  How  — by  2)ipe  ? 

A.  They  car  it  from  there  to  Bayonne. 

Q.  Is  there  not  a pipe  line  connected  with  New  York  ? 

A.  Yes,  sir  ; that  belongs  to  the  Standard  Oil  Company. 

By  Senator  Boyd  : 

Q.  That  terminates  at  Hoboken,  doesn’t  it  ? 

A.  I think  it  terminates  at  Bayonne,  further  down  the  bay. 

By  Senator  Browning  : 

Q.  Is  that  the  only  pipe  line  that  comes  to  New  York  ? 

A.  Yes,  sir. 

Q.  When  was  that  company  incorporated  ? 

A.  It  is  hard  to  tell  about  that ; that  is  one  of  the  things  that  they 
do  not  give  us  much  information  in  regard  to. 

Q.  I recollect  that  in  1878  I was  induced  to  vote  for  a pipe-line 
company  which  gave  them  very  valuable  franchises  upon  the  ground 
that  it  was  going  to  be  an  opposition  and  to  break  up  the  Standard 
Oil  Company  ? 

A.  Where  was  that  — from  the  oil  country  to  Buffalo  ? 

Q.  I think  it  was  going  to  come  to  New  York  ; the  Standard  Oil 
Company  must  have  swallowed  that  up  ? 

A.  That  didn’t  progress  very  far;  they  have  swallowed  up  every 
thing  but  the  Tideivater  Pipe  Line  — all  other  lines;  there  was  a line 
to  Buffalo  which  they  swallowed  up. 

Q.  The  Tidewater  Line  belongs  to  another  company  ? 

A.  Yes,  sir ; it  belongs  to  another  company ; the  Standard  Oil 
Company  have  tried  to  get  control  of  it  since  1879,  but  they  have  per 
sistently  declined  to  come  under  the  control  of  the  Standard  Oil  Com- 
pany. 

Q.  What  proportion  of  the  Pipe  Line  trade’ do  they  carry  on  ? 

A.  I have  not  figures  at  hand  at  this  moment,  but  five  or  ten  per 
cent;  in  answer  to  the  question  you  asked  about  the  other  powers  in 
the  trade,  I mentioned  the  Tidewater  Company;  and  then  the  specu 
lative  trade  m crude  petroleum  is  a power;  the  people  who  speculate 
in  petroleum  go  in  very  largely,  buy  or  sell,  so  that  the  crude  market 
is  not  entirely  controlled  by  the  Standard ; Ave  had  an  immense  rise 
recently  from  fifty  cents  to  11.37  in  Angust,  which  was  not  engineered 
by  the  Standard  Oil  Company ; it  was  the  public  sentiment  acting 
upon  the  decreased  prospect  of  the  supply  of  crude  oil;  the  Standard 
Oil  Company  of  course  no  doubt  got  very  great  benefit  from  it,  but  it 


430 


was  a surprise  to  them  ; this  immense  break,  which  resulted  in  such 
disaster  recently,  I do  attribute  to  the  Standard  Oil  Company;  they 
have  brought  about  an  excited  condition  of  the  trade  by  which  the 
oils  carried  on  margins  had  to  be  thrown  overboai'd. 

Q.  And  you  attribute  it  entirely  to  the  Standard  Oil  Company  ? 

A.  No,  sir,  not  entirely.  There  was  an  oil  well  struck  which  has  a 
legitimate  “ bear  ” influence;  but  I think  that  well,  and  liy  their 
making  money  scarce  in  the  oil  country  and  Pennsylvania  were  the 
two  causes  ; and  so  far  as  the  well  was  concerned  there  was  something 
of  a legitimate  influence  in  depressing  it. 

Qv  Which  company  struck  that  oil? 

A.  It  is  called  the  Anchor  Oil  Company,  but  the  Standard  people 
are  interested  in  it. 

Q.  Do  you  know  how  many  oil  companies  exist  in  the  country 
which  have  no  connection  with  the  Standard  Oil  Company  or  are  not 
under  its  influence  in  some  way  ? 

A.  I could  answer  that  the  other  way  better.  There  are  a few  com- 
panies, large  purchasing  companies,  that  the  Standard  Oil  Company 
are  interested  in,  and  then  most  of  the  producing  they  are  not 
interested  in.  The  Standard  Oil  Company  have  not  paid  that  atten- 
tion to  producing  and  swallowing  up  the  producing  interest  that  they 
have  paid  to  the  handling  of  oil,  refining  it,  etc.  They  have  not  tried 
to  encroach  upon  that  ground  so  greatly. 

Q.  The  branch  of  the  oil  business  which  they  seem  to  have  mo- 
nopolized then  is  the  refining  branch  ? 

A.  The  refining  and  the  transportation  through  the  railroads  and 
their  pipe  lines,  and  what  is  a very  important  part,  the  storage  of 
petroleum.  There  are  considerably  over  thirty  millions  of  barrels  now 
in  store  in  the  oil  country  on  which  they  derive  a profit,  or  the  greater 
portion  of  it. 

Q.  Then  all  the  other  crude  oil  producing  companies  are  dependent 
upon  the  Standard  Oil  Company  for  the  means  of  refining,  transporting 
and  storing  tlieir  products  ? 

A.  The  Standard  Oil  Company  stand  between  the  oil  in  the  oil 
country  and  the  consumers,  with  the  exception  of  about  5 or  10  per 
cent,  which  is  represented  by  the  Tidewater  Pipe  Line;  so  that  nearly 
all  the  oil  that  goes  out  of  the  country  has  to  go  through  the  Standard 
Oil  Company’s  hands. 

Q.  Is  the  margin  system  considerably  carried  on  in  the  oil  business? 

A.  Very  largely. 

Q.  Can  you  state  to  what  extent? 

A.  'riiat  could  not  be  stated  with  any  particular  accuracy.  About 
15  i)er  cent  margin,  or  10  per  cent,  or  20  per  cent,  in  that  vicinity ; 
would  buy  a 1,000  barrels  of  oil,  and  if  the  price  enhances,  it  makes 


431 


capital  for  the  person  who  has  bought  one  or  more  thousand  barrels 
rapidly.  If  for  any  reason  there  is  a decline  below  this  margin  and 
below  the  power  of  the  party  to  put  up  margins,”  by  the  rule  of  the 
Oil  Exchanges  his  oil  is  sold  out. 

Q.  It  is  an  entire  loss  ? 

A.  It  is  an  entire  loss,  and  it  is  this  enforced  sale  of  oil  in  that  way 
that  contributes  to  very  important  fluctuations  and  very  important 
depressions,  those  of  yesterday  being  a very  marked  instance. 

Q.  How  many  speculative  sales  of  oil  are  made  ? 

A.  It  has  been  frequently  the  case  that  sales  of  petroleum  have  run 
up  to  20,000,000  barrels  per  day  in  the  different  exchanges,  during 
the  last  few  weeks.  The  sales  at  Oil  City  alone  yesterday  are  reported 
at  10,000,000  barrels.  Those  are  speculative  sales,  all  of  them  you 
may  say.  There  are  exchanges  that  have  been  established  for  a con- 
siderable time- at  a great  many  points.  There  are  some  that  have  been 
established  for  a considerable  time  and  there  are  four  or  five  more  in 
process  of  formation. 

Q.  Are  these  merely  speculative  institutions  ? 

A.  Purely  speculative.  They  buy  and  sell  certificates  tliat  represent 
oil  in  tanks  in  Ihe  oil  country. 

Q.  What  proportion  of  the  oil  that  is  sold  or  what  percentage  of  the 
oil  that  is  sold  by  these  transactions  are  speculative  ? 

A.  The  real  transactions  are  represented  by  the  shipments  out  of  the 
oil  country.  The  shipment  averaged  last  year  about  55,000  barrels 
per  day.  So  far  this  year,  I can’t  say  the  average  for  the  year,  but  they 
are  now  running  55,000  barrels  per  day. 

Q.  Then  these  would  represent  the  legitimate  sales  ? 

A.  Those  would  represent  what  we  call  legitimate  sales  in  the  way 
of  oil  going  to  the  consumers. 

Q.  State  what  amount  of  sales  are  represented  as  speculative  sales? 

A.  The  shipments  out  of  the  oil  region,  for  instance,  yesterday,  we 
will  suppose  were  55,000  barrels,  and  the  speculative  sales  were 
20,000,000  barrels. 

Q.  Yesterday  ? 

A.  Yes,  sir.  That  represents  about  the  rate  of  the  oil  going  to  the 
consumer,  and  the  sales  on  speculation,  buying  and  selling. 

Q.  Those  sales  of  oil  on  speculation,  do  not  they  tend  to  increase  the 
price  of  oil  ? 

A.  No,  sir,  they  work  both  ways.  They  tend  to  increase  it  and  de- 
press it  both.  Sometimes  the  speculation  goes  to  the  benefit  of  the 
consumer,  sometimes  to  the  benefit  of  the  producer,  more  particularly 
to  the  benefit  of  the  middle  people,  the  Standard  Oil  Company,  and 
generally  to  the  loss  of  the  other  middle  people,  the  speculators. 


432 


Q.  Then  the  Standard  Oil  Company  is  the  chief  beneficiary  of  this 
style  of  doing  business  ? 

A.  Yes,  sir. 

Q.  Have  you  any  other  information  you  would  like  to  give  the  com- 
mittee in  relation  to  the  oil  business  ? 

A.  I can’t  think  of  any  thing  particularly. 

Q.  Have  you  any  special  views  on  the  subject  of  dealing  in  “ fu- 
tures ” iif  other  branches  of  commerce  than  the  oil  business  and  its 
elfect  upon  commerce  ? 

A.  Dealing  in  futures  ” is  very  necessary  in  the  petroleum  busi- 
ness. 

Q.  That  is  you  mean  legitimate  dealings  in  ^Hutures”  ? 

A.  Yes,  sir.  This  speculative  dealing,  which  I have  been  speaking 
of,  is  mostly  in  what  we  call  spot  oil.  That  is,  it  is  in  the  certificates 
that  are  delivered  at  once,  either  on  the  same  day  or  within  two  or 
three  days.  The  transaction  has  a view  to  the  future.  The  man  that 
buys  to-day  buys  with  a view  of  carrying  it ; he  does  not  buy  a con- 
tract, he  buys  a certificate  of  the  Pipe  Line,  and  it  is  in  that  form 
that  it  difl'ers  from  an  ordinary  future,  you  might  say,  because  it  is 
really  the  contract  of  the  Pipe  Line  to  deliver  that  oil  to  him  any  time 
that  he  wants  it. 

Q.  You  mean  to  say  these  are  the  legitimate  sales? 

A.  No,  those  are  the  speculative  ones ; the  certificate  of  the  Pipe 
Line  is  bought ; that  certificate  represents  oil  in  their  hands  and  it  is 
a contract  on  their  part  with  the  holder  of  the  certificate  to  de- 
liver the  oil  at  such  time  as  he  wanted  it,  and  he  pays  them  a storage 
charge  for  the  time  it  remains  with  them,  and  that  certificate  is  negotia- 
ble, and  that  same  oil  may  be  bought  and  sold  a thousand  times. 

Q.  You  would  regard  that  as  a species  of  gambling? 

A.  As  it  is  conducted  the  gambling  spirit  enters  into  it  very  con- 
siderably ; I think  it  isi3erfectly  legitimate  for  anybody  to  buy  property 
with  a view  of  its  enhancement  in  value,  and  that  is  the  nature  of 
buying  these  certificates  in  a great  measure  ; but  where,  as  the  great 
number  of  the  people  do,  they  buy  them  without  any  particular  knowl- 
edge of  the  situation,  it  is  like  betting  on  a turn  of  a card  very  greatly. 

Q.  Then  the  speculators  are  frequently  heavy  losers  ? 

A.  They  are  frequently  heavy  losers,  yes,  sir  ; we  have  a good  many 
failures  ; they  frequently  lose  very  heavily  ; as  a class,  I think  the  money 
that  is  put  up  in  speculation  suffers  considerable  loss,  the  most  of 
wliicli  the  Standard  Oil  Company  would  get  the  benefit  of,  because 
tlicy  liave  the  inside  track  ; the  ([uestion  of  margins  which  you  have 
been  inquiring  about  is  illustrated  in  ])etroleum  very  well  in  one  of  my 
reports  issued  some  months  ago;  T traced  the  power  of  accumulation 
in  a person  buying  upon  “margins  ? ” I presumed  that  he  had  $800 


433 


and  bought  10,000  barrels  of  oil  on  a margin  of  ten  per  cent,  which  is 
such  as  is  ordinarily  all  that  is  required  in  the  oil  country  ; then  presum- 
ing the  conditions  were  ripe  for  advance,  that  the  conditions  of  supply 
were  very  favorable  to  an  advance  m the  price,  and  these  conditions 
were  thoroughly  understood,  the  market  would  readily  advance  say 
twenty  cents  per  barrel ; the  man  has  made  then  S2,000  upon  his 
investment  of  8800  ; his  capital  becomes  82,800  ; with  that  he  can  buy 
25,000  barrels  of  oil  say,  and  when  the  market  advances  to  81.25  he 
has  made  87,000  or  88,000  more  and  that  gives  liim  a capital  of 
810,000,  and  by  the  time  the  market  gets  to  82.50  a barrel,  which  is 
nothing  very  remarkable,  looking  back  a few  years  in  regard  to  the 
price  of  petroleum,  this  man  would  be  worth  about  a million  dollars  by 
reinvesting  at  every  twenty-five  per  cent  advance,  and  he  has  all  the 
time  up  a ten  per  cent  margin,  and  a 2^ortion  of  the  time  he  has  had  a 
good  deal  more  ; after  he  had  reinvested  up  to  ten  per  cent,  if  there 
had  been  a fiuctuation  against  him  of  ten  per  cent,  his  broker  or  banker 
would  sell  him  out,  and  he  would  be  through,  but  resuming  that 
every  thing  worked  favorably,  his  8800  would  become  nearly  a million 
between  the  price  of  eighty  cents  per  barrel  and  82.50  ; you  can  see 
from  that  that  there  is  an  immense  inducement  to  speculation,  and 
that  petroleum,  through  its  very  rapid  changes,  presents  those  induce- 
ments ; of  course  there  are  corresponding  chances  of  loss,  and  anybody 
has  to  weigh  those  before  he  goes  into  the  petroleum  market  as  a 
s^^eculator. 

By  Senator  Boyd  : 

Q.  You  speak  about  a report ; do  you  get  out  a periodical  ? 

A.  Daily  and  monthly. 

Q.  What  do  you  call  it  ? 

A.  ^‘Petroleum  Trade  Reports.”  . 

Q.  Whgre  is  it  jiublished  ? 

A.  I am  now  jiublishing  them  at  my  office  here  in  the  city  ; I have 
formerly  published  them  here  and  at  Oil  City,  until  the  beginning  of 
this  year,  when  I came  on  here  to  live. 

Q.  It  is  a regular  monthly  ^publication  ? 

A.  A regular  monthly  and  daily  publication  ; there  is  the  form  of 
my  daily  report  (producing  paper );  a very  important  jiortion  of  my 
business  is  my  cable  business  through  my  agents  in  Europe,  who  dis- 
tribute them  to  my  connections  there. 

Q.  Have  you  any  thing  you  would  like  to  say  in  relation  to  the 
present  excited  state  of  the  market  in  connection  with  the  subjects 
before  this  committee  ? 

A.  I do  not  knaw  that  I have  any  thing  to  say  in  regard  to  the  con- 
dition of  the  market. 

55 


434 


Q.  Have  you  any  special  views  on  the  dealing  in  “ futures  ” in  any 
branch  of  commerce  ? 

A.  I believe  with  some  of  the  gentlemen  wlio  liave  testified  here 
that  a great  deal  of  this  dealing  in  “ futures”  is  very  beneficial  ; there 
is  one  department,  however,  through  which  I think  the  evils  chiefly 
come,  and  that  is  “short”  sales  by  people  who  are  not  i-egiilarly  in 
the  trade,  to  wliom  the  article  does  not  come  in  the  regular  course  of 
legitimate  business  ; when  a large  class  of  sellers  have  put  out  “ short  ” 
sales,  a “ corner  ” becomes  possible,  but  it  is  rarely,  I think,  that  a 
“corner”  is  made  except  as  there  are  heavy  “ short”  sales  ; the  thing 
of  going  into  open  market  and  buying  the  products  is  a matter  in 
which  the  purchaser  takes  a great  chance,  but  if  there  are  a large 
number  of  “ short  ” sellers  he  does  not  take  a chance  particularly,  be- 
cause he  corners  them  and  they  will  run  up  the  market  in  a very  ex- 
cited manner  to  get  the  produce  to  cover  their  “shorts;”  if  those 
“ short  sales  ” could  be  interdicted  by  legislation,  I am  satisfied  that 
we  woirld  not  have  this  excited  condition  of  the  speculative  markets. 

Q.  Do  you  mean  that  a law  ought  to  be  enacted  prohibiting  people 
from  selling  what  they  are  not  able  to  deliver  ? 

A.  That  would  not  cover  it,  because  ordinarily  they  can  deliver  by 
going  into  the  open  market  and  purchasing  ; but  the  evil  comes  from 
their  making  contracts  in  a business  with  which  they  have  no  regular 
connection  as  between  the  purchaser  and  the  consumer,  making  sales 
expecting  to  buy  at  a lower  price  — purely  speculative  sales. 

Q.  That  is  where  the  evil  comes  ? 

A.  I think  the  evil  rests  in  that,  and  if  that  could  be  stopped  the 
speculation  in  food  products  and  other  products  would  decrease  im- 
mensely. 

Q.  You  spoke  of  the  Petroleum  Exchanges.  How  do  they  carry 
on  their  transactions  in  those  exchanges  ? 

A.  Very  much  as  stocks  are  carried  on.  They  make  a delivery  of 
the  certificate  the  same  as  a delivery  of  stock  is  made.  The  chief 
differences  you  might  say  between  the  Pipe  Line  certificates  and  a 
railroad  stock  is  that  in  holding  the  certificate  you  have  to  pay  some- 
thing because  you  own  the  oil  and  you  have  to  pay  for  the  carrying  of 
the  oil,  while  in  dividend-paying  railroad  stock  you  get  something. 

Horace  C.  Smith,  being  duly  sworn,  was  interrogated  and  testified 
as  follows  : 

By  Senator  Boyd  : • 

Q.  Where  do  you  reside  ? 

A.  In  New  London,  Oneida  county,  this  State. 


435 


Q.  What  is  your  business  ? 

A.  I am  interested  in  boating  on  the  Erie  canal. 

Q.  You  are  the  master  or  president  of  the  Boat  Owners’  Associa- 
tion ? 

A.  The  ex-president  now. 

Q.  When  were  you  president,  of  the  association  ? 

A.  My  time  expired  last  January. 

Q.  How  long  had  you  been  president  ? 

A.  Four  successive  terms,  one  year  each. 

Q.  Will  you  state  to  this  committee  your  opinion  in  reference  to 
the  whole  system  of  making  corners  ” and  dealing  in  ‘‘  futures  ” 
and  upon  any  other  subject  which  may  be  under  investigation  before 
the  committee  ? 

A.  In  regard  to  these  corners”  I am  not  so  familiar  with  them. 
As  I was  telling  Mr.  Cooney,  my  testimony  would  have  been  more 
appropriate  at  the  other  end  of  the  route,  in  Buffalo.  I am  more 
directly  interested  in  boating  and  shipping  grain  and  carrying. 

Q.  State  what  you  know  of  any  evils  affecting  the  grain  interest  or  * 
transportation  of  grain  ? 

A.  Heretofore  the  grain  has  been  shipped  by  a class  of  men,  they  are 
termed  scalpers.”  They  obtain  it  of  the  real  shippers,  act  as  middle- 
men and  take  it  to  the  boatman,  parcel  it  out.  They  have  adopted 
that  method  of  doing  business  till  they  have  reduced  the  prices  in 
competing  with  one  another  to  that  degree  that  there  is  nothing  left 
to  the  boatman. 

Q.  You  mean  reduced  the  price  of  transportation  ? 

A.  Yes,  sir ; in  1881  there  was  a heavy  competition  on  the  trujih 
line  railroads  which  necessarily  brought  the  canal  rates  down  very 
low;  but  this  season  the  railroad  quotations  have  been  nine  cents  a 
bushel  from  Buffalo  to  Hew  York  on  wheat  and  eight  and  one-half 
cents  on  corn  ; they  have  not  varied  from  the  opening  of  navigation 
to  the  present  day  ; but  the  canal  freights  have  been  down  as  low  as 
four,  four  and  a quarter  and  four  and  a half  cents  on  wheat  and  cor- 
respondingly low  on  corn,  generally  half  a cent  less  on  corn  than  on 
wheat ; there  is  no  good  reason  why  they  should  be  over  two  cents 
under  railroad  freights  because  the  grain  is  worth  from  one  cent  to 
one  and  a half  cents  more  on  canal  boats  in  this  harbor  than  it  is  on  the 
rail.  ^ 

Q.  On  what  grounds  do  you  make  that  statement  ? 

A.  By  hearsay. 


436 


By  Senator  Brown-in-G! 

Q.  Do  you  know  it  to  be  a fact  that  it  is  so  that  grain  in  the  boat  is 
worth  more  than  grain  in  the  cars  ? 

A.  I have  often  heard  it  mentioned  ; Ido  not  state  that  as  a fact 
from  personal  knowledge,  because  I have  never  taken  the  pains  to  in- 
quire into  that,  only  it  is  a common  custom,  and.  I have  heard  it 
repeated  often  and  supposed  that  it  was  the  fact. 

By  Senator  Boyd  : 

Q.  Is  that  the  prevailing  opinion  ? 

A.  Yes,  sir. 

Q.  Then  your  knowledge  is  that  the  system  of  scalping  carried  on 
at  Buffalo  and  elsewhere  is  a tax  upon  the  grain  commerce.  ? 

A.  Yes,  sir. 

Q.  And  an  injury  to  the  canal  interests  ? 

A.  Yes,  sir  ; a very  great  injury. 

Q.  Do  you  know  any  thing  about  the  system  of  elevating  grain  in 
* any  of  the  lake  ports  ? 

A.  No,  sir  ; I do  not  understand  that ; I know  about  elevation  here 
from  canal  boats. 

Q.  State  what  you  know  about  that  ? 

A.  We  are  charged  one-half  a cent  a bushel  for  elevating  grain. 

Q.  In  New  York  ? 

A.  Yes,  sir  ; from  canal  boats. 

Q.  Do  you  know  what  the  charges  for  elevating  grain  in  Buffalo  are  ? 

A.  No,  sir;  the  canal  boats  are  not  charged  for  that;  they  are 
charged  trimming,”  which  is  about  $10  to  a load  of  8,000  bushels. 

Q.  And  they  are  charged  by  some  person  in  connection  with  the 
Western  Elevating  Company  at  Buffaloytare  they  ? 

A.  Yes,  sir;  they  are  connected  with  that. 

Q.  What  other  information  would  you  like  to  give  to  this  com- 
mittee ? 

A.  That  these  ‘^scalpers”  ought  to  be  driven  off  the  dock  if  there 
is  any  way. 

By  Senator  Biiowni]N'G  : 

Q.  Can  you  get  along  without  the  scalpers  ? ” 

A.  Now  it  could  be  done  since  the  canal  has  been  declared  free  by 
the  State.  Tliere  is  no  necessity  for  them  to  prey  upon  the  boatman 
any  longer  in  the  way  that  they  have  in  the  past  season. 

Q.  They  say  that  they  save  you  a great  deal  of  trouble  in  finding  ii 
cargo  for  you.  That  if  a captain  arrives  this  afternoon,  he  is  not  in 
Buffalo  half  an  hour  before  he  had  got  a load,  and  if  it  was  not  for  the 


437 


^'scalpers”  to  do  his  business  in  the  absence  of  the  boat,  anticipating 
its  arrival,  that  he  would  lose  time  in  going  around  and  hunting  up  a 
cargo.  Is  that  a fact  ? 

A.  1 don’t  think  it  is,  because  the  grain  is  there  and  it  lias  to  be 
shipped.  He  used  to  formerly  get  it  before  the  ‘^scalpers”  were 
located  there,  some  twenty -five  years  ago. 

Q.  Did  it  take  you  some  time  to  find  a cargo  ? 

A.  Not  very  long  ; we  usually  would  step  into  an  office  and  procure 
one  as  readily  as  we  do  from  ‘‘  scalpers.” 

Q.  From  what  the  ‘‘scalpers”  said  to  this  committee  in  Buffiilo,  I 
am  of  the  opinion  for  one  that  it  is  not  going  to  be  very  long  before 
they  will  make  contracts  for  nearly  all  the  grain  that  leaves  'Chicago 
right  straight  through  to  this  port  and  perhaps  to  England.  I 
believe  that  will  be  a fact,  and  if  it  is,  it  is  going  to  make  your  canal 
rates  subject  to  the  caprice  of  these  “ scalpers  ” and  contractors  and 
the  Chicago  market.  Do  you  look  upon  it  in  that  same  light  ? 

A.  Yes,  sir ; I have  no  doubt  but  what  it  will  come  to  that. 

Q.  Tliere  was  a shipper  there  who  said  that  he  believed  that  when 
a man  bought  grain  in  Chicago  he  ought  to  know  just  exactly  what  it 
would  cost  to  land  it  in  Liverpool,  and  the  only  way  he  could 
ascertain  that  was  to  make  his  contracts  right  straight  through,  and 
having  made  his  contracts,  that  is  what  he  expected  to  pay  and  no 
more.  Now,  where  the  “ scalper  ” .does  what  I consider  to  be  im- 
proper is  this,  that  acting  as  an  agent  for  the  canal  boat,  he  makes  a 
contract  to  carry  the  grain  through  at  six  cents,  and  then  he  and  two 
or  three  friends  “ bear  ” down  the  market  and  make  the  rate  five  and 
one-half  cents,  and  he  makes  his  one-half  cent  on  the  contract  and 
charges  you  his  five  per  cent  on  the  load.  That  is  where  he  fails  to 
act  as  an  honest  agent  and  you  suffer  ? 

A.  Yes,  sir. 

Q.  Then  his  answer  to  that  is  that  if  he  makes  a contract  for  your 
boat  at, six  cents,  and  the  price  when  the  grain  arrives  there  is  six  and 
one-half  cents,  you  won’t  do  for  it  the  contract  price  and  he  loses.  You 
recognize  him  as  your  agent  when  it  is  to  your  advantage,  but  when  it 
is  not,  you  do  not  recognize  him  as  your  agent.  He  says  he  makes 
sometimes  on  the  contract  and  at  other  times  he  loses  ? 

A.  He  generally  makes  though,  doesn’t  he  ? 

Q.  They  said  it  was  about  even.  I guess  they  make.  I will  take 
the  chance  on  that. 

A.  I do  not  know  but  one  instance  this  season  where  they  lost,  and 
that  was  where  unexpectedly  a large  amount  of  grain  came  into  Buffalo 
and  the  price  advanced  to  eight  cents,  and  they  had  quite  a large  num- 
ber of  contracts  at  six  cents. 

Q.  Then  they  lost  ? 


438 


A.  Yes,  sir,  bnt  that  only  lasted  for  a few  -days,  and  that  is  tho  only 
period  during  the  season  that  they  lost  any  thing  to  my  knowledge. 

Q.  How  many  more  canal-boats  could  be  on  the  canals  as  they  are 
to-day  — how  many  more  than  are  now  employed  there  — there  are 
about  6,000  now,  are  there  not  ? 

A.  Yes,  sir ; that  has  been  the  estimate. 

Q.  Could  you  put  6,000  more  on  ? 

A.  No,  sir. 

Q.  How  many  more  could  you  put  on  ? 

A.  There  are  plenty  now,  in  my  estimation,  to  do  the  business. 

Q.  You  think  there  are  enough  now  to  do  all  the  business  ? 

A.  I do. 

Q.  This  business  is  likely  to  increase  probably  one-third  or  one-half  ? 

A.  Certainly. 

Q.  Wouldn’t  that  have  a tendency  to  increase  the  tonnage  on  the 
canal  ? 

A.  Yes,  sir,  of  course  it  would. 

Q.  Hoiv  much  more  can  the  canal  accommodate  in  its  present  con- 
dition ? 

A.  It  could  accommodate  double  the  number  that  is  run  on  it  this 
season,  certainly.  I do  not  know  the  number  that  has  run  through 
this  season. 

Q.  You  think  it  could  accommodate  double  the  number  ? 

A.  Yes,  sir,  but  the  present  prices  or  the  prices  that  have  ruled  this 
season  will  drive  all  the  boatmen  out  of  the  business  and  they  lay  it, 
as  near  as  I can  find  out  from  the  owners,  all  to  the  scalpers”  in  de- 
pressing the  price.  It  put  a stop  to  all  boat  building.  There  has  not 
one  scarcely  been  built  this  season.  There  is  no  sale  for  them  if  they 
are  built.  A man  cannot  buy  any  thing  out  of  freight  that  he  takes 
from  Buffalo  this  season.  For  instance,  I have  one  good  grain-boat, 
a Rochester-built  boat,  four  horses  on  ; it  has  run  all  the  season  ; I have 
had*  one  cargo  at  sixty  cents  that  there  was  160  clear  on  it ; that  was  an 
ap-trip ; now  it  is  coming  down  the  last  time  with  a load  of  flax-seed  at 
five  cents;  that  is  $60  more;  that  is  all  the  money  that  that  property,  at  a 
low  estimate  worth  $2,000  — that  is  all  the  money  that  was  made,  and 
all  the  men  tell  me  about  the  same  thing,  and  if  this  free-canal  move- 
ment does  not  increase  the  volume  of  business  and  their  profits,  they 
are  ready  to  abandon  the  business. 

By  Senator  Boyd  : 

(2.  Al)out  how  much  do  the scalpers  ” charge  every  boat-owner 
more  tliaii  the  boat-owner  would  have  to  pay  if  he  dealt  directly  witli 
tho  forwarder  ? 

A.  I do  not  know  as  there  is  any  difference;  I don’t  know  but  the 
forwarder,  if  he  shipped  it,  he  would  charge  the  boatman  just  as  much 


439 


commission,  five  per  cent ; I do  not  know  how  that  would  be  ; there 
is  an  understanding  between  the  shipper  and  the  scalper.”  They 
divide  up  the  profits,  so  I am  told. 

Q.  Then  the  evil  of  the  scalping  business  is  this,  as  I understand  it, 
that  they  make  a contract  with  the  shipper  at  so  much  a cargo,  and 
afterward  they  charge  a commission  also  to  the  boat-owner  ? 

A.  Yes,  sir. 

Q.  And  that  commission  charged  to  the  boat-owner  is  exorbitant 
and  should  not  be  charged  ? 

A.  Yes,  sir. 

Q.  That  is  the  burden  which  the  boat-owners  complain  of  in  the 
scalping  business  ? 

A.  Yes,  sir. 

Q.  What  is  that  commission  generally  on  an  ordinary  cargo  ? 

A.  It  is  five  per  cent  on  the  price  they  obtain;  8,000  bushels  of 
wheat  at  5 cents  would  be  S20. 

Q.  Then  that  is  120,  that  the  scalpers”  charge  the  boatmen,  which 
you  think  is  an  unjustifiable  tax  upon  the  boating  interest  ? 

A.  Yes,  sir, 

Q.  And  that  is  the  extent  of  the  evil  of  which  you  complain  in  the 

scalping  ” business  ? 

A.  The  greatest  evil  is  their  cutting  the  prices  so  much  under  the 
railroad  freights  that  it  produces  a figure  that  there  is  no  profit  left 
to  the  boatman. 

Q.  That  then  is  in  their  dealings  with  the  shipper  ? 

A.  Yes,  sir. 

Q.  And  you  think  that  a canal  boatman  would  make  better  terms 
with  the  shipper  if  he  dealt  directly  with  him,  instead  of  through  the 
scalper? 

A.  Altogether. 

By  Senator  Browning:  ^ • 

Q.  Do  you  think  that  for  what  the  scalper  ” does  he  is  over  paid 
— the  scalper”  secures  you  a cargo,  he  pays  all  back  charges  on  the 
grain  ? 

A.  Yes,  sir. 

Q.  He  pays  in  fact  all  the  money;  he  insures  the  cargo;  he  advances 
you  $200  or  $150  as  the  case  may  be,  and  altogether  he  pays  some  $500 
or  $600,  and  then  sends  you  on  your  way,  and  for  that  he  charges  you 
$20.  It  is  not  alone  for  securing  the  cargo  that  he  charges  you  $20; 
it  is  for  doing  all  the  business  in  connection  with  the  transfer  and 
sending  you  out  of  port  ? 

A.  Yes,  sir. 


440 


Q.  As  I understand  it,  you  do  not  make  so  mucli  objection  to  that 
as  you  do  to  liis  dishonesty  ? 

A.  Yes,  sir;  that  is  it. 

Q.  In  pretending  to  act  as  your  agent,  when  he  don’t  act  as  your 
agent?  * 

A.  That  is  it. 

Q.  In  other  words,  if  I secure  a contract  to  send  grain  over  tlie  canal 
at  six  cents  a busliel,  if  on  the  arrival  oil  your  boat  I should  deliver  (jver 
to  your  boat  or  a number  of  your  boats,  this  grain  at  six  cents  a bushel 
I would  be  an  honest  contractor  and  an  honest  agent  of  the  boat,  and 
Avould  be  entitled  to  all  the  boat  pays  me  for  that  transaction  ? 

A.  Yes,  sir. 

Q.  And  you  wouldn’t  grumble  at  it? 

A.  Yo,  sir, 

Q.  That  is  what  an  honest  agent  ought  to  do;  but  they  do  not  do 
that ; this  is  what  they  do;  they  get  a contract  at  six  cents  and  ahalf^ 
and  a dozen  of  them  who  have  similar  contracts  will  go  into  the  niai’- 
ket  and  bear  ” it  down  and  fix  the  price  at  five  and  one-half  cents,  and 
pay  you  that  and  make  half  a cent  per  bushel  on  the  contract,  and  then 
demand  of  you  also  their  five  per  cent  ? 

A.  Yes,  sir. 

Q.  That  is  where  they  are  dishonest  ? 

A.  Yes,  sir. 

Q.  But  their  answer  to  that  is,  and  I put  the  question  to  you  now,  if 
I was  a ^^’scalper  ” up  there  doing  business  for  you  and  others  that  came 
into  port,  and  I had  a contract  for  six  cents  per  bushel,  and  on  the  day  of 
the  arrival  the  price  was  six  and  one-half  cents,  would  you  take  it  at  six? 

A.  I would  be  obliged  to ; now  there  has  been  a ring  established 
there. 

Q.  If  my  contract  limited  me  to  six  cents  per  bushel  and  the  market 
rate  was  six  and  one-half  cents  on  the  day  of  arrival  of  tlie  grain, 
would  you  take  it  at  six  cents,  or  wouldn’t  you  demand  the  six  and 
one-half  cents  ? 

A.  It  is  the  general  custom  to  demand  the  six  and  one-half  cents. 

Q.  That  is  where  the  “ scalper  ” says  you  fail  to  recognize  him  as 
your  agent,  and  he  says  that  he  is  justified  in  not  acting  as  your 
agent  when  it  is  below  that  price.  If  you  could  only  fix  an  agency 
there,  which  would  make  a contract  for  you,  and  if  the  rate  was  six 
cents  or  five  and  one-half  cents,  and  you  got  the  benefit  of  it  and  the 
next  time  it  came  around  it  was  six  and  one-half  cents  and  you  didn’t 
get  the  benefit  of  it  but  took  it  at  the  contract  price,  he  would  be  lit- 
erally your  agent  ? 

A.  Yes,  sir. 


441 


Q.  He  says  you  recognize  him  when  it  is  to  your  advantage,  and  do 
not  recognize  him  when  it  is  not,  That  is  their  argument  against 
yours.  But  you  are  of  the  opinion  that  you  could  get  along  without 

scalpers’’  altogether? 

A.  Yes,  sir. 

Q.  Wipe  them  out  ? 

A.  Yes.  sir;  now  especially  since  the  canal  is  made  free. 

Q.  Is  there  any  way  you  can  do  that  — do  you  think  it  requires 
legislation  to  do  it  ? 

A Ido. 

Q.  Tell  me  why.  If  the  canal  boats  refuse  to  do  business  through 
those  people,  wouldn’t  that  wipe  them  out  ? 

A.  As  long  as  the  shippers  are  leagued  in  with  the scal})ers ’’ to 
divide  up  this  profit,  how  are  you  going  to  cut  them  ofi*  without  some 
legislation  ? It  is  knavery. 

Q.  You  couldn’t  get  the  boatmen  to  act  in  concert  ? 

A.  No,  sir^  the  way  it  has  been  conducted  this  year  was,  a certain 
ring  of  those  scalpers  ” took  the  contract  at  such  ii  price,  and  when 
it  arrived  at  Buffalo,  they  shipped  it  for  half  acent  lower  and  pocketed  # 
the  overplus  and  charged  the  boatmen  a commission  on  what  they  did 
give  them.  That  is  a wrong  way  of  doing  business.  It  is  really  a 
conspiracy  against  the  boatmen  to  deprive  them  of  the  price  that  they 
ought  to  have. 

Q.  Of  the  legitimate  fruits  of  their  industry  ? 

A.  Yes,  sir;  I have  another  boat  here  that  is  engaged  in  the  coal 
traffic  from  South  Amboy  to  this  city,  supplying  steamships  at  18  and 
20  cents  a ton  and  that  boat  has  cleared  me  double  the  profit  or  three 
times  the  profit  that  the  one  has  running  through  from  Buffalo  to  . 
here,  which  is  worth  double  the  amount. 

By  Senator  Bro wnikg  : 

Q.  Are  you  an  officer  in  the  Canal  Boat  Association  ? 

A.  Yes,  sir. 

Q.  You  have  been  president  ? 

A.  Yes,  sir;  the  time  has  expired. 

Q.  What  office  do  you  hold  now? 

A.  I am  in  the  department  of  the  superintendent  of  public  works 
on  the  Erie  canal  now. 

Q.  In  the  employ  of  the  State  ? 

A.  Yes,  sir. 

Q.  Can  you  tell  the  committee  how  many  of  the  6,000  canal  boats 
belong  to  the  Canal  Boatmen’s  Association  ? 

A.  There  was  over  2,000  enrolled  at  one  time,  but  they  dwindled 
56 


442 


down  to  quite  a low  number,  some  few  hundred  at  the  time  my  office 
expired. 

Q.  Under  your  administration  ? 

A.  Yes,  sir. 

Q.  How  many  do  you  tliink  belong  to  it  to-day, 

A.  I don’t  tliink  it  is  over  200. 

Q.  About  200  canal  boats  out  of  6,000  are  represented  in  the  Canal 
Boat  Owners’ Association? 

A.  Yes,  sir. 

Q.  And  they  are  generally  men  who  own  their  own  boats,  are 
they  ? 

A.  Yes,  sir,  all  of  them  invariably. 

Q.  I mean  the  boats  generally  are  owned  by  one  man  ? 

A.  Yes,  sir. 

Q.  And  one  man  owns  one  boat  ? 

A.  Y^es,  sir. 

Q.  There  are  some  boat-owners  who  own  sixty  or  seventy  boats  ? 

A.  Yes,  sir. 

By  Senator  Boyd  : 

Q.  Some  of  those  boat-owners  are  also  engaged  in  the  scalping  busi- 
ness, are  they  not  ? 

A.  Y^es,  sir.  There  comes  in  one  trouble.  Some  of  them  have  a 
dozen  boats  or  fifteen  of  them  under  control  and  they  can  establish 
prices  through  a combination  among  themselves. 

Elmore  A.  Kent,  being  duly  sworn,  was  interrogated  and  testified 
as  follows  : 

By  Senator  Boyd  » 

Q.  Where  do  you  reside  ? 

A.  New  Y^ork. 

Q.  What  is  your  business  ? 

A.  Grain  and  provision  trade. 

Q.  Are  you  a member  of  any  firm? 

A.  Yes,  sir. 

Q.  What  is  the  name  of  the  firm? 

A.  E.  A.  Kent  & Company,  New  York. 

(h  Wliere  do  you  do  business  ? 

A.  80  Broad  street. 

Q.  How  long  have  you  been  in  that  business? 

A.  .U)oub  twenty  years  in  Chicago  and  New  York. 

(h  Please  state  to  the  committee  what  you  know,  and  your  opinion 
concerning  the  whole  system  of  making ‘‘ corners,”  and  dealing  in 


443 


‘‘futures,”  with  reference  to  its  effect  upon  commerce  and  upon  the 
public  welfare  ? 

A.  The  “corners”  are  incidental  in  our  markets.  An  opportunity 
for  them  is  usually  offered  by  short  crops ; but  as  a rule  “ corners  ” 
have  been  disastrous.  It  is  exceptional  when  they  are  successful  to 
those  who  run  them.  That  is  my  experience  and  observation. 

By  Senator  Browkin^g  : 

Q.  Have  you  ever  known  of  any  successful  “ corners  ” ? 

A.  Yes,  sir. 

Q.  When? 

A.  April,  wheat  in  Chicago  this  last  April,  and  two  years  ago  — or 
a year  and  a half  ago  I think  — I won’t  be  sure  which  — pork  in 
Chicago.  There  have  been  a great*  many  attempts  at  “ corners  ” that 
have  been  disastrous. 

Q.  The  two  you  have  cited  are  the  only  two  that  you  now  think  of 
that  were  successful  ? 

A.  Notable  “ corners.”  Those  are  the  only  two  that  I can  recall 
now  that  have  been  successful. 

Q.  Has  there  been  a “ corner,”  or  an  attempt  to  make  a “ corner  ” 
recently  in  petroleum  ? 

A.  That  I am  not  informed  of.  I am  not  acquainted  with  the 
petroleum  trade. 

Q.  You  don’t  deal  in  that  ? 

A.  No,  sir. 

Q.  Your  business  is  principally  in  “ options,”  is  it  not  ? 

A.  Largely  so  ; we  handle  cash  property  as  well. 

Q.  You  do  not  handle  the  actual  property  ? 

A.  We  do  a great  deal  of  it,  yes,  sir. 

Q.  But  your  business,  the  majority  of  it,  is  in  “ options”  ? 

A.  The  greater  volume,  yes,  sir. 

Q.  And  upon  a cash  basis  ? 

A.  Yes,  sir. 

Q.  And  your  customers,  as  a rule,  do  not  handle  the  article  ? That 
is  if  you  sell  an  option  for  future  delivery  in  grain,  as  a rule  you  do 
not  deliver  the  grain  ? 

A.  It  is  the  intention  to  deliver.  The  basis  of  all  these  “ options 
is  upon  an  intention  to  deliver  and  to  receive  the  property. 

Q.  But  the  fact  is  you  settle  without  a delivery? 

A.  We  settle  through  what  they  call  settling  clerks,  which  is  simi- 
lar to  the  clearing-house  of  the  banks.  The  machinery  of  settling  is 
similar  to  the  clearing-house  in  the  banks  ; instead  of  delivpring  the 
bulk  of  the  property  to  one  and  then  delivering  the  bulk  right  l)ack 
again,  they  settle  the  differences. 


444 


Q.  Do  you  ever  purchase  in  the  open  market  ? 

A.  Do  1 individually  ? 

Q.  For  yourself  or  for  your  customers  ? 

A.  I sometimes  do,  yes,  sir. 

Q.  In  what  market? 

A.  In  New  York,  Chicago  and  St.  Louis. 

Q.  Principally  in  which  ? 

A.  New  York  and  Chicago. 

Q.  Do  you  have  agents  in  Chicago  ? 

A.  I have  a firm  in  Chicago  and  St.  Ijouis. 

Q.  Is  it  a connection  of  your  firm  ? 

A.  Yes,  sir ; they  are  partners  of  mine. 

Q.  And  you  have  a connection  all  the  time  day  by  day  ? 

A.  Yes,  sir. 

Q.  Keep  posted  as  to  the  quotations  ? 

A.  Yes,  sir. 

Q.  And  you  have  customers  who  come  in  your  place  and  they  buy 
and  they  sell  ? 

A.  Yes,  sir. 

Q.  They  deposit  the  margin  with  you,  and  you  settle  the  same  as  if 
you  were  running  an  exchange  on  your  .own  hook  ? 

A.  We  act  as  an  agent  of  our  customers. 

Q.  Can  you  state  what  percentage  of  the  business  done  in  your  office  is 
with  the  view  of  an  actual  delivery  at  the  time  the  transaction  is  made  ? 

A.  It  is  all  made  with  the  intent  to  deliver. 

Q.  Can  you  state  what  portion  of  the  transactions  do  cover  an 
actual  delivery  ? 

A.  I couldn’t  tell ; it  would  be  a small  proportion ; it  would  be 
about  the  same  proportion  in  dollars  and  cents  that  it  would  with  the 
clearings  of  the  banks  in  the  city  of  New  York;  I think  that  would 
be  about  the  relative  percentage. 

Q.  About  the  same  percentage  as  the  sales  on  the  floor  of  the 
Exchange  ? 

A.  Yes,  sir. 

Q.  About  the  same  proportion  as  it  is  on  the  Produce  Exchange  “call?” 

A,  Yes,  sir. 

Q.  No  more  and  no  less  ? 

A.  Yes,  sir. 

Q.  'I'lie  legitimate  sales  are  about  three  per  cent  of  all  the  sales  on 
the  Ih-oduce  Exchange  flocrr ? 

A.  Yliere  are  figures  ; 1 don’t  know  what  they  are. 

Q.  Mr.  Craiit  stated  yesterday  that  about  three  per  cent  would  per- 
liaj)S  he  a lil^eral  average  for  the  legitimate  sales  as  compared  with  the 
purely  speculative  ones  — it  might  be  five  per  cent,  but  he  thought 


445 


three  per  cent  was  fair.  The  transaction  between  the  customers  for 
whom  you  act  as  agent  is  usually  upon  a cash  basis  and  the  transac- 
tion is  generally  on  paper  ? 

A,  Yes,  sir  ; even  cash  stuff  is  represented  by  paper. 

Q,  Do  you  want  to  state  the  amount  of  ‘‘  margins”  deposited  with 
you,  say  in  a given  year,  or  wouldn’t  you  like  to  do  that  ? 

A.  I couldn’t  tell. 

Q.  Can  you  give  any  thing  like  it  — can  you  state  the  amount  of 
money  deposited  with  you  as  ‘^margins”  to  cover  transactions  ? 

A.  I could  not  guess. 

Q.  Can  you  give  the  recipts  for  one  day  in  the  shape  of  margins  to 
cover  transactions  for  which  you  are  retained  as  an  agent  ? 

A.  I couldn’t  give  a guess ; there  is  more  or  less  money  passing  in 
and  out  of  the  office  every  day,  as  ‘‘margins.” 

By  Senator  Boyd  : 

Q.  Suppose  we  take  yesterday  ; you  were  in  the  office,  I presume, 
yesterday  ; how  much  money  passed  through  your  office  on  purely 
speculative  transactions  yesterday  ? 

A.  Do  you  mean  profits  and  losses,  or  “ margins  ? ” 

Q.  “ Margins.” 

By  Senator  Brownin’G  . 

Q.  I mean,  for  instance,  ^he  doctor  may  come  in  and  I may  want 
to  buy  50,000  bushels  of  grain  to  be  delivered  next  January,  and  he 
leaves  his  margin  with  you  to  cover  that,  ton  cents  a bushel,  we  will 
say,  or  five  cents,  and  I come  in  and  I leave  my  margin  with  you  and 
make  my  deposit ; the  question  I ask  is,  can  you  tell  me  the  amount 
of  the  receipts  from  that  source  in  any  given  day  within  the  last  ten 
days  ? 

A.  A great  deal  of  the  “ margins”  between  merchants  is  put  up  on 
the  Exchange  ; they  have  a system  under  the  authority  of  the  Produce 
Exchange ; it  is  put  up  there  and  they  deposit  it  in  banks. 

By  Senator  Boyd  : 

Q.  That  is  where  you  are  simply  acting  as  a broker? 

A.  Yes,  sir. 

Q.  But  in  the  transactions  of  your  own  office,  about  how  much 
money  was  put  up  yesterday  ? 

A.  It  ranges,  I should  say,  from  $1,000  to  possibly  $40,000  a day. 

By  Senator  Browjs^ikg  : 

Q.  Would  it  be  fair  to  say  that  it  covers  $10,000  a day,  on  an  aver- 
age,  right  straight  through  the  year  ? 


44G 


A.  I cannot  tell. 

Q.  Would  it  average  $5,000  a day  ? 

A.  I think  so. 

Q.  And  that  is  ten  per  cent  of  the  selling  value,  is  it  not  ? 

A.  It  ranges  from  five  to  twenty-five  per  cent,  according  to  the 
prices  and  the  hazardous  markets  — anywhere  from  five  to  twenty-five 
per  cent. 

Q.  Then  if  a man  deposits  $5,000,  that  would  really  represent  a sell- 
ing value  of  $100,000  ? 

A.  Yes,  sir. 

Q.  And  if  it  was  $10,000,  it  would  represent  a selling  value  of 

$200,000  ? 

A.  Yes,  sir. 

Q.  And  that  would  be  the  volume  of  business  transacted  by  you  for 
that  day  ? 

A.  Yes,  sir.  ' 

Q.  We  have  a fashion  of  calling  this  betting  — betting  on  the  in- 
crease or  decrease  in  the  price,  and  if  you  will  allow  me  to  use  that 
term,  when  I come  in  with  my  margin  do  you  bet  against  me,  or  don’t 
you  take  any  chances  of  losing  on  that  — do  you  get  a commission  on 
that  ? 

A.  I take  orders  and  execute  them  in  the  open  market. 

Q.  You  get  a commission  ? 

A.  Yes,  sir. 

Q.  So  you  don’t  lose  any  thing  ? 

A.  No,  sir  ; I take  no  chances. 

By  Senator  Boyd  : 

Q.  Who  gets  the  amount  at  last  — who  receives  that  — where  does 
that  go  to  ? 

A.  It  goes  somewhere  in  the  market  to  any  one  who  happens  to  be 
on  the  opposite  side  of  the  market. 

By  Senator  Brow^tii^g  : 

Q.  If  the  corner”  breaks,  the  other  man  makes  the  money,  and 
the  cornerer  loses  ? 

A.  Yes. 

By  Senator  Boyd  : 

Q.  Do  you  represent  New  York  sellers  or  Chicago  sellers  ? 

A.  All  over  the  country. 

By  Senator  Browning  : 

(i.  Most  of  your  business  is  done  right  through  the  Chicago  houses, 
is  it  not  ? 


447 


A.  We  do  a great  deal  in  New  York  as  well  as  Chicago.  We  do 
business  in  New  York  for  Chicago  parties,  and  do  business  in  Chicago* 
for  New  York  parties. 

Q.  It  is  a paying  business,  is  it  ? 

A.  Yes,  sir. 

Q.  Do  you  want  to  state  what  your  commissions  are  ? 

A.  Yes,  sir  ; it  is  a quarter  of  a cent  a bushel  for  grain,  for  buying 
and  selling,  and  ten  cents  a package  for  lard,  and  five  cents  a package 
for  pork,  standard  rates. 

Q.  What  is  corn  worth,  to-day,  can  you  tell  us  ; or  yesterday  ? 

A.  In  what  market  ? 

Q.  In  this  market. 

A.  For  cash  ? 

Q.  We  will  say  for  future  delivery.  What  can  I buy  corn  for  in 
January,  now  ? 

A,  I think  it  was  about  76  1-2,  when  I left  down-town 
Q.  What  are  oats  selling  for,  in  January? 

A.  Oats  are  44  7-8. 

Q.  What  is  wheat  selling  for,  delivered  in  January  ? 

A.  January  wheat,  to-day,  is  $1.13. 

Q.  If  you  should  sell  100,000  bushels  of  wheat,  it  would  represent, 
probably,  $10,000 ; they  have  to  put  up  ten  cents  on  the  wheat  ? 

A.  Yes,  sir. 

Q.  Is  that  percentage  on  the  selling  value,  or  on  the  amount  of  the 
margin  ? 

A.  The  commission  is  so  much  a bushel. 

Q.  It  is  on  the  value  ? 

A.  No,  sir;  it  is  on  the  quantity. 

Q.  If  you  sell  100,000  bushels  of  wheat,  you  get  a commission  of  a 
quarter  of  a cent  on  each  bushel  ? 

A.  Yes,  sir  ; $250  for  buying  and  selling  100,000  bushels  of  wheat. 
Q.  If  it  was  oats  you  would  get  the  same  ? 

A.  Yes,  sir. 

Q.  And  what  business  ranges  from  all  the  way  from  $100  to  $46,000 
a day,  it  has  been  as  low  as  $100,  and  as  high  as  $40,000  ? 

A.  The  amount  of  margins  that  would  be  required  in  the  business. 
Q.  And  that  represents  simply  one-tenth  of  the  number  of  bushels  ? 
A.  Yes,  sir. 

Q.  Are  therein  number  of  such  houses  in  New  York  city? 

A.  Yes,  sir ; a large  number. 

Q.  How  many  would  you  think,  fifty  ? 

A.  There  are  3,000  members  of  our  Exchange. 

Q.  And  each  has  an  office  outside  ? 


448 


A.  No,  sir;  I'think  two-thirds  would  have  a regularly  established 
office. 

Q.  Two-thirds  would  have  a regularly  established  office  where  a 
similar  business  was  carried  on  ? 

A.  Yes,  sir;  in  different  articles  on  the  Exchange 
Q.  Including  petroleum  ? 

A.  No,  sir ; petroleum  is  not  on  our  Exchange. 

Q.  Don’t  you  sell  petroleum  on  the  Produce  Exchange  ? 

A.  No,  sir. 

Q.  Lard  and  pork  ? 

A.  Yes,  sir,  and  tallow,  wheat,  corn,  oats,  rye,  barley,  flour,  whisky 
and  oils,  the  oils  which  are  the  uroduct  of  the  hog,  and  cotton  seed, 
and  linseed  and  all  those  oils. 

By  Senator  Boyd  : 

Q.  Then  about  how  many  bushels  of  wheat  do  you  sell  in  your 
office,  or  how  many  bushels  are  represented  by  the  transactions  in  your 
office  daily,  on  an  average  ? 

A.  It  fluctuates  very  much. 

Q.  On  an  average  ? 

A.  It  will  run  from  100,000  to  a million  and  a quarter  a day,  on  the 
New  York  Exchange  alone. 

Q.  I mean  in  your  own  house  ? 

A.  In  Chicago  and  St.  Louis? 

Q.  No,  in  New  York. 

A.  I say  our  own  office  passes  in  purchases  and  sales ; it  ranges  from 

100.000  bushels  a day  to  a million  and  a quarter  bushels. 

Q.  And  you  are  allowed  a commission  of  half  a cent  on  each  bushel  ? 
A.  No,  sir  ; the  standard  rate  of  commission  is  a quarter  of  a cent. 
Q.  In  addition  to  that,  how  many  bushels  of  oats  would  there  be  ? 
A.  That  is  all  kinds  of  grain. 

Q.  How  much  lard  would  be  represented  in  the  transactions  which 
pass  through  your  house  daily  on  an  average  ? 

A.  Our  business  in  provisions  is  chiefly  in  Chicago. 

Q.  Do  you  do  any  business  in  lard  and  pork  here  ? 

A.  Yes,  sir. 

Q.  Just  state,  if  you  please,  how  many  pounds  of  lard  would  be 
represented  by  the  transactions  ? 

A.  I can  give  you  the  packages,  and  we  buy  and  sell  from  1,000  to 

10.000  packages  a day. 

Q.  How  many  pounds  in  each  package  ? 

A.  Three  hundred  and  twenty. 

Q.  What  are  your  commissions  on  the  lard  sales  ? ' 


449 


A.  Ten  cents  a package. 

Q.  How  much  pork  per  day,  on  an  average  ? 

A.  It  would  range  from  a thousand  to  ten  thousand  barrels. 

Q.  And  you  say  vegetable  oils  ’ 

A.  We  don’t  deal  in  those. 

Q.  The  trade  of  your  firm  is  confined  chiefly  to  corn,  pork  and  lard  ? 

A.  Yes,  sir. 

Q.  What  is  your  opinion  in  reference  to  the  whole  system  of  , deal- 
ing in  ‘^futures,”  just  give  your  opinion  in  regard  to  the  legitimate 
transactions  where  there  is  a sale  and  delivery,  and  also  to  the  illegiti- 
mate ones  where  there  are  simply  sales  on  speculation  ? 

A.  I have  studied  very  closely  the  operations  of  this  option  ” bus- 
iness for  the  last  five  or  eight  years,  and  I have  come  to  the  conclusion 
that  it  is  the  cheapest  machinery  that  can  be  invented  or  devised  be- 
tween the  producer  and  consumer  to  bring  them  together.  There  is 
no  doubt  in  my  mind  but  what  the  general  average  of  prices  is  no 
higher;  if  any  thing  the  average  is  lower  to  the  consumer  than  it  was 
ten  3^ears  ago  when  there  were  no  such  dealings. 

Q.  You  are  now  speaking  of  the  legitimate  transactions  ? 

A.  The  option  business  ; you  might  call  it  all  legitimate  because  it 
is  based  on  the  property  ; for  instance,  I have  a man  in  Indianapolis 
who  telegraphs  me give  me  some  ofier;  boat-load  of  wheat;  8,000 
bushels;”  I make  him  an  offer ; he  accepts  it ; I go  immediately  into 
the  wheat  market  and  I sell  the  same  quantity  for  the  next  month’s 
delivery. 

Q.  That  is  legitimate  ? 

A.  Yes,  sir;  the  time  comes  around  and  that  man  in  the  course  of 
three  or  four  days  sees  he  can  sell  his  wheat  for  au  advance  in  Indian- 
apolis ; he  telegraphs  me  to  buy  him  the  wheat  here ; some  people 
would  call  that  an  illegitimate  transaction,  but  I wouldn’t,  where  I 
buy  in  what  I sell  and  do  not  deliver. 

Q.  But  where  certificates  are  passed  through  fifty  or  sixty  hands  as 
a merely  speculative  transaction,  what  would  you  call  that  ? 

A.  The  intent  with  every  man  is  to  deliver  just  as  much  as  it  is  in 
the  clearing-house  of  New  York  banks,  if  you  understand  the  opera- 
tion of  those  ; the  same  thing  is  in  operation  in  our  Exchange  every 
day  as  in  the  clearing-house  of  the  banks. 

Q.  Do  you  know  the  system  of  business  conducted  in  these  places 
which  are  called  bucket-shops  ? ” 

A.  I have  been  into  them  in  Chicago  and  in  St.  Louis  ; I have 
never  made  an  investment  there ; never  investigated  them  at  all. 

Q.  Do  you  know  whether  any  such  exist  in  New  York  ? 

A.  I do  not  know  of  any ; no,  sir. 

57 


f 


450 


By  Senator  Browning  : 

Q.  What  is  the  smallest  lot  that  you  will  sell? 

A.  Five  thousand  wheat,  or  corn,  or  oats,  250  packages  of  lard  and  ; 
250  barrels  of  pork. 

By  Senator  Boyd  : 

<2.  What  percentage  of  the  transactions  which  daily  take  place  in 
your  office  are  done  with  the  view  to  an  immediate  delivery  of  the 
goods  or  actual  delivery  of  the  goods  ? 

A.  The  intention  is  that  there  will  be  an  actual  delivery  some  time. 

Q.  I mean  as  between  the  parties  to  the  transaction? 

A.  Do  you  mean  to  ask  by  that  what  proportion  of  cash  propertv  we 
handle  ? 

Q Yes,  what  proportion  in  value  ? 

A.  I should  put  it  anywhere  from  three  to  eight  per  cent  of  all 
transactions,  possibly  three  to  ten  per  cent. 

Q.  According  to  your  experience  almost  all  engaged  in  this  business 
are  getting  rich,  making  money,  are  they  not  ? 

A.  I think  that  any  one  that  sticks  to  his  legitimate  business  makes 
money. 

Q.  Who  pays  the  profits  — who  bears  the  burden  of  the  profit  which 
these  speculators  make,  ultimately  ? 

A.  I think  the  real  profits  that  come  out  of  the  total  transactions  in 
produce  are  just  what  it  costs  to  bring  the  produce  from  the  producer 
to  the  consumer  ; somebody  makes  that,  and  that  is  all  that  is  really 
made. 

Q.  Who  pays  that  actual  profit,  who  sustains  it  in  the  end  ? 

A.  It  comes  off  of  both  the  producer  and  the  consumer. 

Q.  Then  they  both  equally  bear  a portion  of  it  ? 

A.  Yes,  sir  ; it  is  right  they  should. 

Q.  About  how  much  per  bushel  would  grain  be  increased  in  price 
by  reason  of  these  profits  between  the  producer  and  consumer  ? 

A.  It  would  be  very  small. 

Q.  IIow  much? 

A.  I could  not  tell. 

Q.  There  is  an  increase  of  course  ? 

A.  Yes,  sir;  the  cost  of  middle-men;  the  cost  of  middle-men  ten 
years  ago  was  greater  than  it  is  now'  by  far. 

Q.  How  do  you  account  for  that? 

A.  The  facilities  that  are  oficred  for  business. 

C^.  And  wouldn’t  the  increase  of  production  and  also  the  increase  of 
demand  l)e  a reason  why  middle  men  could  do  their  business  for  less  ? 

A.  I think  the  competition  among  merchants  reduces  it  to  the 


minimum. 


/ 


451 

William  H.  Macy^  having  duly  affirmed,  was  interrogated  and  testi- 
fied as  follows  : 

By  Senator  Bovd: 

Q.  Where  do  you  reside  ? 

A.  In  the  city,  40  East  Twenty-first  street. 

Q.  What  is  your  business  ? 

A.  President  of  the  Seamen’s  Savings  Bank. 

Q.  How  long  have  you  been  such  president  ? 

A.  I suppose  ten  or  fifteen  years. 

' Q.  Please  state  to  the  committee  your  opinion  in  regard  to  the  whole 
system  of  making  corners  and  dealing  in  futures  with  reference  to  its 
effect  upon  commerce  and  upon  the  public  welfare  ? 

A.  I have  been  out  of  active  business  for  the  last  five  or  six  and 
twenty  years,  and  know  nothing  about  it,  only  what  I have  seen  in  the 
papers. 

Q.  From  what  ? 

A.  I have  formed  the  opinion  that  it  is  a very  bad  practice,  but  I 
think  it  is  one  you  can’t  control  by  legislation,  because  it  was  a prac- 
tiee  fifty  years  ago,  and  more  too. 

Q.  The  system  of  making  corners  ? 

A.  And  buying  up  any  article  that  the  merchants  knew  — by  the 
excess  — more  than  there  was, 

Q.  Where  parties  purehased  grain  with  a view  of  making  a delivery, 
we  do  not  find  fault  with  that,  that  is  legitimate,  but  the  merely  specu- 
lative part  of  the  transaction  ? 

A.  That  I think  is  very  bad  and  injurious  to  commerce. 

Q.  What  effect  has  it  upon  the  banking  interests  of  the  country  — 
I mean  the  not  only  dealing  in  futures,  but  the  making  of  corners  in 
any  staple  ? 

A.  I don’t  see  what  effect  that  would  have  on  banking  at  all. 

Q.  Would  it  not  affect  the  moneyed  interest  by  causing  fluctuations 
in  the  money  market  ? 

A.  No,  I think  not;  banks  would  lend  on  legitimate  paper  and  that 
wouldn’t  be  legitimate  paper ; they  wouldn’t  lend  on  any  contracts  of 
that  kind  ; I have  been  president  of  a bank  these  seventeen  years  and 
I am  satisfied  I should  not. 

Q.  And  why  would  the  banks  not  lend  on  any  contracts  of  that  kind  ? 

A.  They  would  look  upon  it  as  fictitious. 

Q.  And  it  would  be  unreliable  ? 

A.  Unreliable,  yes,  sir ; when  notes  are  given  it  is  supposed  that  the 
purchaser  has  had  value  received  and  he  has  got  that  material  that  he 
can  sell  and  pay  the  notes  with. 


452 


Q.  But  in  purely  speculative  and  gambling  transactions  they 
wouldn’t  have  that  security  ? 

A.  No,  they  wouldn’t  have  that  security;  I wouldn’t  treat  with 
them  at  all. 

Q.  In  cases  where  transactions  are  had  between  fifty  or  sixty  indi- 
viduals without  any  actual  delivery  of  the  article  dealt  in,  would  you 
call  that  a system  of  buying  on  speculation  and  gambling  ? 

A.  Yes,  sir;  I should  think  it  was  the  worst  kind  of  gambling. 

Q.  Why? 

A.  Because  they  know  they  haven’t  the  produce  to  deliver  or  the 
material ; it  is  mere  betting. 

Q.  And  assuming  a risk  which  good  public  morals  doesn’t  recognize 
as  being  a safe  means  or  way  of  carrying  on  transactions  or  business. 

A.  Not  a legitimate  transaction  of  business.  Understand  I have 
had  no  experience  in  this  thing.  I have  never  had  any  operation  of 
the  kind  nor  been  in  the  way  of  lending  any  money  on  any  thing  of 
the  kind  — never  have  seen  any  such  proposition. 

Q.  But  you  know  such  a state  of.  speculation  exists  in  the  country  ? 

A.  I know  it  from  what  I read  in  the  papers  and  from  hearsay. 

Q.  Your  opinion  is  that  such  a system  is  detrimental  to  the  best 
interest  of  commerce  and  trade  ? 

A.  Yes,  I think  that  must  be  the  opinion  of  everybody. 

By  Senator  Browning  : 

Q.  Does  not  a ‘^corner  ” affect  the  banking  interest? 

A.  No,  I think  not  ; I don’t  see  why  it  should. 

Q.  You  have  a larger  demand  then  for  money,  don’t  you,  than  when 
the  market  is  in  a normal  condition  ? 

A.  You  have  got  no  legitimate  demand. 

Q.  Does  dealing  in  stocks  and  cornering  ” the  market  in  stocks, 
pulling  up  or  bearing  down,  affect  the  banking  interest  ? 

A.  No  farther  than  the  parties  have  securities  to  offer  to  get  loans 
— not  beyond  that. 

Q.  Does  that  apply  also  to  grain  as  well  as  railroad  stock  ? 

A.  Of  course.  A man  that  buys  if  he  wants  to  raise  the  money  to 
pay  for  it,  he  has  got  to  have  something  tangible  to  raise  the  money 
on. 

Q.  Have  you  experienced  any  thing  like  an  approaching  panic  dur- 
ing the  last  week  ? 

A.  ffliere  has  been  a great  demand  for  money,  I know  that. 

Q.  Can  you  tell  the  committee  the  cause  for  that  ? 

A.  No,  1 cannot. 


453 


Q.  It  must  have  been  on  account  of  the  unsteady  condition  of  the 
m u-ket,  wasn’t  it  ? 

A.  The  great  cause  is  the  government  locking  up  so  much  money. 
They  take  in  a million  and  a half  a day. 

Q.  It  can’t  be  attributed  to  fluctuations  in  the  values  of  stocks? 

A.  No,  sir,  not  so  much. 

By  Senator  Boyd  : 

Q.  Can  you  form  any  opinion  of  how  far  these  illegitimate  specula- 
tions impose  a burden  upon  the  consumers  of  products  ? 

A.  I can’t  form  any  opinion  how  far.’  It  certainly  enhances  the 
price  and  that  affects  the  consumers. 

Q.  Then  the  laboring  man’s  day’s  wages  is  rendered  of  less  value  to 
him  ? 

A.  Of  course  he  can’t  buy  as  much  to  support  his  family  with  his 
wages. 

Q.  Do  you  believe  it  is  the  duty  of  the  people  through  the  Legisla- 
ture to  remedy  these  existing  evils  so  far  as  they  possibly  can  ? 

A.  As  I said  in  the  first  place,  I do  not  believe  the  Legislature  can 
effect  it  at  all.  Public  opinion  is  the  only  thing  that  can  affect  it,  if 
it  can  be  frowned  down. 

Q.  Do  you  suppose  it  is  possible  to  crystalize  public  opinion  into 
the  form  of  an  act  which  would  have  a repressing  tendency  upon  such 
wild  and  illegitimate  speculations  ? 

xV.  No,  I do  not  believe  you  can. 

Q.  Then  you  believe  the  only  way  to  do  is  to  educate  the  people  and 
to  develop  higher  sentiments  in  the  community  in  regard  to  it  ? 

A.  Yes,  sir ; let  it  be  frowned  down  by  every  well-wisher  of  his 
neighbors. 

Q.  And  you  believe  that  such  efforts  as  are  now  being  made  by  this 
committee,  witli  the  aid  of  the  press,  will  be  beneficial  in  that  respect  ? 

A.  I don’t  believe  it  will  have  any  effect  myself  otherwise  than  in 
educating  public  opinion  to  show  that  there  is  an  effort  made  to  sup- 
press it  if  it  can  be  done;  but  I do  not  believe  you  can. 

Q.  Is  there  any  thing  else  that  you  would  like  to  state  to  the  com- 
mittee in  regard  to  this  matter  ? 

A.  No,  I think  not ; I have  not  been  brought  in  contact  with  it  in 
any  manner  or  shape. 

Q.  You  have  knowledge  that  it  does  exist  ? 

A.  I have  a general  knowledge  of  what  is  done. 

Q.  The  expression  of  your  opinion  will  have  a very  great  influence 
in  enabling  us  to  accomplish  the  objects  for  which  the  committee  was 
appointed  — that  is  in  educating  the  people  ? 

A.  That  is  what  you  want ; I think  it  is  very  demoralizing,  this 
corner  in  breadstuffs  and  other  things. 


454 


Q.  And  these  illegitimate  speculations  ? 

A.  Yes,  sir. 

The  committee  then  adjourned  to  Monday  morning,  November  27, 
1882,  at  11  o’clock,  a.  m. 


New  York,  November  27,  1882. 

The  committee  met  at  the  Metropolitan  Hotel  in  the  city  of  New 
York,  pursuant  to  adjournment. 

Present  — Senators  Boyd  and  Browning,  of  the  committee,  John 
N.  Corning,  Sergeant-at-Arms  of  the  Senate,  and  Daniel  A.  Cooney, 
Clerk  of  the  committee. 

Dr.  Howard  Crosby  was  then  called,  and  being  interrogated,‘testified 
as  follows ; 

Senator  Boyd  — In  view  of  the  sacred  character  of  your  calling,  we 
will  dispense  with  the  ordinary  oath. 

By  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  In  this  city. 

Q.  You  are  a minister  of  the  gospel  ? 

A.  I am. 

Q.  You  have  been  so  for  how  many  years  ? 

A.  For  more  th^n  twenty  years. 

Q.  Are  you  familiar  with  the  system  of  making  ‘‘  corners  ” and  deal- 
ing in  futures,”  either  by  observation  or  otherwise  ? 

A.  I am  only  familiar  with  these  systems  from  what  appears  in  the 
public  prints. 

Q.  From  your  knowledge  of  the  system  please  state  to  the  commit- 
tee your  opinion  in  regard  to  its  eSect  upon  commerce  and  its  influ- 
ence upon  the  public  welfare  ? 

A.  I think  it  must  derange  commerce  and  demoralize  public  senti- 
ment ; I look  upon  it  as  a forced  elevation  of  values  by  trick  in  order 
to  increase  indebtedness,  and  like  all  tricks  must  issue  badly  for  the 
community  and  its  welfare  ; I see  no  difference  between  cornering  and 
other  forms  of  gambling  which  are  universally  considered  to  be  most 
demoralizing  to  the  community. 

Q.  What  is  your  opinion  in  regard  to  what  is  admitted  to  be  the 
illegitimate  form  of  speculation  in  grain  or  other  food  products  or  any 
commodities  ? 


455 


A.  It  is  dealing  in  trade  with  uncertainties,  things  that  may  be 
non-existent  and  therefore  again  comes  under  the  head  of  gambling. 
I see  no  difference  between  it  in  principle  and  the  ordinary  form  of 
gambling,  at  gambling  tables. 

Q.  Please  state  what  you  consider  to  be  the  influence  upon  society 
generally  of  such  practices  from  a moral  standpoint  ? 

A.  It  gives  a feverish  tone  to  society,  induces  men  to  make  great 
ventures  and  to  meet  with  great  disappointments,  increases  the  num- 
ber of  desperate  men  in  the  community  and  deters  honest  men  from 
honest  business. 

Q.  What  is  the  legitimate  standard  of  value  of  all  commodities? 

A.  I should  say  in  general  the  Autlue  which  naturally  belongs  to  it, 
the  value  that  is  not  unnaturally  and  by  pressure  or  trick  produced. 

Q.  What  relation  has  labor  to  the  value  of  products  ? 

A.  Labor  of  course  should  add  to  the  value  of  products  and  the 
condition  of  trade  should  be  such  as  to  farther  the  reward  of  all  use- 
ful labor. 

Q.  Then  the  unnatural  forcing  up  of  the  prices  of  the  necessaries  of 
life  is  a tax  upon  labor  rather  then  a reward  ? 

A.  It  is  already  so ; I look  upon  it  as  a tyranny  and  oppression  of 
labor  and  of  legitimate  business.  If  I may  be  allowed  to  illustrate,  if  I 
am  a mariner,  I can  judge  by  my  scientific  knowledge  of  winds  and 
currents  and  can  steer  my  vessels  across  the  Atlantic  wisely  and  safely, 
but  if  we  can  imagine  that  one  person  by  some  hocus-pocus  could  get 
I charge  of  the  power  over  the  winds  and  waves  and  run  them  in  his 
own  interest  and  against  mine,  and  against  every  other  mariner’s, 
turning  the  currents  this  way  and  that  way  at  his  will,  turning  the 
wind  hither  and  thither  as  he  wished,  he  would  be  an  oppressor  and 
tyrant  on  the  ocean  and  a nuisance  to  be  abated. 

Q.  Then  that  term  would  apply  to  all  persons  who  are  engaged  in 
the  “ cornering”  of  food  products,  stocks,  bonds  and  every  other  com- 
modity or  machinery  by  which  the.  illegitimate  business  is  carried 
on? 

A.  I think  so ; I think  it  is  especially  glaring,  however,  in  the  case 
of  food  products  and  important  articles  of  that  kind.  In  the  matter 
of  stocks  where 'all  are  engaged  in  speculating,  the  loser  doesn’t  gain 
so  much  sympathy,  but  at  the  same  time  the  principle  is  exactly  the 
same  ; he  has  been  robbed. 

Q.  When  prices  are  forced  up  by  the  operation  of  ‘^corners”  or 
illegitimate  speculation,  on  whom  does  the  burden  ultimately  fall? 

A.  It  ultimately  falls  upon  the  poorer  classes  who  have  to  pay  for 
high  prices  where  they  procure  their  food  and  where  they  pay  their 
rent. 


1 


45  (j 

1 

Q.  Then  indirectly  a system  tliat  would  enhance  the  price  of  rent 
and  food  to  the  poor  man  would  deteriorate  from  the  value  of  the 
wages  which  he  receives  ? 

A.  Undoubtedly  it  would.  i 

Q.  That  is,  the  i)urchasing  power  of  his  wages  would  be  decreased 
very  materially  ? 

A.  It  would;  I would  also  say  in  connection  with  that  question 
that  the  fluctuation  of  prices  of  the  necessaries  of  life  is  far  more  fear- 
ful to  the  poor  man  than  to  the  rich  man,  and  hence  any  form  of  ille- 
gitimate trade  which  produces  those  fluctuations  is  directly  injurious 
to  the  poorer  classes, 

Q.  And  carrying  on  any  system  which  would  thus  affect  the  inter- 
est of  the  laboring  classes  might  be  designated  as  a declaration  and 
continuance  of  a civil  war  upon  their  rights  ? 

A.  It  is,  in  my  estimation.  As  I used  the  language  before  I consider 
it  tyranny  and  oppression. 

Q.  Do  you  think  that  the  evils  resulting  from  this  illegitimate  sys- 
tem of  speculation  are  confined  only  to  the  injuries  which  result  to  the 
laboring  classes  and  the  poor  man,  or  does  it  affect  all  classes  of  trade 
and  society  ? 

A.  I think  it  affects  all  classes,  but  especially  I think  it  affects  the 
poorer  class  and  the  honest  class. 

Q.  State  if  you  please  why  especially  the  honest  class  of  citizens? 

A.  Because  their  conscience  will  not  allow  them  to  enter  into  com- 
petition with  those  who  are  over-reaching.  They,  therefore,  back  down  i 
from  the  contest  and  are  overcome. 

Q.  Do  you  believe  it  is  the  duty  of  the  people  through  their  law- 
making machinery  to  endeavor  to  abate  these  evils? 

A.  By  all  means.  I believe  it  is  within  the  power  and  province  of 
the  Legislature  to  correct  these  evils. 

Q.  Would  you  please  to  suggest  such  provisions  as  you  think  might 
be  formulated  into  an  act  which  would  have  the  tendency  or  effect  of 
repressing  these  evils  ? 

A.  My  detailed  knowledge  of  commerce  is  so  small  that  I would 
scarcely  venture  to  ])ropose  a plan  that  should  involve  any  details.  I 
think  a general  principle  of  buying  and  selling  only  that  which  really 
exists  should  be  at  the  foundation  of  the  law.  That  principle  might  have 
to  l)e  modified  by  reason  of  the  nature  of  things,  but  I certainly  think 
that  principle  should  be  at  the  basis  of  the  law,  that  things  bought 
and  sold  must  have  an  existence  and  be  able  to  be  transferred  imme- 
diately. 


I 


457 


By  Senator  Brownin^g  : 

Q.  It  has  been  said  by  some  that  when  we  attempt  to  prevent  all 
sales  except  wliere  there  is  an  actual  delivery  that  it  is  a direct  attack 
upon  the  credit  system.  What  do  you  think  of  the  credit  system? 

A.  I think  in  any  law  that  is  proposed  there  should  be  a certain 
margin  for  tlie  credit  system.  I do  not  think  we  can  transact  busi- 
ness without  a credit  system,  but  I think  that  that  could  be  under 
certain  control  and  limits. 

Q.  Then  you  wouldn’t  advocate  the  passage  ol  an  act  that  would 
make  all  debts  unlawful  ? 

A.  No,  sir,  by  no  means. 

By  Senator  Boyd  : 

Q.  Is  tliere  any  thing  else  that  you  would  like  to  state  to  the  com- 
mittee in  connection  with  this  subject  ? 

A.  Nothing. 

Alexander  E.  Orr,  being  duly  sworn,  was  interrogated  and  testified 
as  follows : 

By  Senator  Boyd  . 

Q.  Where  do  you  reside  ? 

A.  I reside  in  Brooklyn  and  do  business  in  New  York. 

Q.  Where  is  your  place  of  business  ? 

A.  20  South  street. 

Q.  What  is  that  business  ? 

A.  Grain  commission  business. 

Q.  Are  you  a member  of  any  firm  ? 

A.  The  firm  of  David  Dows  & Co. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  Since  1858. 

Q.  Are  you  familiar  with  the  system  of  making  corners  and  dealing 
in  futures  ? • 

A.  Yes.  sir,  I am  familiar  with  all  the  system. 

Q.  From  observation  and  otherwise  ? 

A.  Yes,  sir. 

Q.  Please'  state  your  opinion  in  relation  to  the  whole  system  of  mak- 
ing corners  and  dealing  in  futures  with  reference  to  its  effect  upon 
commerce  and  its  influence  upon  the  public  welfare  ? 

A.  As  you  asked  me  to  state  my  views  in  writing,  and  as  what  I 
have  written  answers  many  of  your  questions,  you  will  allow  me, 
please,  to  read  that  first  and  you  may  ask  any  questions  afterward. 

The  witness  then  read  the  following  statement: 

58 


458 


‘‘Gentlemen: — Sometime  ago  I received  a written  notification 
from  the  clerk  of  your  honorable  committee  to  the  effect  that  at  a 
future  period  I would  bo  called  upon  to  testify  before  you  relative  to 
the  whole  system  of  ^making  corners  and  dealing  in  futures  with 
reference  to  its  effects  upon  commerce  and  its  influence  upon  the  pub- 
lic welfare/  The  letter  concluded  with  the  following  paragraph : 
‘This  notice  is  given  to  you  at  this  time  that  you  may  be  enabled  to 
collect  such  data  and  circumstances  as  you  may  wish  to  place 
before  the  committee  when  called  upon/  ” 

I thank  the  committee  for  giving  me  this  kindly  notice  for  prepa- 
ration. I believe  the  question  (because  it  is  comparatively  new)  is 
much  misunderstood  by  the  press,  the  Legislature,  and  indeed  I may 
add  the  whole  community  outside  the  largo  commercial  exchanges  and 
those  immediately  connected  with  them  in  developing  the  business 
interests  of  this  country.  I beg  your  permission,  therefore,  to  present 
my  opinions  in  writing  with  such  practical  illustrations  as  I can  vouch 
for  of  my  own  knowledge,  and  afterward  to  answer  any  questions  that 
my  remarks  may  suggest. 

Your  investigation  may  be  classified  under  four  heads,  viz. : 

The  system  of  creating ‘‘ corners ’’ — the  system  of  dealing  in  mer- 
chandise for  future  delivery  — the  effect  these  systems  have  upon 
commerce  and  the  public  welfare,  and  that  legislative  action,  if  any,  is 
necessary  for  the  protection  of  the  public  interest. 

And  first.  Corners.  — Corners  may  be  divided  into  three  classes  ; 
1st,  Accidental  ; 2cl,  Protective;  3d,  Aggressive. 

“Accidental  corners”  are  not  numerous,  but  under  certain  condh 
tions  of  the  market  they  may  prove  expensive  to  those  who  are  unfor- 
tunate enough  to  become  their  victims;  they  occur  through  failure  oi 
transportation  by  lake,  canal  or  railroad  — from  fire  or  flood,  and, 
where  grain  is  the  article  contracted,  from  atmospheric  influences  ; 
they  may  occur  with  the  most  conservative  merchants  and  are  simply 
one  phase  of  the  many  vicissitudes  attendant  upon  mercantile  transac- 
tions. Permit  me  byway  of  illustration  to  give  you  two  examples  of 
accidental  corners,  the  first  of  which  is  partly  hypothetical:  In  Jan- 
uary, 1881,  A had  10,000  bushels  of  “ Yo.  1 north-western  wheat  ” in 
Duluth;  it  could  not  leave  tliab  port  till  the  opening  of  navigation ; 
at  that  time  the  value  of  such  wheat  in  Yew  York  for  May  delivery 
was  $1.28  per  bushel,  and  A sold  it  to  P for  that  price  and  option  ; in 
the  month  of  March  following,  the  value  had  advanced,  and  B sold  the 
same  wheat  for  the  same  delivery  to  0,  at  $1,39  iier  bushel.  The  open- 
ing of  navigation  for  that  year  was  unusually  late  and  the  wheat  did 
not  arrive  in  Buffalo  till  after  the  middle  of  May — too  late  to  be 


459 


shipped  by  canal,  as  originally  intended  by  A ; it  was  forwarded  by 
rail,  upon  the  assurance  that  it  would  be  in  New  York  in  ample  time 
to  meet  A’s  contract  obligations,  but  accident  delayed  its  arrival  till 
the  first  day  of  June,  one  day  too  late  for  delivery  under  the  contract. 

Meanwhile  the  value  of  such  wheat  had  fallen  to  11.21  per  bushel; 
the  demand  for  it  was  very  moderate  and  the  stock  in  New  York  was 
exceedingly  light,  and  held  entirely  by  C.  A,  believing  that  his  wheat 
would  be  in  New  York  prior  to  the  end  of  Mayas  promised  by  the 
railroad,  made  no  other  provision  for  his  contract.  B,  trusting  in 
the  ability  of  A to  deliver  the  wheat  which  he  had  contracted  to  him, 
and  which  he  would  then  deliver  to  0,  rested  upon  that  faith,  and  0 
stood  ready  to  receive  the  wheat  when  tendered,  although  his  contract 
price  was  eighteen  cents  per  bushel  greater  than  the  then  market 
value.  But  the  unexpected  failure  of  the  railroad  to  deliver  the  wheat 
in  New  York  on  the  last  day  of  the  month  caused  a demand  for  16,- 
000  bushels  of  No.  1 north-western  wheat  from  0,  who  was  the  only 
person  who  had  any,  and  he,  suspecting  that  it  was  wanted  to  make 
delivery  to  him,  withdrew  his  wheat  from  the  market  absolutely,  and 
the  result  was,  A was  obliged  to  default  upon  B,  and  settle  with  him 
by  the  payment  of  eleven  cents  per  bushel  on  16,000  bushels,  which 
was  the  measure  of  his  loss  through  his  inability  to  deliver  to  C,  and 
a day  or  two  after  A sold  his  wheat  on  the  market  at  $1.21,  the  net 
loss  to  him  being  eighteen  cents  per  bushel,  or  $2,880,  because  through 
the  efiTect  of  an  unforeseen  late  spring  and  a railroad  accident,  0 had 
been  able  to  corner  the  wheat  market  for  that  grade  without  premed- 
itating, or  in  any  way  infringing,  the  laws  of  commercial  equity  or 
morals. 

My  second  illustration  deals  with  much  larger  quantities. 

As  a rule,  canal  navigation  closes  about  the  first  week  in  December 
of  each  year.  It  is  estimated  that  shipments  leaving  Buffalo  prior  to 
the  fifteenth  or  tv"entieth  of  November  will  reach  tide-water  without 
obstruction  from  ice.  In  1880  there  was  a marked  exception,  how- 
ever, winter  coming  so  suddenly  and  severely  that  all  boats  leaving 
Buffalo  on  and  after  INAvember  4th  were  frozen  in  the  canal  and  forced 
to  remain  there  with  their  cargoes  aboard  till  the  opening  of  naviga- 
tion in  the  following  spring.  The  quantity  of  grain  thus  suddenly 
withheld  from  market  amounted  to  from  five  to  six  millions  of  bushels 
and  as  a large  part  of  it  had  been  sold  for  November  or  December  de- 
livery, it  is  not  difficult  to  understand  the  effect  such  a misfortune 
would  have  had  upon  prices  had  the  stock  of  such  grain  in  New  York 
been  limited.  Fortunately  this  was  not  the  case,  and  the  disaster 
coming  early  in  November,  thei’e  was  reasonable  time  to  make  provis- 
ion for  maturing  contracts  without  causing  very  serious  loss. 


4G0 


In  both  these  cases  the  transactions  throughont  were  legitimate,  but 
the  grain  was  as  effectually  locked  up  through  accident,  as  if  it  had 
been  withheld  by  design.  In  the  first  example  C could  not  be  blamed 
for  refusing  to  sell  wheat  to  A which  A intendetl  should  be  given  to  B 
and  by  B to  0 at  a much  higher  price  than  the  then  market  value.  It 
was  C’s  good  fortune  tluit  as  wheat  failed  to  arrive  in  time,  just  as  it 
would  have  been  thegood  fortune  of  those  who  held  grain  in  Xow  York 
in  1880  if  the  sudden  freezing  of  the  canal  had  caused  as  sudden  a de- 
mand to  fill  contracts  and  thereby  enhanced  values, of  which  they  would, 
according  to  mercantile  usage,  have  had  a right  to  take  advantage. 

Protective  corners”  are  simply  what  the  name  suggests.  They  are 
the  results  of  the  acts  of  a merchant  (or  set  of  merchants)  through 
the  purchase  of  that  which  is  forced  upon  the  market  to  the  injury  of 
his  business  and  the  de})reciation  of  his  wares  and  merchandise.  A 
has  a store  filled  with  cotton  goods  which  he  has  just  purchased  for 
his  fall  trade.  He  is  waiting  for  his  customers,  but  B comes  forward 
and  says  to  A’s  customers,  I will  sell  a thousand  cases  of  cottons  at 
twenty  per  cent  less  than  A.  if  you  will  accept  delivery  next  week. 
The  immediate  tendency  of  B's  offer  is  to  depreciate  the  value  of  A’s 
stock,  and  A,  believing  that  his  prices  are  reasonable,  and  that  B has 
some  sinister  intent,  or  that  B’s  offer  is  a bargain  (no  matter  what  his 
reasons,  however),  buys  them  upon  B’s  terms  and  awaits  delivery.  But 
B,  when  he  sold  the  cottons,  did  not  have  them  to  deliver,  his  object 
was  to  depress  the  value  of  A’s  cottons  to  a price  below  the  price  at 
which  he  had  sold,  then  to  purchase  from  A at  a profit  and  make 
delivery  on  his  contract. 

Finding,  therefore,  that  his  first  attack  was  not  successful  he  makes 
a second  with  a like  result,  then  a third  and  fourth,  and  yet  A,  or  some 
one  else,  stands  ready  and  takes  B’s  cottons  as  fast  as  he  offers  them 
for  future  delivery;  now  the  price  at  which  B has  sold  the  cottons, 
although  quoted  in  the  market  reports,  is  not  their  actual  market  value  ; 

B has  simply  acted  upon  his  .opinion  of  the  future  value  (whether 
legitimate  or  illegitimate  it  matters  not)  and  that  opinion  is  not  bind- 
ing upon  his  purchasers. 

When,  therefore,  B’s  contracts  mature,  if  he  comes  to  purchase  of  A,  he 

(A)  has  just  the  same  right  to  withhold  his  cotton  from  B,  as  B had  to 
offer  his  at  a less  price  tlian  Aasked,  and  if  B defaults  on  his  contracts 
because  of  A’s  refusal  to  sell,  or  because  A asks  a higher  price  than  he 

(B)  is  willing  to  give,  he  must  pay,  as  damage  to  A,  such  differences  as 
A can  ])rove  this  market  value  to  be  over  and  above  the  price  at  which 

sold;  protection  of  this  kind  though  sometimes  resulting  in  ‘^cor-  - 
jjoj-s”  is  most  essential  to  the  agricultural  and  commercial  interests  of 
the  United  States  ; tiie  more  bountiful  the  prospective  harvest,  the 
ifiore  likely  is  such  a })crnicious  system  of  attacks  to  obtain  ; values 


461 


have  often  been  depressed  far  below  the  producing  point  before  the 
crops  has  even  been  begun  to  be  secured,  and  if  a protective  check  was 
not  created  by  holding  these  bands  of  commercial  pirates  ” to  a strict 
account  and  compelling  the  fulfillment  of  their  contracts  or  by  the 
payment  of  corresponding  damages,  the  result  to  the  agricultural  in- 
terests especially  would  be  at  times  disastrous  in  the  extreme;  it  is  a 
common  practice  among  farmers,  indeed  with  many  it  is  an  imperative 
necessity,  to  postpone  2:)ayment  of  taxes  and  store  debts  till  after  the 
harvest  is  gathered’and  a sale  of  part  of  the  crops  made;  if,  therefore, 
values  at  that  time  are  depressed  by  promiscuous  selling  for  future 
delivery  without  the  j)rospect  of  the  seller  being  held  to  a strict  ac- 
count, the  loss  to  the  farmer  who  must  realize  to  meet  matured  obliga- 
tions is  very  evident ; let  me  give  you  an  illustration;  a few  weeks 
2irior  to  harvest  time,  in  one  of  those  years  of  pros2)ective  plenty,  a. 
certain  merchant  chanced  to  be  in  Chicago ; a raid  upon  the  grain 
market  was  then  in  ojieration ; average  prices  for  wheat  and  corn  for 
future  delivery  had  gradually  been  forced  down  from  fifteen  to  twenty 
per  cent,  and  a very  demoraliiing  state  of  commercial  affairs  was  im- 
minent; the  merchant  noticed  that  one  of  the  leading  operators  in  the 
said  board  had  been  a previous  correspondent,  and  taking  him  aside  on 
’Change  cautioned  him  as  to  the  result  of  his  action  ; ho  j)ointed  out 
the  fact  that  the  prices  he  made  current  were  much  below  the  cost  of 
production ; that  the  farmers  would  withhold  their  grain,  excejDt  where 
absolute  necessity  comioelled  them  to  sell,  and  that  if  he  ^^ersisted,  the  re- 
sult to  himself  would  be  disaster ; his  answer  was  characteristic  ; if  the 
farmers  don’t  sell  their  grain,”  said  he,  we  propose  to  sell  it  for  them ;” 
he  and  his  followers  did  persist  and  they  did  a deal  of  injury,  but 
when  the  time  came  to  make  good  their  contracts,  they  howled  against 
the  wickedness  of  corners,  and  many  of  them  failed ; there  never  was 
a more  jnst  retribution,  they  had  sim|)ly  cornered  themselves  and  when 
they  discovered  this  fact,  prices  had  simply  returned  to  legitimate 
values ; a very  large  percentage  of  mercantile  corners  (so-called)  have 
their  origin  %s  above  described,  but  they  sometimes  (although  really 
seldom)  degenerate  into  the  third  class  viz. : aggressive  corners,”  while 
‘^protective  corners”  may  be  operated  by  a wise  man  on  the  one  side 
and  a fool  on  the  other  — it  needs  a fool  on  each  side  to  operate  an 
“aggressive  commercial  corner”  except  when  unforeseen  misfortune 
has  overtaken  the  cornered  party.  ' 

An  aggressive  corner  partakes  of  the  character  of  a conspiracy  and 
should  be  denounced  both  in  law  and  equity. 

It  is  foreign  to  commercial  enterprise  or  development  and  meets 
with  almost  universal  condemnation  from  the  mercantile  community. 
In  a commercial  sense,  it  is  taking  an  undue  advantage  of  the  follies 


402 


or  misfortunes  of  others  or  of  the  ordinary  risks  of  legitimate  specula- 
tion, it  works  in  secret  and  its  intent  is  only  developed  when  the 
victim  is  within  the  toils. 

An  accidental  ” or  protective  ” corner  becomes  aggressive  when 
by  combining  circumstances,  an  enhanced  fictitious  value  is  created 
for  that  Avhicli  the  conspirators  have  to  receive  from  those  who  have 
not  got  it  to  deliver  unless  it  is  obtained  through  them. 

Such  corners  are  so  repulsive  to  commercial  honor  that  our  Mercan- 
tile  Exchanges  and  Boards  of  Trade  now  discountenance  them  entirely 
and  when  attempted  they  generally  end  in  disaster  to  their  opera- 
tors. 

But  outside  the  commercial  world  aggressive  corners  are  numerous, 
and  sometimes  their  effect  on  commerce  is  exceedingly  annoying  and 
injurious. 

They  could  be  divided  into  many  classes  (too  numerous  to  mention 
hero),  but  I will  confine  myself  to  three,  namely:  Money  corners, 
labor  corners  and  legislative  corners. 

The  locking  up  of  money  is  a conspiracy  to  depress  values,  and  its 
effect  is  far  reaching  and  often  overwhelming.  The  process  is  generally 
within  the  limit  of  law,  and  its  pernicious  influences  are  possible  for 
the  reason  that  speculation  is  largely  carried  on  by  the  aid  of  borrowed 
capital.  It  often  overreaches  the  aims  of  instigations  by  producing 
panic, and  when  confidence  is  established,valueshave  been  rudely  shakene 
the  innocent  and  the  guilty  suffer  alike.  The  usury  laws  of  the  Stat- 
and  that  feature  of  the  national  banking  law,  which  withholds  a re- 
serve twenty-five  per  cent  of  deposits  from  circulation,  have  greatly 
aided  conspirators  of  this  class,  because  by  limiting  the  legal  rate  of 
interest  to  six  per  cent  and  imposing  severe  penalties  when  the  law  is 
infringed,  capital,  in  times  of  stringency,  has  no  inducement  held  out 
to  seek  the  place  where  it  is  most  needed.  The  late  action  of  the 
Legislature  in  modifying  the  laws  relative  to  money ‘‘lent  upon  call’’ 
(and  which  from  the  short  trial  it  has  had  is  working  admirably)  will 
T)rove  a remedy  that  cannot  be  too  highly  appreciated  fy  the  whole 
community. 

'‘  Labor  corners’^  ixyq  very  numerous  and  assume  various  nhases  of 
operation. 

The  ordinary  “strike”  when  attended  with  intimidation,  and  the 
“ rules  of  the  society  ” which  have  almost  extinguished  the  appren- 
tice system  (intended  to  i)rodnce  a continued  supply  of  skilled  labor) 
are  the  most  common.  A man  should  be  the  judge  of  the  value  of 
his  own  time  and  labor,  and  no  power  should  attempt  to  control  him 
in  this  respect,  but  when  he  opposes  the  riglitof  his  fellow  man  to  ex- 
ercise a like  j)rivilege,  or  refuses  an  education  to  the  youth  of  his  gen- 


4G3 


■eraf^ion,  he  is  locking  up  labor,  and  operating  a ^‘corner  ” more  per- 
nicious to  the  interest  of  society  than  all  other  classes  of  corners 
combined. 

Permit  me  to  quote  the  words  of  a prominent  judge  (Judge  Wyler) 
when  passing  sentence  upon  a young  man  for  larceny  a short  time 
ago: 

I cannot  see  how  a young  man  can  get  a trade  now  on  account  of 
the  trade  combinations  which  prevent  boys  from  becoming  appren- 
tices. Every  parent  in  the  land  should  hold  his  foot  down  on  these 
organizations  which  have  the  effect  of  bringing  skilled  labor  here  from 
abroad,  and  of  causing  an  universal  idleness  among  youth  which 
drives  them  to  crime.” 

The  strong  arm  of  the  law  should  see  to  it  thatdabor  in  alUts  branches 
shall  be  protected,  and  that  when  intimidation  or  force  is  used  to  op- 
pose such  protection,  it  should  be  unhesitatingly  put  down. 

I do  not  know  whether  the  scope  of  your  inquiry  was  intended  to 
examine  into  legislative  corners,  but  as  their  influence  upon  commerce 
in  all  its  ramifications  is  vitally  important,  I will  venture  briefly  to 
refer  to  them.  Strictly  speaking,  they  are  also  numerous,  but  I shall 
^ confine  my  remarks  to  two  only,  viz,:  The  coinage  of  silver  dollars 
of  the  present  standard  and  the  pernicious  influences  of  our  present 
tariff  laws. 

* By  process  of  law  88  cents  worth  of  silver  (its  actual  market  value) 
is  fashioned  into  a coin,  the  insignia  of  the  United  States  is  stamped 
upon  its  face,  and  it  is  arbitrarily  paid  out  to  the  people  as  value  for 
100  cents.  It  is  made  a legal  tender  for  debts  due  from  the  governilient 
not  withstanding  tlie  fact  that  nearly  14  per  cent  of  its  declared  value 
is  fictitious  and  never  did  have  an  equitable  existence  whatever.  The 
people  dare  not  refuse  it;  they  are  cornered”  by  legislation  in  a more 
aggressive  manner  than  was  ever  attempted  by  commercial  or  financial 
intrigues.  I will  not  insult  the  intelligence  of  this  committee  by  sug- 
gesting the  only  honorable  remedy.  Tariff  legislation  may  have  two 
great  ends  — revenue  and  protection — but  then  the  results  exceed  the 
necessities  of  the  one,  and  over  protects  the  requirements  of  the  other 
and  withholds  from  the  public  the  tariff-ridden  article;  it  simply 
creates  a legislative  corn^ ; a thing  done  by  interposition  of  law  at 
the  cost  of  the  many  for  the  benefit  of  the  few. 

No  country  on  this  globe  has  elevated  and  ennobled  labor,  or  seen  to 
it  that  it  has  been  so  well  paid  as  the  United  States  (long  may  it  be 
so),  but  no  people  have  ever  been  so  much  imposed  upon  by  legislative 
corners  under  the  pleas  of  protective  labor,  as  the  citizens  of  the 
United  States.  I give  it  to  you  upon  the  authority  of  the  Hon.  Mr. 
Hewitt,  that  a single  manufacturing  firm  of  steel  products  in  Penn- 


464 


sylvania,  u^oon  a capital  of  $2,000,000,  earned  in  a single  year  nearly 
two  other  millions  of  dollars  after  it  had  cared  for  its  workmen,  for 
whose  supposed  benefit  we  are  told,  a tariff  of  $28  per  ton  had  been  im- 
posed upon  steel  rails. 

I will  not  exhaust  your  patience  with  further  illustrations  of  this 
phase  of  the  subject  (Congress  has  at  last  a glimmering  that  a revision 
of  the  tariff  is  essential);  1 shall,  therefore,  pass  on  to  the  second  divi- 
sion of  your  investigation,  viz. : “ The  system  of  dealing  in  merchan- 

dise for  future  delivery.’’ 

If  there  has  been  any  one  element  more  noteworthy  than  another  ih 
aiding  the  development  of  the  commerce  of  the  United  States  into 
its  magnificent  proportion  of  to-day  it  is  the  facility  with  which  sales 
and  purchases  can  be  made  for  future  delivery.  The  values  of  three 
articles  of  American  products  exported  from  New  York  in  1881  were 
as  follows  : 

Grain  products- $122,852,883 

Annual  products 108,077,856 

Petroleum  products 31,596,723 


Total $262,527,462 


The  total  export  value  of  tnese  products  from  all  other  ports  of  the 
United  States  for  the  same  year  were  : 

Grain  products $147,479,636 

Annual  products 49,516,005 

Petroleum  products 8,718,886 

Total $205,714,527 


Added  together,  the  total  value  of  these  three  items  of  export  amount 
to  about  half  of  the  value  of  the  exports  from  the  United  States  in 
1881.  They  are  all  largely  dealt  in  for  future  deliveries,  but  as  I shall 
refer  to  them  a little  more,  in  detail  hereafter  when  discussing  the 
next  division  of  the  subject,  I shall  not  delay  you  now. 

The  system  of  selling  and  buying  these  articles  for  future  delivery 
is  not  conlined  to  the  American  merchant.  B^reign  merchants,  appre- 
ciating its  great  advantages,  make  it  almost  the  rule  to  protect  their 
prospective  needs  by  making  such  transactions  at  our  sea-board  markets. 
This  is  especially  so  with  grain,  and  I venture  the  prediction  that  at 
no  very  distant  day  the  cities  of  New  York,  Boston,  Philadelphia  and 
Baltimore,  and  such  other  places  as  will  grant  like  facilities  will  be- 
come the  granaries  for  the  world.  The  telegrapli  and  steamboat  have 


4G5 


done  much  to  annihilate  distance,  and  the  English  or  Continental 
merchant  who  so  holds  his  stock  of  grain  can  distribute  it  through 
these  means  to  his  own  home  ports  of  consumption  more  rapidly  then 
if  he  held  it  in  Liverpool,  Havre' or  Antwerp,  while  at  the  same  time, 
pending  such  distribution,  he  can  have  the  advantage  of  any  other 
foreign  market  needing  our  surplus,  and  the  benefit  of  our  speculative 
and  consumptive  market  besides. 

The  system  is  also  exceedingly  popular  with  the  agricultural  and 
trading  classes  and  inland  merchants  throughout  the  length  and 
breadth  of  the  whole  countr}^  because  of  its  protective  features  ; it 
gives  to  the  farmer  a ready  market  for  his  products  at  their  full  value 
almost  at  his  own  door,  because  the  active-minded  energetic  trading 
class  who  are  legion  in  the  small  towns  and  villages  along  the  lines  of 
our  numerous  railroads  have  the  assurance  that  the}^  can  sell,  at  a 
reasonable  profit  and  at  a moment’s  notice  in  the  large  commercial 
centers,  the  purchases  of  to-day,  thereby  relieving  themselves  from  the, 
possibilities  of  a loss  on  that  day’s  transactions,  and  rendering  therfi- 
selves  free  to  repeat  their  purchases  on  the  morrow ; in  the  same  man- 
ner the  merchant  of  Chicago,  St.  Louis  or  Toledo,  who  sends  to  New 
York  his  ship-load  of  grain,  can  protect  his  position  by  selling  it  for  a 
future  month’s  delivery  without  taking  the  risk  of  the  market  for  the 
twenty  or  thirty  days  consumed  in  its  transfer  to  tide-water  under  the 
old  system,  and  is  able,  without  multiplying  the  risk,  to  repeat  his  ship- 
ment as  often  as  the  opportunities  of  the  market  will  warrant;  this 
system  is  most  simple  in  its  ojDeration,  and  under  the  rules  of  our  large 
Exchanges  is  recognized  as  a valuable  and  legitimate  means  of  facilitat- 
ing commercial  transactions;  the  form  of  contract  adopted  by  Boards 
of  Trade  are  similar,  and  the  rules  laid  down  by  all  of  them  for  the 
strict  observance  of  such  obligations  are  analogous  ; I submit  herewith 
as  a sample  the  form  of  contract  in  vogue  among  members  of  the  New 
York  Produce  Exchange;  it  is  concise  and  definite  and  refers  directly 
to  these  rules. 

Graiit  Contract. 

New  York,  18  . 

In  consideration  of  one  dollar  in  hand  paid,  the  receipt  of  which  is 
hereby  acknowledged,  have  this  day  sold  to  (or  bought  from) 

‘ bushels  of  New  York  inspection,  at 

cents  per  bushel  deliverable  at  seller’s  (or  buyer’s)  option 

18  . ' 

This  contract  is  made  in  view  of,  and  in  all  respects  subject  to  the 
by-laws  and  rules  established  in  the  New  York  Produce  Exchange,  in 
force  at  this  date. 

59 


400 


Misunderstandings  or  controversies  occur  but  seldom,  and  when  they 
do  are  immediately  referred  under  the  rules  to  the  appropriate  com- 
mittee and  at  once  settled;  through  this  system  sales  and  purchases 
for  delivery  at  any  future  periods  agreed  upon  are  made  with  almost 
marvelous  rapidity  and  exactness,  and  the  advantages  are  so  positive 
and  assured  that  their  abrogation  through  legislative  interference 
would  produce  a commercial  revolution  more  intense  and  far  reaching 
than  any  of  the  great  commercial  panics  of  the  present  generation. 

This  declaration  brings  one  to  the  third  item  of  inquiry,  viz.:  The 
effect  which  sales  for  future  have  upon  commerce  and  the  public  wel- 
fare. 

I have  at  some  extent  anticipated  this  phase  of  the  inquiry  in  the 
foregoing  remarks  respecting  some  of  the  advantages  derived  from  the 
operation  of  this  system.  I assure  you  I have  merely  touched  upon 
them.  I have  stated  there  Avas  shipped  from  the  United  States  in 
1881,  grain  and  product  of  grain  valued  at  1270,332,519.  Probably 
seventy-live  per  cent  (and, very  likely  more)  of  this  actual  grain  was 
dealt  in  for  future  delivery  by  the  exporters  before  it  found  its  way  on 
board  ship,  and  it  is  not  improbable  that  from  the  time  it  Avas  har- 
vested till  it  reached  the  sea-board  it  formed  the  basis  of  transactions 
of  aggregating  ten  or  tAventy,  perhaps  fifty,  times  that  amount  in  value. 
Eatit  one  of  AvhichAvere  legitimate  and  mercantile.  But  this  is  not  all. 
The  vessels  Avliicli  transported  it  abroad  Avere,  to  a great  extent,  ^con- 
tracted for  before  their  arrival  at  their  ports  of  American  destination, 
and  the  bills  of  exchange  which  provided  for  its  payments  were  also 
largely  sold  for  future  delivery  to  the  foreign  banker.  In  fact  every 
element  relative  to  its  shipment  in  some  Avay  might  be  said  to  partake 
of  this  future^’  character. 

There  was  shipped  from  the  United  States  in  the  same  year  about 
7,200,000  barrels  and  13,200,000  cases  of  petroleum  and  products  of 
petroleum  in  from  1,750  to  2,000  ships;  eighty  to  ninety  per  cent  of 
this  vast  business,  both  in  petroleum  and  ships,  Avas  based  upon  sales 
and  freight  engagemen ts  for  future  delivery.  The  tobacco  importations 
of  France,  Spain  and  Italy  (and  doubtless  Germany  Avill  ultimately 
follow  the  same  rule)  are  government  monopolies,  and  almost  alto- 
gether supplied,  without  exception,  are  let  from  one  to  two  years  in 
advance  of  re([uired  delivery,  and  they  aggregate  tens  of  thousands  of 
hogsheads,  and  millions  of  dollors  of  value.  I could  enumerate  other 
important  items,  among  them  cotton,  Avith  its  crop  of  over  six  millions 
of  bales,  and  exqiorts  amounting  to  oA^er  $261,000,000  in  1881,  dealt 
in  to  a very  large  extent  in  exactly  the  same  manner  at  home  and 
abi-oad,  but  i presume.  I have  said  enough  to  make  it  evident  that  sell- 
ing and  buying  hir  future  delivery  is  the  invention  of  a great  necessitify 


467 


and  it  answers  the  need  so  well,  and  has  helped  to  build  up  our  inte- 
rior towns  and  large  cities  so  rapidly,  that  it  is  an  universally  recognized 
part  of  our  great  and  growing  commercial  system. 

The  immediate  effect  of  future  sales  on  the  commerce  of  New  York 
is  to  increase  our  receipts  of  exportable  merchandise.  I hold  that  the 
assurance  of  an  outward  cargo  will  attract  ships  with  inward  cargoes, 
and,  therefore,  our  import  trade,  in  a great  measure,  will  depend  upon 
this  system.  If  our  State  Legislature  should  interdict  its  operation’ 
and  the  competing  sea-board  cities  are  permitted  to  retain  it,  a large 
part  of  our  foreign  trade  would  leave  us  and  go  to  them  just  as  surely 
as  foreign  steel  rails  would  seek  the  port  of  Baltimore  if  that  port 
received  them  free  of  duty,  and  avoid  New  York  where  the  present 
excessive  rate  of  |28  per  ton  continued  to  be  collected. 

But  it  may  be  said  that  this  system  is  used  at  times  as  a 
cloak,  for  transactions  which  savor  more  of  gambling  than  are 
legitimate  speculative  operations.  That  also  it  sometimes  assists  the 
conspirator  in  the  operations  of  an  aggressive  corner,”  and  that  its 
influences,  if  unchecked,  may  have  a tendency  to  demoralize  the  young 
men  of  the  present  age.  To  some  extent  such  statements  are  true. 
It  is  impossible  to  draw  the  line  between  legitimate  speculation  and 
gambling,  or  cornering,  transactions,  until  the  interest  on  the  actors 
lias  been  developed.  Indeed,  the  interest,  under  certain  circumstances, 
cannot  be  discovered  at  all;  but  there  remains  this  safeguard,  that 
should  the  discovery  take  place  (which  is  the  case  when  the  illegiti- 
mate purpose  is  sought  to  be  enforced),  the  rules  of  our  Commercial 
^Exchange  protects  legitimate  speculations  from  the  machinations  of 
the  one,  and  the  law  rendered  void  the  action  of  the  other  when  its 
protective  influences  are  demanded. 

To  determine  that  a great  commercial  good  shall  be  abrogated,  be- 
cause its  abuse  might  inculcate  gambling  and  prove  injurious  to  the 
rising  generation,  would  be  as  preposterous  as  to  interdict  the  impor- 
tation of  paper  stocks  and  ivory,  because  a part  might  be  converted 
into  playing  cards  and  dice,  wherewith  to  operate  games  of  chance  in 
an  unlawful  manner. 

This  brings  me  to  the  last  division  of  the  inquiry,  viz.  : 

What  legislative  action,  if  any,  is  necessary  for  the  protection  of  the 
public  welfare?  In  a great  commercial  country  like  the  United 
States,  where  agriculture,  manufactures  and  commerce  are  the  founda- 
tions of  prosperity  and  wealth,  legislation,  after  having  enunciated  the 
fundamental  principles  of  law  and  order,  should  guarantee  to  com- 
merce that  in  all  matters  immediately  relating  to  commerce,  legislation 
should  largely  emanate  from  commercial  sources.  The  Legislature  of 
New  York  has  endowed  our  Exchanges  with  valuable  privileges  which 


468 


have  resulted  in  building  up  associations  of  upright  intelligent  busi- 
ness men,  who  in  turn  have  become  tlie  guardians  of  the  State’s  com- 
merce, and  secured  to  her  principal  city  the  proud  position  of  the 
commercial  metropolis  of  the  United  States. 

The  New  York  Produce  Exchange  now  numbers  3,000  members,  all 
engaged  in  commercial  pursuits,  and  especially  those  departments 
which  embrace  the  products  of  the  soil  of  the  cereal-growing  States  — 
of  oils,  of  animal-food  products,  and  all  their  addenda  of  railroad,  lake, 
canal  and  ocean  transportation. 

In  the  operation  of  this  immense  business,  which  represents  fi-om 
fifty-five  to  sixty  per  cent  of  the  surplus  productions  (of  these  articles) 
of  the  United  States,  necessity  has  suggested  rules  (which  are  commer- 
cial laws  of  equity)  for  the  direction  and  protection  of  its  members. 
They  are  altogether  too  long  to  mention  at  this  time,  but  I will  cite 
two  which  bear  directly  upon  the  subject  under  consideration. 

If  default  under  a grain  contract  for  future  delivery  (for  any  causes 
whatever)  takes  place,  the  following  will  immediately  become  opera- 
tive : 

‘‘Eule  21. — Sec.  1.  — That  in  case  any  property,  contracted  for 
future  delivery,  be  not  delivered  at  maturity  of  contract,  the 
purchasers  shall  notify,  in  writing,  the  committee  on  grain,  of  the 
failure  to  deliver,  and  the  committee  on  grain  shall,  at  the  next  call, 
publicly  read  such  notice,  and  buy  in  the  grain,  for  account  of  the 
party  directing  the  purchase,  but  no  unreasonable  price  shall  be  paid, 
arising  from  manipulated  or  fictitious  markets  or  unusual  detention  in 
transportation.  Any  legitimate  loss  resulting  to  the  buyer  shall  be 
paid  by  the  party  in  default,  and  the  grain  so  bought  in  shall  be  a good 
delivery  on  defaulted  contracts  maturing  that  day.” 

You  will  please  specially  note  the  protective  elements  of  this  rule  : 

No  unreasonable  price  shall  be  paid  arising  from  fictitious  or  manipula- 
ted markets,  or  unusual  detention  in  transportation,”  and  further,  the 
damage  that  can  be  recovered  must  be  ‘‘  legitimate.”  From  this  you 
may  perceive  how  the  corner  question  in  all  its  phases  of  “ accidental,” 

protective,”  and  “ aggressive,”  can  be  disposed  of,  and  a strict  system 
of  equity  administered. 

The  second  rule  to  which  I desire  to  direct  your  attention  refers  to 
the  inception  of  the  future  purchase  or  sale.  Its  purport  is  as  follows: 

“ In  all  sales  on  purchases  of  grain  for  future  delivery,  either  party 
to  the  contract  shall  liave  the  right  to  call  an  original  margin  of  ten 
cents  per  bushel  on  wheat,  rye  and  barley,  and  five  cents  per  bushel  on 
corn  and  oats,  and  a further  margin  from  time  to  time,  to  the  extent 
of  and  variation  in  the  market  value  from  the  contract  price.” 


469 


This  rule  contains  a protective  and  restrictive  element.  The  first  is 
a mutual  protection  to  the  parties  at  interest  against  loss  through 
fluctuations  in  market  value,  and  the  possible  vicissitudes  of  a mer- 
cantile career.  The  second  restricts  the  volume  of  such  trading  to 
more  conservative  proportions  because  of  the  margin  clause,  and  is 
especially  beneficial  in  checking  the  propensity  to  assume  undue  risks 
on  the  part  of  persons  of  moderate  means  by  compelling  them  to  re- 
strict their  purchases  to  the  capacity  of  their  pockets  for  margin  pur- 
poses. It  is  also  an  answer  to  the  objection,  that  the  system  of  future 
sales  may  prove  injurious  to  young  men,”  for  the  reason  that  young 
men  when  they  want  simply  to  gamble,  and  find  that  they  must  de- 
posit margins,  as  decided  above,  would  prefer  a quicker  and  more  di- 
rect method  of  determining  their  ventures.  If,  on  the  other  hand, 
their  intention  is  to  speculate,  the  fact  that  a margin  is  required  at  the 
outset  of  the  transaction  induces  a consideration  and  caution  that 
would  not  exist  if  the  restrictive  influences  of  the  margin  did  not  enter 
into  the  account.  So  advantageous  has  this  rule  proved,  that  a con- 
tract without  an  original  margin  clause  is  becoming  the  exception  on 
the  floor  of  our  Exchange.  In  1881,  the  amount  deposited  through  the 
Exchange  superintendent,  for  margin  purposes,  was  $15,000,000. 

From  these  illustrations,  which  could  be  prolonged  indefinitely,  I as- 
sume that  you  are  satisfied  that  the  great  commercial  exchanges  are  able 
to  legislate  within  themselves  upon  important  commercial  questions. 
It  is  reasonable  to  suppose  that  holding,  as  they  do,  their  finger  upon 
the  commercial  pulse  of  the  nation,  they  are  best  able  to  detect  inju- 
rious influences,  and  to  suggest  remedies.  If  this  is  true,  legislation, 
which  is  to  have  a direct  bearing  on  all  commercial  questions,  should 
not  be  forced  upon  commerce,  but  should  rather  await  commercial 
suggestion.  Grave  errors  have  resulted  from  a failure  to  observe  this 
obligation  and  legislation,  and  legislative  inquiry  has  often  been 
misled  by  design  or  accident  into  hasty  action. 

With  great  respect,  j^ermit  me  to  state  that  I believe  this  is  a misfor- 
tune that  the  Legislature  of  the  State  of  New  York  has  not  been 
quite  free  from.  I believe,  gentlemen,  that  your  honoi-ablc  committee 
will  find,  from  this  investigation,  that  the  pernicious  effects  of  “ com- 
mercial corners”  and  sales  for  future  delivery  ” have  been  greath^ 
exaggerated.  I regret  that  I am  obliged  to  say  that  sometimes  the 
press  ” and  persons  desirous  of  attracting  the  public  ear,  make  start- 
ling statements  which  will  not  bear  investigation.  With  your  permis- 
sion I will  give,  in  closing,  three  illustrations  of  this  practice. 

One  is  taken  from  the  writings  of  a gentleman  very  common  in 
public  life,  for  whose  integrity  and  indomitable  energy  I have  a 
profound  respect  — I mean  the  Hon.  John  Kelly  — and  two  from 


470 


statements  made  to  this  committee  by  witnesses  who  considered  them- 
selves competent  to  suggest  remedies.  I wisli  it  to  be  distinctly  un- 
derstood that  I mean  no  disrespect  to  the  gentlemen  from  whom  1 
note.  I am  sure  the  one,  and  ! trust  the  others,  would  not  Avillingly 
mislead,  but  my  desire  is  to  point  out  how  easy  it  is  for  a man  of  in- 
fluence and  intelligence  to  be  himself  misled  into  making  very  mis- 
leading statements. 

The  Hon.  John  Kelly,  in  a comparatively  recent  letter  to  the  Anti- 
Monopoly  Conference  held  at  Albany,  makes  the  following  declara- 
tions : 

‘‘  1st.  Even  opium,  which  forms  the  basis  of  laudanum,  paregoric 
and  other  needed  medical  compounds,  and  which,  from  the  very  nature 
of  its  production  and  excessive  customs  duties,  is  expensive,  has  been 
made  the  subject  of  a ‘ corner.’  A few  Wall  street  speculators  formed 
a syndicate  to  control  the  imports,  and  the  [price  was  advanced  from 
$2.50  to  $6.00  per  pound,  compelling  the  inhabitants  of  tenemenis  to 
pay  the  full  price  of  a day’s  living  to  secure  enough  medicine  for  a 
child  that  was  dying  for  need  of  this  medicine.” 

Admitting  that  a corner  had  exaggerated  the  value  of  the  pound  of 
opium  to  $6.00  (the  doing  of  which  I condemn  as  heartily  as  Mr. 
Kelly),  that  does  not  justify  a balance  of  hi^  sensational  remark. 

A pound  of  opium  (Troy  weight)  contains  5,760  grains.  I am  in- 
formed by  a respectable  physician  that  one  grain  of  opium,  or  its  pro- 
duct, is  a dose  for  a child,  whether  it  lives  in  a tenement-houSe  or  a 
Fifth  avenue  mansion.  If  this  estimate  is  correct,  sufficient  opium 
for  ten  doses  would  only  cost  one  cent,  instead  of  the  unknown  quan- 
tity of  the  full  price  of  a day’s  living,”  as  Mr.  Kelly  has  it.  If  Mr. 
Kelly’s  ‘‘child”  should  unhappily  die  for  the  need  of  opium,  the 
blame  must  be  laid  at  some  other  door  than  the  opium  corner.  That 
would  be  only  fair  play.  It  may  be  a pleasure  to  know  that  the  opium 
corner  referred  to  proved  a disastrous  failure  to  all  who  were  inter- 
ested in  its  operation,  and  the  lesson  it  taught  is  expected  to  be 
permanent. 

Again,  in  the  same  letter,  Mr.  Kelly  writes : 

“ 2d,  The  same  condition  of  things  exist  in  bread-stufls,  and  even 
the  great  staff  of  life  is  made  a mere  plaything  of  selfish  speculators  of 
the  Produce  Exchange.  When  men  like  James  E.  Keene  are  crushed  . 
between  the  upper  and  nether  mill-stones  of  Wall  street  operators, 
they  rush  to  the  Produce  Exchange,  and  by  making  corners  in  wheat, 
flour  atid  provisions,  seek  to  retrieA^e  their  failing  fortunes.  Mr. 
Keene,  Amour  & (Jo.,  of  New  York  and  Chicago,  and  their  associates, 
liave  repeatedly  locked  uj)  all  available  bread-stuffs,  for  no  other  pur 
pose  than  to  create  an  artfi-licial  stringency  and  advance  the  price, 


471 


compelling  the  consuming  classes  to  pay  exorbitant  prices  for  ^the 
bread  which  nourishes  and  sustains  life.” 

This  would  be  a very  terrible  state  of  affairs  if  Mr.  Kelly  did  not 
again  draw  upon  his  imagination.  He  cannot  be  altogether  blamed 
for  not  knowing  better,  for  many  of  the' newspa])ers  of  that  day,  1880, 
when  the  corner  referred  to  was  being  operated,  were  equally  erro- 
neous in  their  statement. 

The  wheat  crop  of  that  year  was  estimated  at  nearly  500,000,000  of 
bushels,  and  the  corn  crops  at  1,700,000,000  of  bushels.  If  Mr.  Keene, 
therefore,  was  ‘^crushed”  in  Wall  street,  how  was  he  able  to  buy  up 
‘all  available  bread-stuffs,”  the  estimated  value  of  which  (the  wheat 
alone)  was  about  $050,000,000.  If  Mr.  Kelly  had  charged  that  Mr. 
Keene  and  his  associates  had  tried  to  destroy  the  trade  of  the  city  of 
Montreal  by  damming  up  the  falls  of  Niagara  with  a garden  spade,  it 
would  not  have  been  a more  ridiculous  cliarge  to  have  made  in  the  in- 
terest of  the  Canadian  government  against  these  alleged  offending 
corner  mongers.  But  Mr.  Kelly  further  states  that  the  effect  of  these 
purchases  upon  the  consuming  classes  compelled  them  to  pay  “ exorbi- 
tant prices  for  bread.” 

Now,  although  disapproving  of  this  corner  as  much  as  Mr.  Kelly, 
the  truth  must  be  told,  and,  therefore,  permit  me  to  show  you  the 
measure  of  its  effect  upon  the  “bread,”  which  Mr.  Kelly  so  truly  said, 

“ nourishes  and  sustains  life,” 

“ Mr.  Keene’s  corner  had  little  effect  in  New  York,  its  influence 
was  principally  confined  to  Chicago,  where  the  stock  never  exceeded 
a few  million  bushels,  and  for  the  time  being  it  possibly  gave  an  exag- 
gerated value  to  wheat  in  that  market  of  from  ten  t(f  fifteen  cents  a 
bushel.  But  as  soon  as  this  influence  extended  to  all  markets,  the 
result  would  be  as  follows,  while  the  corner  lasted  : Five  bushels  of 
wheat  will  make  about  120  loaves  of  bread,  the  usual  size.  The  ficti- 
tious value  of  the  wheat  in  those  120  loaves,  estimated  at  the  outside 
figures,  would  be  seventy-five  cents,  or  a little  over  half  a cent  per  loaf, 
or,  at  the  outside,  one  cent  added  to  the  cost  of  a bread  ration  of  an 
able-bodied  man,  for  one  day.  Truly,  corners,  and  aggressive  cor-  | 
ners,  especially,  are  demoralizing  ; but  their  effects  are  not  so  afflict- 
ing as  Mr.  Kelly  paints  them. 

By  Senator  Browning  : 

Q.  Is  that  a fact  that  the  price  of  wheat  was  not  increased  Over  fif- 
teen cents  a bushel  ? 

A.  No,  sir  ; from  ten  to  fifteen  cents. 

Q,.  When  did  the  corner  commence  ? 

A.  When  you  come*  to  speak  of  actually  a corner,  there  was  no  be- 


472 


ginning  to  the  corner ; the  corner  exaggerated  the  price  for  a short 
time  there,  but  I refer  to  that  a little  furtiier  on,  showing  you  the 
exact  facts  in  another  general  statement  which  is  made  here. 

The  witness  then  continued  reading  as  follows  : 

My  second  illustration  is  from  the  sayings  of  Mr.  F.  I>.  Thurbcr 
who  has  so  lately  testified  before  your  committee,  and  who  appears  to 
have  very  greatly  exaggerated  ideas  ; I liave  seldom  seen  a statement 
of  the  very  many  with  which  he  is  credited  that  would  bear  investi- 
gation or  which  could  be  followed  to  any  logical  conclusion. 

Take  for  instance,  as  an  example,  the  remedy  he  has  suggested  to 
you  as  a corrective  of  the  baneful  effects  of  dealing  in  products  of  fu- 
ture delivery;  say  would  prohibit,”  says  Mr.  Thurl)er,  ‘^arnan  sell- 
ing what  he  did  not  possess,  excepting  in  the  case  of  a farm  or  factory, 
where  the  growing  crop  for  regular  product  furnished  a regular  basis 
in  legitimate  trade  for  such  transactions  ; in  short,  I would  make 
actual  delivery  a basis  for  a lawful  transaction.” 

Now,  the  meaning  of  this  (if  it  really  has  any  sense  in  it  at  all)  is 
that  he  would  permit  the  farmer  to  take  the  chances  and  sell  what  he 
had  not  got ; but  he  has  forgotten  to  provide  the  farmer  with  a pur- 
chaser, unless  he  intended,  by  inference,  that  the  purchaser  was  to  be 
another  farmer  ; but  assume  for  a moment  that  Mr.  Thurber  did  intend 
that  the  farmer  might  sell  for  future  delivery  that  which  he  did  not 
possess  to  a merchant,  then  the  merchant  niust  sit  down  and  wait  till 
the  farmer  gets  it,  because  Mr.  Thurber  says,  “I  would  make  actual 
delivery  a basis  for  a lawful  transaction,”  except  for  a farmer;  but 
suppose  the  farmer’s  crop  failed  and  he  never  did  get  what  he  sold 
and  promised  t(^  deliver  at  a future  day,  what  then  ? Why  Mr.  Thur- 
ber would  say,  ‘‘  Oh,  the  wicked  merchant  has  cornered  the  farmer  ; put 
the  rascal  in  Coventry  for  daring  to  take  advantage  of  the  honest 
farmer.” 

But  examine  Mr.  Thurber’s  standpoint  from  another  standpoint 
intelligent  forethought  is  an  essential  element  in  commerce;  Mr- 
Thurber  is  a grocer  having  a large  trade,  and  Messrs.  A.  A.  Low  & 
Bro.  are  importers  of  teas  y Mr.  Thurber  finds  that  the  demands  of 
his  customers  upon  his  stock  of  tea  will  exhaust  it  in  three  months 
unless  he  provides  for  its  replenishment;  what  is  more  natural  and 
legitimate  than  for  him  to  call  at  Mr.  Low’s  office  and  enter  into  a 
negotiation  for  the  purchase  of  1,000  chests  to  be  delivered  prior  to 
the  date  of  his  expected  need;  but  perhaps  Mr.  Low  may  say,  I have 
not  the  tea  you  want  now  in  stoeks,  but  I expect  to  have  it  soon,  and  I 
will  sell  you  1,000  chests  deliverable  in  sixty  days  from  this  date  ; as 
this  suits  Mr.  Tliurber’s  business  equirements  he  accepts  Mr.  Low’s 
offer  and  the  trade  is  consurnTnated. 


473 


By  Senator  Browning: 

Q.  Do  you  know  that  to  be  the  fact  ? 

A.  This  is  a hypothetical  case  I am  ‘stating,  what  has  been  done 
every  day. 

Q.  It  is  being  done  every  day  ? 

A.  It  is  being  done  with  my  own  firm  every  day.  I only  give  you 
teas  instead  of  grain,  and  the  same  system  is  going  on  all  over  the  ^ 
country. 

The  witness  then  continued  reading  as  follows  : 

I cannot  say  what  Mr.  Thurber’s  ideas  of  such  action  on  the  part  of 
Mr.  Low  would  be,  but  I am  positive  that  Mr.  Low  would  have  no 
idea  that  he  and  Mr.  Thurber  had  committed  the  sin  of  gambling. 

But  let  us  follow  this  transaction  a little  farther.  Before  the  sixty 
days  come  around,  suppose  that  tea  has  advanced  in  value  and  Mr. 
Thurber  finds  that  owing  to  the  advance  the  demand  for  tea  from  his 
customers  has  been  lessened  and  he  now  believes  that  500  and  not 
1,000  chests  will  meet  his  trade  requirements.  Should  he  be  debarred  . 
the  right  to  sell  the  surplus  500  chests  to  a brother  grocer  wlio  might 
need  them  or  even  back  again  to  Mr.  Low  if  that  gentleman  desired 
them  ? 

Permit  me  now  to  call  your  attention  to  Mr.  Thurber’s  statement 
relative  to  petroleum  and  the  Standard  Oil  Co. 

Petroleum  is  a stable,  says  he,  ranking  third  in  the  list  of  our 
nation’s  exports ; here  are  export  values  taken  from  the  Chamber  of 
Commerce  reports  for  1881  : 


L Breadstuffs 

2.  Cotton 

3.  Provisions. 

4.  Oils 


$270,332,519 

247,695,749 

145,793,939 

39,077,133 


Petroleum  is  not  a third  Ibut  a modest  fourth  as  shown  by  these 
figures. 

Of  the  total  exports  of  $39, 000, 000, over  $30,000,000  was  shipped  from 
the  port  of  New  York  alone,  in  a large  measure  owing  to  the  fact  that 
the  Standard  Oil  Company  had  located  itself  in  this  city  instead  of 
some  other  sea-board  port,  where  Mr.  Thurber  would  have  driven  it,  if 
(as  I believe)  he  could  have  had  his  way  in  times  gone  by. 

Equally  erroneous  is  Mr.  Thurber’s  statement  that  the  Standard  Oil 
Company  “ Through  its  speculative  manipulations  it  has,  within  a few 
weeks,  more  than  doubled  the  price  of  crude  oil,  and  its  profits  thereby 
iire  variously  estimated  at  from  $20,000,000  to  $40,000,000.” 

If  Mr.  Thurber  has  studied  the  subject  at  all,  he  well  knows  that  :i. 
short  time  before  the  rapid  advance  in  crude  oil,  there  was  a very  rapid 
GO 


474 


decline,  caused  by  the  discovery  of  what  at  first  promised  to  be  very 
prolific  oil  territory;  when  it  was  found  that  this  expectation  was 
delusive,  oil  rebounded  back*to  its  former  value  and  some  thirty  to 
forty  cents  per  barrel  be3^ond  it,  before  the  excitement  culminated; 
I believe  the  Standard  Oil  Company  had  just  as  little  to  do  with  the 
advance  as  Mr.  Thurber,  but  even  if  it  had,  if  he,  Thurber,  was  a 
• lover  of  fair  play,  he  would  have  first  credited  that  comjiany  with 
the  value  of  the  decline  before  he  debited  it  with  the  sum  total  of  the 
advance  and  tried  to  make  you  believe  that  it  was  wholly  due  to  it^ 
unprincipled  action. 

I profess  to  know  little  of  the  oil  interests;  the  production  is  about 
70,000  to  75,000  barrels  per  day ; the  consumption  the  world  over  is 
from  55,000  to  60,000  barrels  per  day,  leaving  a daily  surplus  to  be 
cared  for  of  from  15,000  to  20,000  barrels. 

The  stock  on  hand  in  the  United  States  to-day  is  estimated  at 
35,000,000  of  barrels,  and  it  has  accumulated  to  this  enormous  figure 
in  the  past  five  years  or  thereabouts. 

It  is  a most  important  element  in  the  commerce  of  Uew  York,  and 
as  I have  before  stated  gives  employment  to  from  1,750  to  2,000  vessels 
from  this  port  each  year  ; it  is  estimated  that  the  disbursements  of  a 
single  vessel  amount  to  about  $3,000,  so  that  the  sum  of  about 
$6,000,000  is  annually  received  from  the  source  alone  by  the  different 
interests  dependent  upon  vessels’  disbursements  for  their  livelihood. 

In  caring  for  this  daily  surplus  and  this  enormous  increasing  stock, 
I believe  the  Standard  Oil  Company  and  its  Associate  Storage  and  Pipe 
Line  Companies  are  eminently  fitted ; I know  nothing  about  their 
profits  or  their  losses,  but  I will  stake  my  reputation  for  ordinary 
intelligence,  that  if  you  will  call  the  officers  of  the  Standard  Oil  Com- 
pany before  you,  you  will  obtain  much  valuable  information  relative 
to  the  commercial  value  of  sales  for  future  delivery,  and  establish 
^ the  fact  that  there  is  scarcely  an  atom  of  fairness  in  Mr.  Thurber’s 
statements  concerning  their  company. 

My  third  illustration  is  taken  from  the  testimony  (given  before  this 
committee)  of  Mr.  Pierce,  the  commercial  editor  of  the  Commercial 
Advertiser”  of  Yew  York  as  reported  in  the  Yew  York  “ Trilmne” 
of  the  2Sth  May  last. 

Ilarland  Pierce,  commercial  editor  of  the  Commercial  Advertiser  ” 
was  the  first  witness.  He  described  at  considerable  length  the  making 
of'^' corners,”  and  said : The  tendency  of  ^corners’  is  to  enhance' 
prices,  and  this  is  likely  to  bring  out  grain  or  whatever  is  being 
‘ cormu-ed  ’ ; this,  in  time,  tends  to  depress  prices.  The  ^corner 
formed  by  James  Keene  and  others  in  1870-80  increased  the  price  of 
wheat  to  $I.r.0.  'Phis  ])rice  was  kept  up  during  nearly  the  entire  crop 
year,  causing  ships  to  be  tied  up  for  two  and  three  mouths.  The 


475 


clique  finally  closed  out  the  remainder  of  their  holdings,  about  10,- 
000,000  bushels,  at  an  average  of  ll.OO  per  bushel.  The  amount  paid  for 
the  wheat  by  the  consumers  between  this  price,  -‘Jl.OO,  and  the  higher 
price,  $1.60,  was  a loss  to  the  country.  The  amount  lost  by  the  clique 
at  the  end  was  away  up  in  the  millions.  The  high  price  of  wheat  for 
the  last  few  months  has  been  due  in  good  part  to  the  ^ corner  ’ manipu- 
'lated  by  several  large  operators.’’ 

I desire  to  direct  your  attention  specially  to  three  statements  of  Mr. 
Pierce’s : 

1.  The  ‘‘corner”  increased  the  price  to  $1.60  per  bushel. 

2.  This  price  was  kept  up  during  nearly  the  entire  crop  year,  causing 
ships  to  be  tied  up  for  two  or  three  months. 

3.  The  amount  paid  for  wheat  by  the  consumers  between  “this 
price,  $1.00,  and  the  higher  price,  $1.60,  was  a loss  to  the  country.” 

Mr.  Pierce’s  first  statement  is  correct  if  he  intended  his  questions  to 
mean  number  two  red  winter  wheat  (the  most  valuable  general  ship- 
ping grade  of  wheat)  and  the  place  of  quotation  New  York  where  it 
maintained  the  higher  value.  In  the  month  of  December  — about  the 
time  of  the  making  of  the  corner  in  New  York  — for  just  four  days, 
namely,  the  24th,  26th,  27th  and  29th,  wheat  of  this  quality  and 
grade  sold  in  New  York  respectively  at  $1.60,  $1.60  1-2  and  $1.60  1-4, 
at  no  other  time  throughout  the  year  (that  is  the  crop  year  from  1st 
September,  1879,  to  1st  September,  1880)  can  I find  a record  of  $1.60 
per  bushel  being  reached  except  in  the  four  instances  stated  above.  I 
give  herewith  the  highest  and  lowest  quotations  of  each  month  during 
the  twelve  months  of  1879-80  : 

September,  1879,  $1.09  3-4  to  $1.30. 

October,  1879,  $1.28  to  $1.51. 

November,  1879,  $1.35  1-2  to  $1.48  1-2. 

December,  1879,  $1.48  1-2  to  $1.60  1-2. 

January,  1880,  $1.39  to  $1.58  3-4. 

February,  1880,  $1.43  1-2  to  $1.58. 

March,  1880,  $1.37  1-2  to  $1.50. 

April,  1880,  $1.26  to  $1.40  1-2. 

May,  1880,  $1.27  1-4  to  $1.46  1-2. 

June,  1880,  $1.15  to  $1.33. 

July,  1880,  $1.02  3-4  to  $1.27. 

August,  1880,  $1.05  to  $1.09  1-2. 

This  is  for  the  whole  crop  year  ; I begun  at  $1.09f  for  the  month 
of  September  which  was  the  new  crop  year  and  managed  to  sell  as. 
high  as  $1 .60|  in  December ; but  $1.60  was  not  kept  up  the  whole 
crop  year,  it  was  only  four  days. 


47G 


The  witness  then  continued  reading  as  follows: 

Second  statement  is,  viz.  : That  this  price  (11.60)  was  kept  up 
nearly  the  whole  crop  year. 

The  average  for  the  year  was  really  about  $1.32,  and  that  was  the 
intrinsic  value  of  the  wheat,  not  on  account  of  the  ‘^corner,”  which 
was  only  operative  in  New  York  for  a short  period,  but  }>ecause  of  the 
partial  failure  of  the  grain  crop  in  Great  Britain  and  tlie  Continent 
which  caused  an  active,  and  at  times  an  intense,^  demand  for  our  sur- 
plus. This  demand  began  to  be  developed  soon  after  the  opening  of 
the  crop  year  in  September,  1879,  when  the  price  of  No.  2 red  wheat 
was  about  $1.10  per  bushel  ; but  during  that  month  it  advanced  to 
$1.30  and  the  month  following  to  $1.50  and  held  that  advance  with 
slight  fluctuations  till  the  following  April,  when  the  price  fell  off  to 
about  $1.35  for  that  month  and  May,  and  to  an  average  of  $1.25  for 
June,  $1.15  for  July  and  $1.08  for  August  after  the  crop  of  1880-1881 
had  been  assured.  As  a proof  that  this  advance  was  caused  by  legiti- 
mate demand  and  not  by  corner  operations,  as  Mr.  Pierce  states,  I give 
you  the  quantity  of  wheat  and  flour  exported  from  New  York  for  the 
crop  years  of  1877-8,  1878-79,  1879-80,  1880-81. 


AVheat  exported  in 

1877- 78 

1878- 79 

1879- 80 

1880- 81.. 

Flour  exported  in 

1877- 78 

1878- 79 

1879- 80 

1880- 81 


46,305,410  bushels 
60,526,402 
67,706,602 
50,773,822 

2,443,603  barrels. 
3,740,755 
4,113,854 
5,174,976 


The  export  of  wheat  and  flour  taken  together  during  the  crop  year 
1879-80  (Mr.  Pierce’s  corner  year)  was  the  largest  ever  made  before 
or  since  in  the  history  of  the  United  States,  and  yet  Mr.  Pierce  would 
have  you  believe  that  the  grain  that  year  was  held  above  the  reach  of 
export,  and  that  ships  were  tied  up  to  the  docks  waiting  cargoes  in 
consequence. 

To  show,  however,  that  this  demand  was  not  confined  to  the  city  of 
New  York,  I give  the  declared  values  of  all  exports  of  breadstuffs  from 
the  United  States  for  the  same  year,  which  is  equally  convincing. 
Exports  in  1877-78  $181,811,794  00 

1 878- 79  208,615,057  00 

1879- 80  288,036,835  00 

1880- 81  270,332,519  00 


477 


t 

Showing  that  the  declared  value  was  a great  deal  larger. 

With  regard  to  Mr.Pierce’s  third  statement  it  is  so  evidently  erroneous' 
that  I will  not  delay  you  longer  by  pointing  out  its  inconsistencies  — - 
what  I have  said,  and  it  is  all  based  upon  Mr.  E.  IL  Walker’s  (the 
talented  statistician  of  the  New  York  Produce  Exchange)  reports, 
must  convince  you  that  Mr.  Pierce’s  statements  should  have  no  weight 
with  you  whatever. 

Instances  like  these  could  be  enumerated  indefinitely,  but  it  would 
be  useless  to  illustrate  further. 

In  conclusion,  I respectfully  submit  two  suggestions. 

First.  That  commerce  can  best  solve  the  problem  essential  to  its 
own  well-being  without  undue  legislative  interference. 

Second.  That  the  commercial  value  of  purchases  and  sales  for  fu- 
ture delivery”  wmuld  be  enhanced  if  a law  existed  withholding  legal 
effect  to  all  such  contracts  unless  an  original  margin  of  not  less  than 
ten  per  cent  was  deposited  by  each  party  (or  may  be  agreed  upon)  and 
the  saiae  to  be  kept  good  against  fluctuations  of  market  value,  upon 
written  notice  pending  the  maturity  of  such  contracts.  ^ 

By  Senator  Botd: 

Q.  What  did  you  say  your  business  consisted  chiefly  in  ? 

A.  We  are  receivers  of  all  western  products.  It  is  almost  entirely 
a commission  business. 

Q.  You  are  a member  of  the  Produce  Exchange  ? 

A.  Yes,  sir. 

Q.  And  how  long  have  you  been  a member? 

A.  I think' I have  been  a member  of  the  Produce  Exchange  since 
1858. 

Q.  What  you  have  already  stated  in  regard  to  dealing  in  futures, 
you  have  stated  entirely  concerning  the  legitimate  transactions  in  pro- 
duce ? 

A.  And  also  what  I deem  illegitimate.  If  you  notice  we  have  really 
several  names  for  a corner.  I call  an  aggressive  corner  a very  illegiti- 
mate operation. 

Q.  I refer  to  sales  for  future  delivery  ? 

A.  Yes,  sir,  those  are  all  legitimate. 

Q.  Do  you  know  that  a system  of  sales  for  future  delivery  is  carried 
on  to  a considerable  extent  which  is  illegitimate  ? 

A.  No,  I do  not.  I know  nothing  about  that  system  of  what  they 
call  puts  and  calls. 

Q.  You  do  not  know  any  thing  about  that  ? 

A.  I never  had  any  thing  to  do  with  it,  and  I never  knew  that  my 
Arm  had  any  thing  to  do  with  it,  and  I do  not  think  it  is  recognized  on 
our  Produce  Exchange  ; I do  not  think  it  exists  there. 


478 


I 

By  Senator  Browking: 

Q.  What  don’t  exist  there  ? 

A.  The  system  of  puts  and  calls.  If  it  does,  it  is  not  recognized  at 
all.  We  have  no  rules  for  it.  No  recognition  of  it  is  given  ? 

By  Senator  Boyd: 

Q.  You  have  rules  regulating  sales  on  margins,  have  you  not  ? 

A.  Yes,  sir  ; those  are  the  sales  for  future  delivery  on  purchases 
for  future  delivery. 

Q.  Is  there  not  a call  made  every  day  on  the  Produce  Exchange? 

A.  Certainly. 

Q.  Do  you  believe  that  that  is  a legitimate  way  of  carrying  on  busi- 
ness ? 

A.  I do,  most  decidedly. 

Q.  Has  that  any  thing  to  do  with  the  system  of  puts  and  calls  to 
which  you  have  just  referred? 

A.  No,  sir;  nothing  whatever.  If  you  like  I will  explain  t^ie  object 
of  that^  it  is  to  give  in  an  official  way  to  every  member  an  opportu- 
nity of  L)uying  or  selling  in  a public  manner.  For  instance,  I wish  to 
sell  a boat-load  of  grain  ; it  may  be  in  the  canal,  it  may  be  in  Chicago, 
it  may  be  anywhere,  I don’t  know  where  it  is  ; on  the  call  at  certain 
hours,  we  have  a man  who  acts  like  an  auctioneer,  and  one  man  bids 
and  the  other  man  sells  in  a public  way. 

By  Senator  Browning  : 

Q.  The  system  of  puts  and  calls  you  consider  illegitirnate  ? 

A.  I do,  entirely  so,  and  as  I said  before,  I don’t  believe  it  is  recog- 
nized on  the  Exchange,  and  I do  not  believe  it  is  operated  on  the 
Exchange;  if  it  is,  it  is  in  a suh-rosa  manner;  we  have  no  rules  to 
recognize  it. 

By  Senator  Boyd  : 

Q.  Will  you  please  explain  what  that  system  of  puts  and  calls  is,  to 
which  you  refer  as  illegitimate  ? 

A.  In  my  explanation  I would  only  have  to  give  you  my  idea  of  it, 
never  having  operated.  I think  it  means  a person  giving  a certain 
amount  of  money  to  another  person  for  the  ])rivilege  of  giving  him  at 
a certain  date  the  thing  that  is  named  in  the  contract.  It  is  not  a 
sale,  it  is  not  a purchase,  it  is  a privilege  to  deliver,  and  it  ap])oars  to 
me  to  ])e  simply  a gambling  transaction,  just  exactly  a,s  a bet  would  be 
upon  a horse-race.  If  a horse  arrives  at  the  goal  first,  the  man  who 
has  nanicil  him  lias  the  ])rivi1('ge  of  receiving  fi-om  another  the  amount 
of  money  that  has  1)cen  named.  That  is  the  meaning  of  that,  but  it  is 


479 


different  from  a sale  for  future  delivery.  Take  my  own  business  foi< 
instance ; I am  on  the  Produce  Exchange ; to-day,  when  business  is 
active,  we  will  receive  a telegram  from  Mr.  Jones,  who  perhaps  is  a 
shipper  of  grain  and  a correspondent  of  ours  in  Kentucky,  who  says. 
Sell  two  cars  of  grain  to  arrive  next  December.”  We  do  not  tele- 
graph back  to  know  whether  he  has  got  the  grain  ; we  understand  he 
has  when  he  desires  us  to  sell  it.  When  we  sell  it,  we  mean  to  deliver 
it.  We  give  a contract  which  says  we  will  deliver  it,  and  we  sell  those 
two  cars  of  grain  or  those  ten  cars  of  grain,  as  the  case  may  be,  with- 
out waiting  a moment — just  as  rapidly  as  we  can  if  we  can  find  a 
purchaser  for  it.  The  next  telegram  may  be  from  a firm  in  Toledo,  say 
the  firm  of  Farrington  & Casey,  with  whom  we  have  large  transac- 
tions. They  say,  Sell  50,000  bushels  of  grain  for  delivery  in  Janu- 
ary.” We  sell  those  50,000  bushels  of  grain  in  a moment,  as  soon  as 
we  can  find  a purchaser,  and  telegraph  back  that  we  have  sold  it.  We 
understand  that  they  will  put  us  in  a position  to  deliver;  we  under- 
stand that  the  man  who  buys  from  us  will  take  it  when  we  deliver  it 
to  him,  provided  it  is  in  the  terms  of  the  contract. 

Q.  That  is  in  the  legitimate  course  of  the  business  ? 

A.  Yes,  sir ; and  the  trading  in  that  way  is  enormous  at  times  ; at 
other  times  when  the  markets  are  not  active,  it  is  comparatively  light, 
but  I should  say  it  would  amount  to  hundreds  of  thousands  of  bushels 
every  day,  not  with  my  own  firm  but  with  the  members  of  the  Ex- 
change. 

Q.  Do  you  believe  it  is  the  duty  of  the  people  through  the  Legisla- 
ture to  endeavor  to  suppress  the  illegitimate  system  of  puts  and  calls 
to  which  you  have  referred  ? 

A.  I do,  just  exactly  as  I would  suppress  gambling. 

Q.  Have  you  any  thing  to  suggest  which  might  aid  the  committee 
in  preparing  a bill  for  that  purpose  ? 

A.  I understand  there  was  a law  against  gambling  now  in  existence, 
and  it  would  be  merely  an  enforcement  of  that  law  that  I would  apply 
to  the  puts  and  calls ; I do  not  think  you  could  make  it  stronger. 

Q.  Suppose  the  gambling  law  should  not  be  strong  enough  to  reach 
that  ? 

A.  I think  I would  mention  it  by  name  in  the  bill,  puts  and  calls.’’ 

Q.  Then  you  would  amend  the  gambling  bill  by  inserting  the  words 
“ puts  and  calls  ” and  all  similar  transactions  ? 

A.  Yes,  sir  ; it  is  a matter  of  intent ; when  we  sell,  we  sell  wdth 
the  expectation  of  delivery ; when  we  receive  an  order  to  sell  we  can’t 
tell  what  the  intent  of  the  man  who  telegraphs  that  order  is,  for  he  is 
away  a thousand  miles;  we  understand  his  intent  is  to  do  exactly  as 
we  do  for  him  ; we  do. not  understand  that  he  is  gambling  at  all;  we 


480 


•••do  not  understand  that  wo  ought  to  interpose  an  objection  to  doing 
what  he  directs  us  on  the  supposition  that  he  is  gambling. 

Q.  What  percentage  of  your  business  is  of  that  nature  ? 

A.  I should  think  that  within  the  last  five  years  the  percentage  of 
our  business  in  selling  for  future  delivery  or  against  property  to  arrive 
was  double  or  treble,  perhaps  greater  than  that — I have  not  looked 
closely  into  that  — but  double  or  treble  what  it  was  prior  to  that  period, 

Q.  Then  that  system  of  trade  has  increased  ? 

A.  Very  much  ; it  has  increased  largely  since  we  entered  into  the 
arrangement  with  the  receivers  of  grain  to  have  their  grain  graded  and 
•since  the  elevators  were  built  at  the  different  terminal  points  of  the 
city  — the  railroad  terminal  points  of  the  city. 

Q.  Would  you  call  that  system  of  doing  business  a speculative  sys- 
tem ? 

A.  It  affords  more  opportunities  for  speculation  than  the  ordinary 
way  of  waiting  until  the  property  was  received;  but  it  is  a much 
greater  safeguard  in  the  way  of  operating  the  business  than  the  old 
svstem,  which  required  the  shipper  of  the  goods  to  have  his  property 
stand  at  risk  during  the  time  of  transportation.  From  Chicago  that 
would  be  thirty  days.  The  ordinary  fluctuations  in  the  market  some- 
times during  that  period  would  be  very  great.  This  system  now  of 
selling  before  its  arrival  protects  him  and  enables  him  to  know  exactly 
where  he  stands,  almost  from  the  time  of  the  inception  of  his  transac- 
tion. Before,  he  didn’t  know  until  the  termination  of  the  thirty  days, 
until  the  property  was  sold. 

Q.  What  proportion  do  your  sales  in  which  the  property  is  actually 
delivered  bear  to  your  sales  which  are  merely  speculative  as  you  have 
described  them  ? 

A.  I do  not  call  these  merely  speculative  sales.  ‘ I do  not  sell  them 
any  more  speculative  sales  than  if  the  property  was  delivered. 

Q.  Then  the  two  sales  such  as  you  have  described — what  propor- 
tion to  the  actual  amount  of  business  done  in  your* house  ? 

A.  I have  not  looked  into  that  question,  but  I should  think  that  it 
would  probably'amount  to  four  times,  three  or  four  times,  the  amount 
of  property  actually  delivered.  Perhaps  more.  I would  like  to  explain 
the  reason  why.  When  my  firm  makes  a sale  for  any  one  of  its  cor- 
respondents or  makes  a purchase  for  any  one  of  its  correspondents,  it 
gives  its  own  name.  It  does  not  give  the  name  of  the  correspondent. 
Now  as  Ave  are  constantly  receiving  orders  to  buy  and  orders  to  sell, 
we  very  often  buy  and  sell  from  the  parties  whom  we  have  previously 
traded  with  in  New  York  ; in  other  words,  if  we  buy  to-day  from 
Mr.  A.  10,000  bushels  of  wheat,  in  the’  fulfillment  of  some  other  order 
to  sell,  probably  we  might  sell  to  Mr.  A.  the  same  number  of  bushels  of 


481 


wheat  although  we  bought  it  for  a party  when  we  bought  it  from  A, 
When  we  were  ordered  to  sell  we  might  find  Mr.  A.  wanting  to 
buy  and  we  would  sell  to  him.  Therefore  the  party  we  had 
dealt  with  would  hold  a contract  from  David  Dows  & 
Co.,  for  10,000  bushels  of  wheat  bought  and  another  contract 
for  10,000  bushels  of  wheat  sold,  and  those  contracts  would 
ring  ('Ut.  There  would  be  no  necessity  for  delivering  that  wheat  there, 
because  it  would  be  handing  it  back  to  us,  yet  both  transactions  were 
different  and  for  different  parties.  The  man  we  bought  originally  for 
thus  deals  with  the  man  we  sold  for,  and  the  person  with  whom  we  had 
made  the  transaction  in  New  York  would  be  out  of  the  transaction 
entirely.  I could  illustrate  it  perhaps  more  plainly  by  taking  you 
two  gentlemen.  Suppose  I receive  from  Senator  Boyd  an  order  to 
buy  10,000  bushels  of  grain  and  I buy  it  from  the  firm  of  Armour  & 
Co.,  in  New  York.  Suppose  Senator  Browning  sends  me  an  order  a 
day  or  two  after  to  sell  10,000  bushels  of  grain  for  him.  I go  in  the 
open  market  and  sell  it  and  I find  Armour  has  been  the  purchaser  of 
it.  I stand  in  the  position  of  having  bought  for  Senator  Boyd  10,000 
bushels  and  having  sold  for  Senator  Browning  10,000  bushels  and 
both  were  transacted  by  Armour  & Co.  As  far  as  they  are  concerned 
both  transactions  match.  But  you,  gentlemen,  stand,  one  as  having 
10,000  bushels  bought  and  the  other  as  having  10,000  bushels  sold,  so 
that  Senator  Boyd  delivers  the  grain  that  I have  sold  for  him  and  I receive 
it  and  hold  it  for  the  account  of  Senator  Browning. 

By  Senator  Boyd  : 

Q.  So  the  firm  is  canceled  in  the  transaction  ? 

A.  The  firm  to  you  two  gentlemen  is  bound,  but  the  person  who 
originally  bought  the  10,000  bushels  is  out  of  it,  because  your  friend 
there  takes  his  place  so  far  as  he  is  concerned  although  we  are 
responsible  to  both.  It  is  just  exactly  like  a clearance  house  for 
banks.  To  day  you  draw  upon  the  Mechanics’  Bank  and  I draw  upon 
the  Mechanics’  Bank,  and  the  Mechanics’  Bank  has  deposited  the  checks 
of  this  gentleman  who  draws  on  another  bank.  Instead  of  passing 
the  money  for  those  different  checks  they  go  to  a clearance-house  and 
they  put  the  checks  together  and  they  balance  the  drafts  upon  the 
different  banks  and  they  strike  a balance  and  they  only  pay  the  differ- 
ences over  which  is  perfectly  legitimate  and  a great  facility  in  assist- 
ing the  large  volume  of  business. 

By  Senator  Browniitg  : 

Q.  Is  your  house  interested,  directly  or  indirectly,  in  the  profits  of 
the  Standard  Oil  Company  ? 

A.  No,  sir,  none  whatever;  never  had  any  thing  to  do  with  it. 

61 


482 


Q.  Were  you  interested,  directly  or  indirectly  with,  Mr.  Keene  in  his 
operations  in  1879  or  1880  ? 

A.  We  bought  some  wlieat  from  Mr.  Keene  and  sold  some  for  him. 

Q.  So  you  were  interested  to  some  extent  in  that  corner  ? 

A.  No,  none  whatever  in  the  corner. 

Q.  I speak  more  particularly  of  that  period  when  he  obtained  con- 
trol of  a large  amount  of  grain  in  the  West  and  held  it  ? 

A.  We  made  some  purchases  for  Mr.  Keene,  but  they  were  compara- 
tively moderate. 

Q.  You  stated  'that  when  you  receive  an  order  from  some  one  in 
Kentucky  to  sell  two  car-loads  of  oats  we  will  say,  or  grain  of  any 
description,  that  that  sale  and  that  sort  of  business  is  carried  on  very 
extensively,  and  that  you  expect  to  deliver  the  grain  ? 

A.  Y^es,  sir. 

Q.  What  is  the  fact  — that  question  the  Senator  has  put  you  in  an- 
other form  when  he  asked  you  what  proportion  of  your  sales  resulted 
in  actual  delivery  — I put  it  in  this  other  form,  what  amount  of  grain 
do  you  actually  deliver,  what  proportion,  as  a result  from  those  sales  ? 

A.  I should  think  sales  of  that  kind,  nearly  all. 

Q.  Nearly  all  are  delivered  ? 

A.  Yes,  sir,  that  is  from  the  small  country  towns,  . 

Q.  Can  you  tell  the  committee  what  proportion  of  wheat  usually 
grades  as  No.  1 ? 

A.  A very  small  proportion,'  because  No.  1 wheat  is  a quality  of 
wheat  that  is  not  generally  saleable,  not  so  active  or  saleable  as  No.  2 
wheat,  therefore  they  take  a poorer  quality  of  wheat  and  mix  it  with 
better  quality  and  make  the  saleable  grade,  which  is  No.  2;  that  is  the 
grade  ; that  is  the  great  shipping  grade ; the  great  grade  that  is  called 
for  abroad. 

Q.  What  proportion  of  the  grain  is  grade  No.  2 ? 

A.  I should  think  in  a year  when  the  crop  is  fairly  harvested  ninety 
per  cent,  perhaps  more,  will  be  of  grade  No.  2. 

Q.  And  what  proportion  of  the  grain  is  No.  3 ? 

A.  No.  3 and  rejected  would  be  the  balance  ; a very  large  proportion 
of  the  balance  would  be  No.  3,  and  a very  smajl  proportion  would  be 
rejected  ; if  the  crop  was  harvested  during  very  wet  weather  then  those 
proportions  would  change. 

Q.  How  many  hands  or  houses  have  you  knoAvn  a contract  for  wheat 
to  pass  through  ? 

A.  One  contract  and  settlement  ? 

Q.  Yes  ? 

A.  1 do  not  know  of  so  many.  I do  not  think  I remember  of  more 
than  eight  or  ten  in  wlieat,  but  I have  known  in  lard  of  one  lot  of 


483 


two  hundred  and  fifty  tierces  of  lard  settling,  I shoula  think,  thirty  or 
thirty-five  different  contracts.  I remember  seeing  it  as  a curiosity. 

By  Senator  Boyd  : 

Q.  Without  any  actual  delivery  of  the  goods  ? 

A.  The  system  prevents  the  actual  delivery  to  each  person  and  pass- 
ing the  money  between  them.  It  is  merely  for  convenience.  The  old 
system  was  to  take  and  p^ss  the  lard  to  each  person  and  to  receive  pay- 
ment, but  for  convenience  we  have  a system  of  drawing  an  order  upon 
the  first  man,  and  that  performs  its  obligation  all  through,  and  then 
at  the  end  the  person  with  whom  that  will  probably  rest  brings  that 
order  in  to  the  person  issuing  it,  and  he  makes  the  payment  and 
delivery.  It  avoids  a large  amount  of  clerical  labor  and  a good  deal  of 
risk. 

Q.  How  many  houses  have  you  known  a contract  for  pork  to  pass 
through  ? 

A.  The  speculation  in  pork  and  trading  in  pork  in  the  city  of  New 
York  is  mostly  confined  to  an  actual  jobbing  trade,  and  therefore  I 
have  not  seen  it  often. 

Q.  Can  you  state  how  many  times  cotton  has  passed  through  differ- 
ent houses  ? 

A.  No,  sir,  I do  not  know  that.  I know  very  little  of  the  cotton 
market,  although  we  sometimes  do  some  business  in  cotton. 

Q.  Do  you  know  what  the  brokerage  on  wheat,  pork  and  lard  is  ? 

A.  Yes,  I know  the  brokerage  on  lard  is  two  cents  a tierce,  upon 
pork  two  cents  a barrel,  and  upon  grain  different  prices  attach  to  it. 
Some  brokers  charge  a half  a cent  a bushel  and  others  a quarter  of  a 
cent. 

Q.  Is  that  a charge  on  the  product? 

A.  Yes,  sir. 

Q.  Does  your  firm  deal  in  option  contracts  ? 

A.  We  deal  in  purchasing  for  future  delivery,  if  that  is  what  you 
call  option  contracts. 

Q.  That  is  what  you  call  option  contracts,  is  it  not  ? 

A.  I think  it  is. 

Q.  Who  has  the  privilege  on  options,  the  buyer  or  the  seller  ? 

A.  It  depends  on  the  way  the  contract  is  drawn  ; it  you  wish  to  buy 
from  me  a quantity  of  wheat  for  future  delivery,  if  the  option  rests 
with  me  as  to  the  time  of  delivery,  the  price  would  be  a little  cheaper 
than  if  the  option  rested  with  you,  for  this  reason,  that  if  the  option 
rests  with  you  to  call  upon  me  for  the  wheat,  I must  have  the  wheat 
on  hand  and  hold  it  during  the  month  of  that  option  and  give  it  to 
you  the  moment  you  call  for  it.  Therefore  I must  have  it  on  hand  on 


484 


the  first  day  of  the  month,  because  you  have  a right  to  call  for  it,  and 
I may  have  to  hold  it  till  the  last  day,  and  all  the  expenses  attending 
that  holding  to  the  last  day  would  be  counted  as  a portion  of  the  cost 
of  the  grain  to  you,  whereas,  if  you  bought  it  at  my  option,  that  I 
would  have  the  option  of  delivering  it  to  you,  I could  deliver  it  to  you 
just  as  soon  as  it  came  into  my  hands.  ^ 

Q.  I would  have  to  receive  it  as  soon  as  you  delivered  it  ? > 

A.  Yes,  sir. 

Q.  Where  does  that  differ  from  a put  and  call  in  the  Stock  Ex- 
change ? 

A.  I don’t  know  any  thing  about  the  Stock  Exchange,  but  it  would 
differ  in  this  way;  if  I understand  a put  I would  have  the  privilege  if 
I wished  to  deliver  to  you  ; but  if  I didn’t  wish,  I wouldn’t  make  any 
delivery  at  all. 

Q.  If  I put  up  a margin  to  call  upon  you  at  a certain  time  in  Janu- 
ary to  deliver  me  50,000  bushels  of  grain  that  would  be  a transaction 
on  the  Produce  Exchange,  wouldn’t  it  ? 

A..  No,  sir ; we  have  no  such  transactions ; we  have  no  puts  and 
calls  there,  that  I know  of ; I never  knew  of  any. 

Q.  In  one  case  you  have  the  privilege  of  delivering  to  me  and  I am 
obliged  to  take  the  grain,  and  in  the  other  case  I have  the  privilege  of 
calling  upon  you  at  a certain  time  for  the  grain  ; that  is  the  difference  ? 

A.  You  get  it  wrong;  I thought  you  referred  to  a buyer’s  option  or 
a seller’s  option. 

Q.  I can’t  see  where  that  differs  ? 

A.  Suppose  you  come  to  me  and  say  I wish  to  buy  a boat-load  of 
grain” — that  is  8,000  bushels  — that  is  the  way  we  sell  it,  because  it 
comes  in  a boat-load,  about  8,000  bushels  ; you  wish  to  buy  a boat- 
load of  grain,  seller’s  option,  in  January ; I sell*  it  to  you  if  the  price 
is  all  right. 

Q.  And  I put  up  a certain  amount  ? 

A.  No,  wait  a moment;  the  rule  of  the  Exchange  says  that  I may 
call  a margin  from  you,  and  you  may  call  a margin  from  me  to  be  put 
in  a place- beyond  the  control  of  either  of  us  ; that  is  to  make  each 
perform  his  obligation  to  the  other ; now  the  obligation  is  that  some 
time  during  January  I must  deliver  to  you  at  my  option  a load  of 
grain  and  you  must  receive  it  and  pay  me  for  it  ; now  reverse  it ; you 
have  the  option  ; then  I must  deliver  to  you  a load  of  grain  during 
January  when  you  call  on  me  and  I receive  payment  from  you  for  it. 
Wliat  is  a put  ? A put  is  merely  that  you  give  me  a certain  amount  of 
money  to  allow  you  cither  to  deliver  me  a load  of  grain  in  January  or 
not  as  you  ])lease  ; therefore  I stand  in  a position  that  if  you  choose  to 
deliver  me  a load  of  grain,  I must  take  it  from  you  ; but  there  is  no 
obligation  on  your  part  to  deliver  me  a load  of  grain  if  I call  upon  you 
lor  it ; it  is  a gamble. 


485 


Q.  There  is  a difference  there,  may  be,  but  I can’t  see  it. 

A.  We  will  change  it  this  way;  suppose  I buy  from  you  to-day  a 
load  of  grain  ; I send  down  to  the  office  and  ask  you  for  the  grain  ; 
you  have  to  deliver  me  the  grain  ; suppose  instead  of  buying  it  for 
delivery  to-day  I buy  it  simply  for  delivery  in  January  ; it  is  an  actual 
transaction  ; grain  has  got  to  pass  ; it  is  a purchase;  now  a put  is  not 
a purchase  at  all  ; it  is  merely  a j^rivilege  given  you  because  you  havt^ 
given  me  so  much  money  either  to  deliver  it  to  me,  or  not,  as  you 
please. 

By  Senator  Brown-inTt  : 

Q.  I have  been  under  the  impression  right  along  that  I could  make 
a transaction  with  you  by  which  I would  put  up  a margin  and  that 
would  give  me  the  privilege  of  calling  upon  you  at  any  time  in  Jan- 
uary to  deliver  me  the  grain  or  its  equivalent  ? 

A.  No,  sir,  then  you  have  got  this  thing  all  wrong  in  your  mind. 

Q.  I thought  you  just  stated  that  ? 

A.  No,  you  see  there  is  as  much  of  an  obligation  resting  upon  you  as 
there  is  upon  me  in  the  ordinary  transaction  ; in  a put  there  is 
not  ; if  you  buy  a load  of  grain  from  me  you  must  receive  it  from  me 
that  is  the  obligation  that  we  hav/C  both  entered  into. 

Q.  But  the  fact  is  on  the  last  day,  when  settlement  comes,  the  grain 
don’t  pass,  but  yon  pay  me  the  difference  ? 

A.  The  grain  does  pass ; if  I fail  to  fulfill  my  obligations  to  you 
under  my  contract  then  another  power  steps  in  and  settles  for  us  ; but 
the  intent  of  the  contract  is’  that  I sell  you  and  you  receive;  that  is, 
I must  deliver  to  you,  and  if  I don’t  deliver  to  you,  you  have  yourright 
then  of  recourse  against  me,  just  exactly  as  on  any  contract  that  you 
would  make.  • # 

Q.  Isn’t  ift  a fact  that  there  is  a very  small  percentage  of  actual  deliv- 
eries on  the  floor  of  the  Exchange  ? 

A.  Oh,  no,  there  is  a very  large  amount ; transactions  are  going  on 
every  day  ; there  is  a very  large  amount  that  will  ring  out  continually 
as  I tried  to  explain  ; for  instance  if  I buy  for  that  firm  that  I spoke 
of  in  Toledo  10,000  bushels  of  grain  for  delivery  in  January,  some 
time  during  the  month  of  December,  that  firm  may  desire  me  to  sell 
50,000  bushels  for  them  in  January,  althoughi  bought  10,000  bushels 
for  them  ; what  would  be  the  result  ? When  I come  to  make  the 
delivery,  so  far  as  they  are  concerned,  only  40,000  bushels  will  be  for 
their  account,  because  10,000  have  already  been  disposed  of ; before 
we  sell  the  grain  we  don’t  wait  until  we  receive  the  actual  grain,  but 
we  sell  the  grain  that  we  are  to  receive,  and  the  parties  for  whom  we 
are  acting  determine  that  it  is  a good  thing  for  them  to  close  their  con- 
tract or  to  sell  to  somebody  else;  that  thing  is  going  on  just  exactly  as 


486 


money  is  being  placed  into  a bank,  and  then  the  clearing-house  system 
comes  in  and  reduces  the  volume  to  its  minimum  and  that  is  done  en- 
tirely with  the  intention  of  saving  labor. 

Q.  What  amount  of  wheat  has  your  house  purchased  for  any  one 
year  during  the  last  three  years? 

A.  I could  not  possibly  tell. 

Q.  llow  much  have  you  sold  in  any  one  year? 

A.  It  would  be  a simple  guess  ; I’couldn’t  possibly  tell. 

Q.  Can  you  tell  what  month  during  the  last  year  your  dealings  have 
been  the  heaviest? 

A.  Generally  the  heaviest  dealings  are  immediately  after  the 
maturity  of  the  crops  in  September,  October  and  November  up  to  the 
close  of  navigation  ; those  are  generally  the  heaviest  times. 

Q.  Take  for  instance  then  last  October;  what  percentage  of  your 
sales  embraced  an  actual  delivery  ? 

A.  That  I couldn’t  tell  you  without  looking. 

Q.  What  is  your  opinion  ? 

A.  I think  this  year  the  business  has  been  comparatively  light  com- 
pared with  other  years  ; the  demand  has  not  been  so  heavy ; 1 should 
think  double  the  amount  would  be  within  the  figures. 

Q.  I don’t  understand  what  you  mean  by  double  the  amount  ? 

A.  I think  the  volume  of  our  sales  would  not  be  more  than  double 
the  amount  of  the  actual  wheat  that  passed  through  our  hands. 

Q.  That  is  to  say,  if  you  sold  200,000  bushels  you  would  actually 
deliver  100,000  bushels  ? 

A.  Yes,  about  100,000  bushels  would  pass  ; it  is  really  guess-work, 
because  I am  merely  the  financial  member  of  the  firm  and  I don’t  pay 
much  attention  to  the  volume  of  the  sales ; it  is  purely  guess-work 
with  me. 

Q.  Mr.  Dow’s  house  has  the  reputation  of  doing  a larger  cash  busi- 
ness than  any  other  firm  in  the  market,  is  not  that  the  fact  ? 

A,  I do  not  know  that  we  aim  to  do  that ; we  aim  to  do  a safe  busi- 
ness, and  perhaps  we  do  receive  a larger  proportion  of  grain  than  any 
other  house,  but  what  the  other  houses’  business  would  be  in  the  sell- 
ing for  future  delivery,  I could  not  tell ; I have  no  means  of  knowing. 

Q.  Can  you  tell  the  committee  what  different  grains  sold  for  last 
Saturday  on  call  — the  quotations  for  last  Saturday  ? 

A.  I tliink  I could. 

Q.  Wliat  were  tlie  published  quotations  for  Saturday  last  ? 

A.  Of  what  kind  of  grain  ? 

Q.  Say  of  wlieat  ? 

A.  I tliink  No.  2 red  winter  wheat,  this  shipping  wheat,  was  worth 
about  $1.10,  somewhere  in  that  neighborhood. 


487 


Q.  That  was  the  quotation  ? 

A.  That  was  about  the  quotation, 

Q.  Suppose  I went  in  the  market,  could  I buy  it  for  that  ? 

A.  I think  you  could  ; whatever  the  quotation  is  you  could  buy  it 
at. 

Q.  Have  you  ever  known  a time  when  wheat  or  grain  sold  for  more 
than  the  quotation  marketed  it  ? 

A.  I do  not  really  understand  your  question. 

Q.  I have  been  told  that  if  a man  went  into  the  market  expecting 
to  buy  for  the  price  that  was  published  in  the  papers  he  would  find 
himself  mistaken  ? 

A.  I think  newspaper  reporters  very  often  get  wrong  ; I don’t  think 
they  would  intentionally  do  so  ; there  are  times  when  it  would  be  al- 
most impossible  to  buy  because  the  property  is  not  there. 

Q.  In  other  words  I have  been  told,  within  the  last  two  or  three 
days,  that  it  frequently  happens  that  grain  will  bring  a cent  more  a 
bushel  than  the  quotations  in  the  papers  or  the  quotations  on  ’Change? 

A.  For  instance  I have  seen  very  often  in  the  morning  a dull  mar- 
ket and  in  the  afternoon  a very  active  market  or  vice  verm,  and  the 
quotation  that  the  reporter  might  have  of  the  morning  market  would 
not  be  a fair  quotation  of  the  evening  market ; you  will  generally 
find,  though,  all  the  quotations  given  — the  three  times  of  a call  ; that 
is  the  reason  we  have  calls  three  times  a day  in  order  to  have  a fair 
view  of  the  market,  an  official  view  of  the  market ; the  price  of  wheat 
may  be  ^1.10  at  the  first  call;  that  is  a published  declaration  of  the 
value  of  wheat  and  a good  many  transactions  take  place  ; but  at  the 
last  call  the  price  may  be  $1.07  or  $1.08  ; it  will  depend  entirely  upon 
what  the  condition  of  thing  is  between  those  two  calls.  But  anybody 
going  in  and  paying  the  market  value  can  always  buy  if  the  stuff  is 
there  to  sell. 

Q.  That  is  the  fact? 

A.  Certainly,  except  in|the  operation  of  a corner  very  often  these 
persons  who  are  running  a corner  will  say  We  will  sell  to  an  ex- 
porter, somebody  who  is  taking  this  away;  we  will  sell  a cent  or  two 
a bushel  less  than  we  will  sell  upon  the  market,,  because  that  is  apt  to 
come  back  to  us,  therefore  we  won’t  sell  it  at  the  same  price.” 

Q.  Then  you  are  of  the  opinion  that  the  price  fixed  on  call  is 
generally  the  standard  for  a sale? 

A.  The  price  fixed  upon  call  is  a fair  representation,  a fair  uniform 
representation  of  the  market  value  at  the  time  the  call  was  made. 
The  person  who  makes  that  is  not  a merchant,  he  is  an  employee  of  the 
board  of  managers,  and  he  names  the  price  of  the  wheat  upon  that 
call  from  his  best  judgment  upon  the  transactions  that  take  place  be- 


488 


fore  him.  After  the  call  is  over  he  takes  and  writes  upon  the  top  of 
the  board  what  is  termed  a settling  price  for  that  day.  Let  me  explain 
to  you  what  the  meaning  of  that  is : if  I deliver  you  a boat-load  of 
grain  it  is  understood  that  the  amount  that  I am  to  deliver  you  is 
8,000  bushels;  that  is  the  amount  I sell  you  ; but  a boat-load  of  grain 
may  be  7,000  or  8,200  bushels;  now  the  surplus  over  and  above  the 
amount  of  8,000  bushels  or  the  reduction  below  8,000  bushels  is  to  be 
settled  for  at  the  market  price,  not  at  the  price  of  the  contract,  and 
therefore  for  the  200  bushels  that  I would  deliver  you  over  the  amount 
of  my  contract  you  would  pay  me  not  the  contract  price,  but  what- 
ever the  man  who  operates  the  call  states  is  the  settling  price.  In 
other  words,  if  I sell  you  a load  of  grain  for  sixty  cents,  the  8,000 
bushels  that  I delivered  you  would  be  charged  at  sixty  cents,  but  if 
the  market  price  at  the  day  of  delivery  was  seventy  cents,  you  would 
pay  me  seventy  cents  for  those  200  bushels.  That  is  all  there  is  to 
that. 

Q.  If  that  is  the  fact,  you  believe  that  the  [calls  have  an  influence 
on  the  market  then,  a decided  influence  ? 

A.  The  calls  have  the  effect  of  giving  public  notice  of  what  the 
actual  market  price  in  the  opinion  of  the  caller  is,  at  the  time  the  call 
is  made.  Then  there  is  a rule  that  if  any  member  of  the  Exchange 
questions  the  price  that  the  caller  puts  up,  he  immediately  appeals  to 
the  members  of  the  Exchange,  the  members  of  the  trade,  and  the 
members  of  the  trade  then  decide  — not  the  caller.  If  the  caller’s 
price  is  called  in  question,  the  members  of  the  trade  then  decide  what 
is  the  market  price  ; but  I hardly  ever  knew  of  that  having  been  called 
in  question.  It  is  a price  that  is  made  by  a man  employed  by  the 
Exchange  for  that  purpose,  beyond  the  influence  of  anybody. 

Q.  Then  these  calls  give  opportunity  to  men,  if  they  see  fit,  to  bear 
down  or  bull  up  the  market,  do  they  not  ? 

A.  Yes,  it  gives  them  an  opportunity  to  sell.  It  you  are  a member 
of  the  Exchange  and  a price  is  bid  for  a boat-load  of  wheat  $1.10,  you 
say,  I will  sell  that  to  Mr.  Orr,'’  and  I must  buy  it  of  you  because  I 
have  made  the  offer.  Then  you  immediately  make  a contract  with 
me  for  that  load  of  wheat,  and  you  say,  Mr.  Orr,-as  this  load  of 
wheat  is  not  to  be  delivered  to  you  for  a month,  I would  like  to  have 
you  put  up  a margin  to  assure  me  that  when  the  time  comes  for  my 
delivery  to  you,  tliat  margin  will  protect  me  against  the  possibility  of 
your  failure.”  That  is  the  meaning  of  the  margin. 

(2.  I understand  that;  but  I am  now  talking  of  the  calls  and  their 
influence  upon  trade;  you  admit  that  these  calls  afford  opportunities 
to  men  to  bear  down  the  market  or  of  increasing  the  price  ? 

A.  They  would,  just  the  same  way  as  they  could  bear  down  the 


489 


market  or  increase  the  price  on  the  floor  of  the  Exchange,  except  the 
call  is  a little  more  public  in  the  way  of  doing  it ; if  you  have  a load 
of  wheat  to  sell  you  have  got  to  find  a person  on  the  Exchange  who 
wants  to  buy  it  at  any  otlier  time  than  when  a call  is  operated  ; the 
meaning  of  tlie  call  is  that  the  buyers  and  the  sellers  get  together  and  you 
say,  ‘‘I  have  got  a load  of  wheat  to  sell  and  I will  sell  it  at  $1.10,” 
and  I believe  that  somebody  will  be  there  who  has  a load  of  wheat  to 
sell  if  I want  to  buy  one,  and  I attend  the  call  and  say,  will  have 
your  load  of  wheat;”  if  81.10  does  not  satisfy  me  I say,  “I  will  give 
$1.09  for  it  ;”  and  the  caller  says,  Mr.  Orr  will  give  $1.09,”  and 
somebody  else  steps  in  and  says,  will  sell  Mr.  Orr,”  and  you  lose 
the  chance  of  selling  it. 

Q.  Do  you  know  what  proportion  of  the  sales  are  made  with  the 
view  of  actual  delivery  at  those  calls? 

A.  I believe  that  every  bushel  of  those  sales  is  made  with  the  view 
of  actual  delivery. 

Q.  If  I should  tell  you  that  on  the  best  authority  of  persons  doing 
that  business  and  the  statement  of  the  officers  of  the  Exchansre  about 

O 

three  per  cent  of  those  amounts  proposed  to  be  sold  is  actual  delivery 
and  that  ninety-seven  per  cent  is  pure  speculation,  then  you  would 
agree  with  the  committee,  I think,  that  the  calls  do  give  an  opportu- 
nity for  speculation  and  do  disturb  the  market? 

A.  I don’t  think  they  give  any  other  opportunity  to  disturb  the 
market  or  to  sell  than  the  Produce  Exchange  gives  the  opportunity ; 
the  object  of  the  Exchange  is  for  men  to  meet  together  who  wish  to 
buy  and  sell,  and  the  call  is  merely  a public  way  of  letting  a buyer 
know  that  there  is  a seller  present,  whereas,  in  the  other  case,  he  would 
have  to  go  among  3,000  members  and  find  out  the  man  ; it  is  nothing 
more  than  an  auction. 

Q.  Before  you  had  the  calls'and  before  you  had  the  grading  system 
you  got  along  very  well ; the  buyer  and  seller  met  on  the  floor  and 
transacted  their  business,  did  they  not  ? 

A.  Yes,  sir. 

Q.  And  the  legitimate  demands  of  trade  were  satisfied  then,  were 
they  not  ? 

A.  They  were,  but  not  with  half  the  facility  that  they  are  now ; let 
me  illustrate  ; before  we  had  a telephone  we  got  along  very  well ; but 
the  moment  the  telephone  came  into  existence  we  all  put  it  into  our 
offices  and  we  sell  a great  deal  of  grain  through  that  means  and  have 
reduced  the  number  of  messengers  that  we  had,  merely  by  using  the 
telephone ; if  we  receive  a telegram  after  we  leave  ’Change,  asking  us 
to  sell  a load  of  grain  or  a quantity  of  grain,  we  immediately  call? 
upon  the  telephone,  those  parties  who,  we  think,  want  to  buy  ; for 
26 


400 


instance,  I will  cite  a case  that  very  often  occurs ; we  receive  an  order 
to  sell  a very  large  quantity  of  grain  ; we  know  a shipper  that  want 
it;  I will  say  Mr.  Bingham,  for  instance,  a large  dealer;  we  immedi- 
ately call  him  upon  the  telephone,  and  we  say,  “we  have  just  got  an 
order  to  sell  grain  for  next  month’s  delivery,  do  you  want  it ;”  he  says, 
‘‘what  is  the  price;”  we  give  him  the  price,  and  if  he  wants  it  we 
immediately  m.ake  the  trade;  we  make  a register  of  it  and  write  a note 
saying,  “ we  have  just  sold  you  so  much  grain,”  and  send  it  up  to  him; 
the  telephone  does  that;  we  got  along  before  we  had  the  steamship 
and  before  we  had  the  telegraph,  but  all  these  things  are  adjuncts  to 
trade,  and  if  you  take  these  things  away  from  us  to-day  you  would 
leave  us  demoralized  because  the  rapidity,  the  facility,  and  tliji  volume 
of  transactions  are  enormous  now,  and  these  tilings  are  immediate 
helps  and  we  wouldn’t  know  hardly  how  to  get  along  without  them. 

Q.  We  don’t  want  to  make  the  telephone  responsible  for  all  this 
speculation  that  is  carried  on  throughout  the^country.  The  telephone 
is  a good  servant  of  the  people  ? 

A.  In  regard  to  speculation,  wdiat  is  it  that  pays  the  taxes  ; is  it  not 
a system  of  speculation  that  is  going  on  continually;  you  must  draw 
a line  somewhere ; I can’t  draw  the  line  between  what  would  be 
gambling  in  grain  and  speculation  in  grain,  because  it  must  be  the 
intent  in  a man’s  mind ; but  I would  say  this,  that  I don’t  know  any 
firm  on  the  Exchange  that  ever  sold,  for  future  delivery,  a bushel  of 
grain,  or  that  ever  bought  for  future  delivery  a bushel  of  grain,  that 
they  didn’t  intend  to  deliver,  and  intend  to  receive  at  the  time  that 
they  made  the  transaction. 

Q.  It  is  in  evidence,  given  by  your  ex-president  and  by  a number  of  ’ 
gentlemen  thoroughly  familiar  with  the  transactions  of  the  Produce 
Exchange,  and  they  have  stated  it  very  frankly  before  this  committee, 
that  an  option  and  a future  is  selling  what  you  have  not  got,  and  buy- 
ing what  you  do  not  want,  and  that  it  is  pure  speculation  ? 

A.  I don’t  say  that  I sell  what  I haven’t  got ; it  is  just  exactly  the 
same  way  that  an  insurance  company  will  take  a risk  upon  my  vessel 
along  the  lake  there ; they  are  not  sure  that  that  vessel  will  arrive  in 
port ; but  they  expect  it  will,  and  therefore,  they  take  the  risk;  now  I 
am  a commission  merchant,  and  if  you  are  dealing  with  me,  a reputable, 
upright  man,  and  telegraph  me  or  write  to  me  to  sell  for  you  in  this 
market  50,000  bushels  of  wheat,  I immediately  sell  it  for  you,  because 
I believe  that  you  arc  going  to  put  me  in  a position  to  make  that 
delivery  ; I can’t  tell  what  your  meaning  is;  if  I afn  to  wait  to  tele- 
grapli  back  to  you,  to  know  if  you  have  got  this  grain  and  if  ybu 
really  mean  to  deliver  this  grain  and  all  that  kind  of  thing,  it  would 
destroy  the  whole  system  of  confidence  and  faith  in  which  we  deal. 


491 


Q.  There  is  no  disposition  on  the  part  of  this  committee,  I take  it, 
to  prevent  any  such  transaction  as  you  have  described,  because  from 
your  statement  you  do  a legitimate  business.  When  you  make  a sale 
for  a man  you  expect  to  obtain  the  grain  and  make  the  actual  delivery^ 
and  that  is  a fact.  What  we  are  trying  to  do  is  to  prevent  this  nine- 
ty-seven per  cent  of  the  business  that  is  carried  on  upon  a purely  spec- 
ulative basis  where  no  grain  is  handled  or  delivered,  and  is  not  ex- 
pected to  be  handled  or  delivered,  but  upon  settling  day  the  parties  to 
the  transaction  step  up  to  the  captain’s  office  and  pay  the  differences  ? 

A.  There  is  never  any  thing  of  that  kind  going  on  as  far  as  my  ex- 
perience goes,  except  when  there  may  chance  to  be  a corner,  and  these 
corners  are  very,  very  seldom,  and  very  much  exaggerated  when  they 
are.  You  will  find  at  the  end  of  the  month  that  almost  everybody  has 
paid  for  or  settled  his  contracts  or  made  his^deliveries.  It  is  only  in 
case  of  the  failure  to  make  a delivery  that  there  is  a settlement  such  as 
you  speak  of,  I don’t  want  you  to  carry  away  any  better  impression 
of  me  or  my  firm  than  we  deserve.  If  we  sell  for  a man  grain  which 
we  have  not  got  actually  in  hand,  but  which  we  expect  him  to  put  us 
in  the  position  to  deliver,  if  a few  days  afterward  or  any  time  pend- 
ing the  delivery  of  that,  he  desires  us  to  buy  for  him  a like  quantity  of 
grain,  we  will  buy  it  for  him  because  we  think  it  is  perfectly  legitimate 
if  a man  determines  to  sell  what  he  has  already  bought,  because  he  is 
going  to  make  a profit  by  it,  or  because  he  fears  he  is  going  to  make  a 
larger  loss.  He  has  a perfect  right  to  sell  it.  If  you  are  going  to  do 
away  with  all  speculation  and  reduce  us  down  to  a system  of  making 
deliveries  and  sales  of  exactly  what  we  have  got,  then  we  get  down  to 
the  position  that  you  would  make  us  — a nation  ofhuxters.  There 
would  be  no  speculation  or  very  little  speculation.  There  would  be 
nothing  more  than  the  producer  and  the  consumer  and  they  would  be 
brought  together.  But  then  what  makes  cities  ? 

Q.  Do  you  believe  speculation  increases  the  value  of  the  product? 
Don’t  you  think  it  has  a tendency  to  put  an  artificial  value  on  the 
product  that  is  sold  ? 

A.  Ho,  sir,  I don’t.  I think  if  you  examine  the  condition  of  things 
you  will  find  that  this  system  of  speculation,  with  the  exception  of  an 
aggressive  corner,  which  we  all  condemn,  has  the  same  effect  upon 
consunlers  as  the  telegraph  had  upon  commerce  when  it  was  first  in- 
troduced. It  is  a leveler.  It  holds  together  and  keeps  a very  much 
more  level  system  of  prices  than  existed  before  it  came  into  effect,  just 
exactly  as  the  telegraph  did  away  with  all  those  surprises  in  the  mark- 
ets, which  were  generally  created  by  an  arrival  of  a vessel  from  abroad. 

I remember  before  the  telegraph  we  wouldn’t  sell  any  thing  until  the 
steamer  arrived,  if  a steamer  was  expected.  We  were  suspicious  of  a 


'I! 


493 

man  who  came  rapidly  into  the  office  about  the  time  a steamer  was  to 
arrive,  because  of  the  news  that  he  might  have  as  against  ourselves 
who  didn’t  have  it  ; but  when  the  telegraph  came,  which  gives  the 
markets  from  abroad  every  day  instead  of  once  a week  or  a fortnight 
as  they  originally  did,  business  went  along  without  the  slightest  sus- 
picion and  there  was  no  interruption. 

Q.  Do  you  believe  that  people  who  are  engaged  exclusively  in  the 
option  business,  where  there  is  no  pretense  of  an  actual  delivery,  ought 
to  be  prevented  from  carrying  on  that  sort  of  business  if  it  is  possible? 

A.  If  you  can  determine  and  define  such  a man,  I question  whether 
you  might  not  prevent  them  ; but  with  a proper  recognition  of  every- 
body confining  themselves  to  a legitimate  trade,  except  as  regards 
their  own  individual  intent,  I think  it  would  be  difficult  to  determine; 
if  I determine  to  buy  a load  of  wheat  from  you  for  future  delivery,  how 
are  you  to  determine  whether  I mean  to  ganible  upon  that  or  not?  I 
give  you  my  obligation  which  says  that  I will  receive  it  from  you  and 
also  put  you  in  a position  that  you  can’t  suffer  any  thing  from  my  fail- 
ure; that  is  by  puttin'g  up  a margin  for  the  fulfillment  of  my  contract 
with  you;  are  you  to  turn  around  and  judge  me  and  say,  ^^you  are  a 
gambler;  you  don’t  mean  to  receive  this ” ; we  can’t  tell  those  things 
at  all ; the  rules  of  our  Exchanges  recognize  the  man’s  right  to  buy 
for  future  delivery,  but  they  will  not  recognize  this  question  of  ‘‘puts 
and  calls,”  which  are,  as  I told  you  before,  simply  gambling. 

Q.  You  believe  that  is  wrong  ? 

A.  I do,  sir ; and  demoralizing. 

Q.  And  so  do  I ; I take  it  we  both  agree  that  where  there  is  a sale 
with  the  intent  of  an  actual  delivery  it  is  perfectly  legitimate,  and 
ought  to  be  permitted  ? 

A.  Yes,  sir. 

Q.  Suppose  we  could  prevent  the  dealing  in  options  pure  and  simple 
and  making  settlements  unless  there  was  actual  delivery  unlawful, 
would  that  have  a tendency  to  check  the  gambling  part  of  the  trans- 
action ? 

A.  Xo,  it  wouldn’t  have  that  tendency  and  it  would  destroy,  to  a 
very  great  extent,  this  protective  feeling. 

Q.  I am  speaking  now  of  the  gambling  transactions  where  vou  go 
into  the  market,  or  I or  somebody  else  we  say,  with  a view  of  making 
a gain  on  account  of  the  rise  or  the  fall  of  the  market  on  the  day  of 
settlement,  and  then  laying  in  the  difference  between  the  price  that  it 
sells  at  and  the  i)rice  that  I bought  at,  or  vice  versa;  that  is  purely  a 
gambling  transaction  ; if  we  make  that  an  unlawful  thing  it  will  have 
a tendency  to  check  the  evil  resulting  from  speculation  ? 

A.  Who  is  to  determine  that?  Suppose  T buy  it  and  you  are  to  test 


V 


493 

my  purchase  by  that  rule ; who  is  to  determine  whether  I am  gamb« 
ling  or  doing  a legitimate  transaction  ; let  me  illustrate  it  a little  fur- 
ther ; I will  take  the  names  of  actual  parties,  because  these  are  actual 
things  that  come  up,  and  are  coming  up  every  day ; take  the 
firm  of  John  Sinclair  & (Jo.,  friends  of  mine,  and  very  respect- 
able and  upright  merchants;  they  wanted  to  locate  a packing- 
house, and  after  looking  the  ground  all  over,  they  located  in 
Cedar  Rapids ; so  anxious  were  the  people  of  Cedar  Rapids  to 
have  them  that  they  offered  to  give  them  a location  for  their 
packing-house  or  very  large  facilities  for  making  money  if 
they  would  locate  there.  They  did  locate  there,  and  immediately 
around  Cedar  Rapids  and  for  a hundred  miles  or  so  an  immense 
demand  arose  for  the  things  they  packed,  pork  and  such  like  things. 
They  packed  from  1,000  to  2,000  hogs  a day.  The  hogs  came  into 
them  generally  in  tliree  or  four  months  in  very  large  quantities.  They 
wished  to  continue  the  operation  of  their  business  during  those  months ; 
but  it  would  have  been  impossible  for  them  to  take  the  risks  attendant 
upon  that  packing  business  if  they  did  not  in  some  way  take  advant- 
age of  the  facilities  granted  them  in  the  large  markets  for  selling  that 
pork  Avhen  they  can’t  send  it  to  market  because  it  is  not  cured.  Sup- 
pose they  write  to  my  firm  and  say,  sell  for  me  in  your  market  a 
thousand  tierces  of  lard  foe  February  delivery  we  sell  for  them  the 
thousand  tierces  of  lard,  and  as  far  as  that  thousand  tierces  goes  they 
are  protected  against  any  loss  in  the  stock  that  they  are  holding.  They 
use  the  money  which  they  wouldn’t  otherwise  have  used  in  going  on, 
or  buying  another  lot  of  hogs,  giving  their  men  employment  and  keep- 
ing their  factory  running.  We  will  advance  them  too  upon  that  other 
lot  because  we  know  that  the  risk  that  they  are  running  is  protected 
by  their  sales.  Now  su23pose  in  the  month  of  January  they  find  that 
there  is  a surplus  demand  right  at  home  for  that  lard  which  they  had 
sold  for  New  York  delivery  in  February,  and  they  telegraph  to  us 
buy  in  for  us  that  thousand  tierces  of  lard  you  sold.”  They  may 
have  an  opportunity  of  selling  that  at  a better  price  to  the  consump- 
tive trade.  We  immediately  go  into  the  market  and  buy  in  that 
thousand  tierces  of  lard.  Now  there  are  two  legitimate  transactions 
in  which  no  lard  Avill  pass  of  John  Sinclair’s  through  our  hands,  and 
if  in  buying  in  that  thousand  tierces  of  lard  we  should  happen  to  strike 
upon  the  very  men  that  we  had  sold  the  thousand  tierces  of  lard  to, 
that  lard  would  ring  out,  and  if  we  bought  it  at  a different  price  we 
would  pay  them  the  difference  or  they  would  pay  it  to  us.  Mr.  Sin- 
clair in  the  mean  time  would  be  going  on  operating  his  business  — it 
gets  into  the  tens  of  thousands  at  times  — the  men  would  be  employed, 
the  farmers  would  have  a market  for  their  hogs,  and  every  thing  would 


494 


be  done  that  was  straight  and  honorable  and  right,  and  at  the  same 
time  no  lard  would  have  actually  passed  through  the  hands  of  the 
parties  in  New  York.  Take  away  that  protective  feature  and  what 
would  be  the  result  ? Mr.  Sinclair’s  factory  would  have  to  be  closed 
when  he  got  to  a certain  poijit. 

Q.  What  would  be  your  brokerage  on  that  transaction  ? 

A.  Our  brokerage  would  be  one-half  of  one  per  cent  for  the  actual 
sale  of  the  lard.  If  the  lard  came  forward  and  was  delivered  it  would 
be  then  one  per  cent  for  this  reason. 

Q.  I am  speaking  of  that  transaction  alone.  That  would  be  one- 
half  of  one  per  cent  ? 

A.  Yes,  sir.  It  is  not  brokerage.  We  call  it  commission.  The 
brokerage  would  actually  be  two  cents  a tierce  merely  for  the  selling 
or  buying. 

Q.  If  the  selling  actually  took  place  he  would  have  to  pay  more  than 
that  ? 

A.  The  sale  does  actually  take  place. 

Q.  You  say  if  the  lard  was  delivered  it  would  be  one  per  cent  ? 

A.  For  this  reason,  if  the  lard  was  delivered  it  would  have  to  come 
forward  from  the  place  where  it  was  lying  and  we  would  be  called  upon 
for  the  money  the  moment  it  left  there  with  the  bill  of  lading,  and 
because  we  would  be  under  advance  for  that  time  we  would  have  to 
charge  a higher  commission. 

Q.  Why  couldn’t  he  cancel  that  contract  by  paying  you  your  com- 
mission ? 

A.  Because  we  were  obliged  to  deliver  the  lard.  We  had  sold  it  to 
somebody.  Suppose  I didn’t  buy  it  from  the  man  that  I sold  it  to  but 
I bought  it  from  Senator  Browning,  then  Senator  Browning,  when  the 
time  would  come,  would  deliver  me  that  lard  and  I would  hand  it  over 
to  the  man  to  whom  I sold  it.  But  the  volume  of  this  trade  is  so 
large  that  we  are  continually  striking  upon  people  whom  we  have 
bought  and  sold  from  and  those  things  are  thus  merely  rung  out  as 
with  the  banks  in  clearing-houses.  One  bank  has  $10,000  on  the 
Mechanics’  Bank,  the  Mechanics’  Bank  has  $11,000  on  it,  and  they 
meet  in  the  clearing-house  and  match  the  checks  to  the  extent  that 
they  will  match,  and  they  pay  the  difference  of  $1,000,  and  that  is  the 
whole  extent  of  this  i^ransaction. 

Q.  If  you  should  aI)o]isli  calls  on  ’Change  could  you  meet  the  de- 
mands of  the  ])ublic  ])y  selling  l)y  sample  ? 

A.  We  do  sell  by  sam])le. 

(h  If  you  sold  exclusively  by  sample  could  you  carry  oa  all  the 
legitimate  transactions  in  that  way  ? 

A.  We  could  in  a very  modilied  manner.  But  let  me  explain  to  you 


495 


that  we  could  do  it  very  easily  if  every  thing  came  in  by  canal.  There 
is  a boat-load  of  grain,  a large  package,  8,000  bushels,  but  a load  of 
grain  by  car  is  only  450  bushels.  Now  a train  of  twenty  cars  will 
make  one  boatload  of  grain.  To  sell  one  boat-load  of  grain  we  would 
have  to  send  to  twenty  cars  to  get  twenty  different  samples,  and  those 
twenty  different  samples  would  all  have  to  match  in  the  eyes  of  the 
buyer  before  he  would  purchase  to  the  extent  of  a boat-load.  We  have 
a system  that  those  cars  come  to  an  elevator.  Before  they  arrive  at 
the  elevator  the  inspector  of  the  Exchange  or  his  agents  go  through 
them  all  and  test  them  according  to  a grade.  Some  will  be  a little 
higher  than  the  grade,  some  a little  lower  ; they  all  go  into  one  eleva- 
tor and  are  dumped  into  different  bins ; all  No.  2 will  go  into  No.  2 
bins  ; then  we  get  our  receipts  and  we  sell  by  the  grade,  the  standards 
of  which  are  on  the  Exchange,  and  instead  of  having  to  sample  every 
car  as  I told  you,  we  make  the  sale  with  the  same  ease,  even  with 
greater  rapidity,  than  we  would  of  a boat-load  by  canal. 

Q.  Supposing  you  adhere  to  the  grade  and  sell  by  grade  — you  sell 
by  sample  now  by  grade,  do  you  not  ? 

A.  No,  as  a rule  not ; if  a man  wants  a very  choice  load  of  wheat, 
we  will  get  a particular  bin,  and  get  a sample  of  that  bin,  and  show  him 
that  and  tell  him  we  can  give  him  that  kind  of  wheat ; but  that  is 
very  seldom  done. 

Q.  It  is  a finer  grade  ? 

A.  If  the  wheat  is  better  than  the  grade,  we  ask  the  elevators  to 
keep  that  what  is  called  identity  preserved  wheat,’’  and  it  is  not  put 
in  the  elevator,  but  kept  by  itself. 

Q.  Could  you  carry  on  all  legitimate  business  without  this  call  on 
’Change,  three  times  a day  ? 

A.  Certainly  you  could.  The  call  is  simply  a facility.  It  does  not 
change  the  character  of  the  operation  at  all.  It  is  just  like  an  auction. 
That  is  the  meaning  of  it.  It  is  to  give  a facility  to  buyers  and  sell- 
ers to  discover  one  another  without  having  the  trouble  of  going  to 
1,600  or  1,700  men,  who  chance  to  be  on  ’Change,  that  is  all.  But 
there  is  ten  times,  I don’t  know  but  there  is  twenty  times,  more  busi- 
ness done  on  the  Exchange  after  the  calls,  when  we  see  who  wants 
grain,  from  the  calls,  than  there  is  actually  upon  the  calls ; but  the 
call  makes  a standard  of  value.  Suppose  you  tell  me  to  sell  your 
wheat  to-day.  I don’t  like,  exactly,  to  sell  it  to-day  until  I know  what 
the  call  says,  because  that  gives  a character  to  the  tone  of  the  market, 
and  then  I would  feel  if  I sold  it  upon  the  call,  or  corresponding  with 
the  call,  you  would  not  find  fault  with  me,  in  case  I make  the  sale  and 
report  it  to  yoa 


496 


Q.  What  would  be  the  practical  effect  if  you  abolished  the  calls  ; 
would  it  cause  complication  or  rivalry  ? 

A.  No  complication  or  rivalry.  It  would  do  away  with  one  of  those 
facilities  of  arriving  at  a knowledge  of  the  market  value. 

Q.  Wasn’t  there  a greater  rivalry  before  you  had  the  call  than  there 
is  to-day  ? 

A.  No,  sir  ; if  you  were  in  the  Exchange  you  would  see  great  rivalry 
among  us. 

Q.  You  have  a twelve  o^clock  call,  haven’t  you  ? 

A.  We  have  three  calls. 

Q.  After  a call,  a quotation  stands  good  until  the  next  call,  does  it 
not  ? 

A.  Oh,  no  ; suppose  I want  to  sell  my  wheat  and  you  won’t  give  me 
the  price  that,  the  caller  named  as  the  market  price,  I say  very  well, 
what  can  you  give  me  ?”  and  if  you  name  a price  and  I am  anxious  to 
sell,  the  call  don’t  influence  me  at  all,  further  than  to  let  me  know 
what  is  the  standard  of  value  for  the  time.  As  I told  you,  the  differ- 
ence between  the  two  calls,  some  days,  will  be  very,  very  marked.  I 
have  seen,  sometimes,  four  cents  a bushel  difference  between  the  two 
calls. 

Q.  What  would  be  the  practical  effect  of  preventing  settlements  on 
settlement  day,  except  where  there  was  an  actual  delivery,  upon  the 
business  transactions  of  the  Exchange  ? 

A.  There  is  never  any  settlement  made  upon  the  maturity  of  the 
contract  upon  the  call  prices,  except  in  a question  of  a corner.  I tried 
to  explain  to  you  the  meaning,  or  the  object,  of  the  call  for  settlement 
prices.  It  is  not  for  settling  a contract.  It  is  for  settling  the  differ- 
ences, and  the  quantities  over  or  under  the  standard  quantity  of  8,000 
bushels. 

Q.  I am  under  the  impression  that  all  contracts  made  for  future  de- 
livery in  January,  not  settled  before  the  last  day  — that  the  last  day  is 
considered  the  settlement  day  for  all  contracts  for  future  delivery  in 
that  month  ; am  I right  ? 

A.  Yes,  that  is  the  last  day  that  you  would  have  the  option  of 
delivering  to  me. 

Q.  And  that  is  settlement  day  ? 

A.  Yes,  sir. 

Q.  On  that  day,  I take  it  from  what  has  been  stated  to  this  com- 
mittee, that  perhaps  ninety-five  per  cent,  and  perhaps  a greater  per- 
cenlago  tlian  that  of  tlie  transactions- are  settled  by  the  payment  of 
money  from  one  to  the  other  without  any  actual  delivery  ? 

A.  You  are  entirely  wrong.  Let  me  exjflain  to  you.  The  general 


497 


rule,  ninety-nine  out  of  every  one  hundred  instances,  is  that  con- 
tracts are  settled  before  the  last  day,  they  mature  or  are  closed  before 
the  last  day  ; but  in  case  they  are  left  to  the  last  day,  and  they  are  not 
settled  before  the  call,  which  is  at  half-past  one  o’clock,  the  middle 
call,  then  as  I read  you  the  rule  the  man  who  has  failed  upon  his 
contract  is  subject  to  this  operation.  The  person  to  receive  that 
property  from  him  writes  immediately  to  the  grain  committee,  and 
says  : Mr.  Jones  has  not  delivered  me  the  property  maturing  to-day 
under  his  contract.”  Now  the  grain  committee  rises  up  at  the  call 
and  reads  that  statement  and  says  : Gentlemen,  who  will  sell  to  us 
under  the  rules  of  the  Exchange  the  amount  that  Mr.  Jones  was  to 
have  delivered  to  Mr.  Orr,”  for  instance,  ‘‘under  his  contract,”  and 
the  grain  committee  bid  it  in  ; but  I read  you  the  rule  where  the  grain 
committee  are  prevented  from  paying  any  excessive  prices  for  that 
property  that  they  buy  in  on  account  of  manipulated  markets  or 
markets  that  are  influenced  by  a failure  in  transportation,  or  in  other 
words  a corner. 

Q.  Then,  in  your  opinion,  there  are  very  few  settlements  by  cash  on 
settlement  day,  the  la«t  day  of  the  month  — it  is  all  by  actual 
delivery  ? 

A.  I do  not  know  whether  they  may  by  the  last  day  of  the  month 
settle.  You  may  think  that,  perhaps,  the  last  day  of  the  month  may 
be  lower  than  the  first  day  or  the  middle  of  the  month,  and  may  not 
wish  to  buy  in  your  grain  and  make  a settlement  till  then.  That  is 
entirely  optional  with  the  parties  who  have  to  make  their  delivery 
under  the  contract,  but  there  is  no  failure  unless  the  purchase  is  made 
through  the  committee,  and  that  thing  I don’t  think  occurs  once  in 
six  months  upon  our  Exchange. 

Q.  I have  been  very  greatly  misinformed  then  ? 

A.  I wish  you  would  really  inform  yourself  upon  that. 

Q.  I have  been  told  that  I could  put  up  $250  down  there,  for 
instance,  an'd  buy  five  thousand  bushels  of  oats  to  be  delivered  in 
January,  and  if  there  is  no  settlement  before  the  last  day  of  next 
January  I have  something  coming  to  me  on  that  transaction,  or  the 
person  with  whom  I dealt  has  something  coming  to  him,  and  that 
passes  to  me  or  to  him,  and  there  is  no  actual  delivery  ; but  I make 
money  on  my  transaction  just  the  same.  That  is  what  I want  to 
understand  ? 

A.*  These  things  are  all  susceptible  of  proof.  The  only  way  in  which 
you  can  make  or  lose  by  that  transaction  if  you  put  up  $250  — 

Q.  That  is  my  margin  ? 

A.  You  can  buy  a load  of  wheat  or  of  oats  ; they  generally  call 
63 


498 


upon  oats  five  cents  a bushel  ; $250  would  represent  nearly  six  thou- 
sand bushels  of  oats.  You  make  an  actual  purchase,  or  somebody  for 
your  account  makes  an  actual  purchase  of  six  thousand  bushels  of 
oats,  at  an  actual  price,  to  be  delivered  u])on  a certain  day.  You  are 
obliged  to  receive  that  when  the  time  comes.  Suppose  in  the  mean- 
while the  market  goes  up  or  goes  down,  and  you  say  to  your  com- 
mission man  that  you  are  doing  this  through,  “ I would  like  to  end 
my  obligation  there.  I would  like  to  have  you  sell  that  out.”  He 
finds  somebody  who  will  buy  and  take  your  exact  position  with  me,  or 
he  may  go  to  the  man  whom  he  has  sold  it  for  and  sell  it  to  him  and 
close  it  up  ; but  both  transactions  are  just  exactly  as  legitimate  as  if 
you  bought  at  the  store. 

Q.  Suppose  that  should  go  to  the  last  day  of  the  month  ? 

A.  If  you  went  on  to  the  last  day  of  the  month  and  didn’t  receive 
the  6,000  bushels  that  you  bought  because  the  price  was  up,  then  the 
party  whom  you  didn’t  receive  from  would  go  to  the  grain  committee 
and  make  complaint  of  you,  and  then  under  the  rules  they  would  lake 
and  sell  that  grain  out  for  your  account  on  this  call.  That  would  be 
the  operation,  and  you  would  have  to  stand  the  loss  or  the  profit, 
whichever  it  would  be,  according  to  their  sale. 

By  Senator  Boyd  : 

Q.  And  it  is  to  secure  that  loss  or  profit  that  the  margin  is  put  up? 

A.  Certainly;  there  are  certain  vicissitudes  attending  all  business, 
and  as  we  are  making  it  a transaction  for  the  future,  the  only  object 
of  this  margin  is  to  prevent  failure  between  the  times,  because,  take 
for  instance  myself,  if  I sell  you  a certain  amount  of  grain  for  delivery 
in  January,  I put  myself  in  a position  to  deliver  you  that  grain  and  I 
expect  you  will  receive  it  from  me ; if  you  do  not  receive  it  from  me 
and  there  is  a loss  on  that  grain,  that  margin  protects  me  to  the 
amount  of  that  loss,  and  the  balance  goes  to  you  as  ascertained  through 
the  committee  appointed  by  the  Exchange,  which  is  beyond  the  influ- 
ence of  either  you  or  myself. 

Q.  And  that  is  where  the  gambling  aspect  of  the  transaction  comes 
in  ? 

A.  I don’t  think  there  is  any  gambling  in  that. 

Q.  When  the  person  puts  up  his  margin  he  assumes  the  risk  of  that 
quantity  of  grain  going  down  in  price  ? 

A.  That  wouldn’t  be  gambling,  that  would  be  pure  speculation. 

Q.  It  would  be  a purcliase  on  chance,  would  it  not  ? 

A.  8up})ose  instead  of  your  buying  it  for  future  delivery,  you  bought 
it  actually  for  cash  and  held  it  for  that  future  delivery,  it  wouldn’t  be 
gambling  ; if  you  bought  a boat-load  of  grain  from  me  and  held  it  for 


499 


the  January  market,  and  when  the  January  market  came  you  sold  it 
out  and  made  a loss  or  profit  on  it,  would  that  be  gambling  ? 

Q.  No  ; if  I had  the  actual  grain  in  my  possession  I don’t  think  it 
would,  but  you  buy  it  with  the  intention  of  receiving  it  from  a person 
who  has  the  intention  of  delivering  it ; if  you  bought  it  with  the  in- 
tention of  not  receiving  it  and  I sold  it  to  you  in  the  same  way  — 

A.  Then  it  is  a put  or  a call ; it  wouldn’t  be  a contract ; it  would 
be  a put  or  a call  ; but  those  are  not  the  contracts  ; we  don’t  recognize 
them  ; you  always  speak  about  corners ; what  is  the  meaning  of  a cor- 
ner ? Who  makes  the  corner  ? It  is  the  short  seller  ; this  talk  about 
the  capitalists  buying  all  the  grain  in  the  United  States  is  all  stnff  and 
nonsense ; there  is  no  such  thing  ; you  asked  me  a question  about  Mr. 
Keene’s  matter ; it  is  all  over  ; my  firm  never  held  for  Mr.  Keene  more 
than  a million  bushels  of  grain  at  any  one  time  nor  so  much  as  that ; 
I don’t  think  with  all  the  talk  that  there  has  been  about  his  corner, 
-at  any  time  he  held  more  than  three  or  four  million  bushels  of  grain. 

By  Senator  Browkiistg  : 

Q.  Can  you  tell  the  committee  the  number  of  bushels  of  grain  that 
are  purchased  in  this  country  in  one  year  ? 

A.  Yes,  sir,  I think  I could  ; the  wheat  crop  of  that  year,  of  1880, 
was  estimated  to  be  a little  short  of  500,000,000  of  bushels,  as  I say 
in  my  statement  there,  worth  about  $650,000,000. 

Q.  In  connection  with  that  let  me  ask  you,  do  you  suppose  that  the 
number  of  bushels  of  wheat  produced  in  any  year  is  enough  to  cover 
all  the  sales  of  a year  in  the  Exchanges  ? 

A.  Oh  no,  it  is  not. 

Q.  What  proportion  do  you  suppose  the  actual  crop  bears  to  the 
actual  sales  in  any  one  year  ? 

A.  I could  not  tell  you  ; I could  not  even  guess  at  it;  I will  illustrate 
it  in  this  way  ; there  are  $194,000,000  to-day  of  money  in  the  banks; 
those  $194,000,000  represent  the  actual  circulating  medium  of  the 
people  of  the  United  States  ; how  many  times  that  is  turned  over  I 
don’t  know;  but  it  must  be  turned  over  a great  many  times  in  the  year 
in  the  ordinary  operations  of  the  trade ; it-  is  just  so  exactly  in  the 
operations  of  this  grain  business  and  this  produce  business ; people  are 
buying  and  selling. 

Q.  Without  delivery  ? 

A.  Sometimes  it  is  delivered  and  sometimes  not  delivered ; it  de- 
pends, just  as  I exemplified  in  Mr.  Sinclair’s  case ; that  is  going  on  all 
over  the  country  ; have  you  any  idea  of  what  the  actual  value  of  farm 
products  delivered  in  Chicago  in  one  day  is  ? I asked  a banker  that 
question  when  he  expressed  a surprise  that  some  of  these  packers  re- 


500 


quired  so  much  money  ; take  one  item  alone  ; hogs  for  instance,  the 
actual  value  market  in  one  day  during  the  season  will  be  something 
like  half  a million  of  dollars ; it  will  exceed  that. 

Q.  The  actual  produce  ? 

A.  The  actual  value  of  one  item  of  produce  and  there  is  wheat  and 
corn  and  oats  and  high  wines  and  tobacco  and  cotton,  and  there  is 
every  thing  going  on  at  the  same  time,  and  the  ramifications  of  that 
are  carried  on  by  hundreds  of  thousands  of  active  mercantile  minds, 
and  through  the  manipulations  of  that,  the  money  for  their  families, 
the  money  for  the  labor  interests  that  are  involved,  and  all  these  things 
are  entering  into  it,  and  if  you  ask  me  to  separate  them,  to  entangle 
and  unravel  them,  I say  it  is  impossible  to  do  it. 

Q.  You  do  say  that  where  there  is  a sale,  there  is  generally  a deliv- 
ery, and  that  is  the  expectation,  and  that  is  the  fact  ? 

A.  No  ; where  there  is  a sale,  the  sale  is  not  made  without  the 
intent  of  the  delivery  and  the  purchase  is  not  made  without  the  intent 
of  receiving. 

Q.  I have  been  told  that  there  has  not  been  grain  grown  enough  in 
this  country  in  one  year  to  meet  the  sales  of  a single  day  on  ’Change 
here,  or  of  two  or  three  days,  or  a week  or  a month  ? 

A.  That  would  be  exaggeration ; but  the  volume  of  transactions  in 
active  times  is  enormous;  I have  seen  an  estimate  as  high  as  810,- 
000,000  a day. 

Q.  In  margins  ? 

A.  No,  in  the  sum  value  of  the  transactions. 

Q.  Showing  that  a large  proportion  of  it  is  purely  speculative  and 
that  there  is  not  in  all  cases  an  actual  delivery  ? 

A.  There  is  no  delivery  in  a great  many  cases  ; but  let  me  go  a little 
further ; a few  days  ago  I met  an  English  gentleman  named  Har- 
graves*, who  is  the  representative  of  the  Liverpool  Exchange  ; one  of 
his  objects  in  coming  out  here  was  to  examine  into  this  system  that 
we  have  here  relative  to  buying  and  selling  for  future;  for  their  mer- 
chants are  going  into  that  system  so  largely,  recognizing  the  protective 
element  of  it;  and  he  got  from  me  the  rules  and  formulas  that  we 
have  relative  to  this  whole  history,  and  expressed  himself  as  being 
very  much  charmed  with  it  ; he  recognized  the  necessities  of  that 
thing  over  there  and  came  out  here  with  the  intention  of  studying  up 
and  rendering  himself  familiar  with  its  whole  working;  you  will  read 
in  that  statement  that  I made  to  you  that  with  the  foreign  merchants 
an  immense  business  is  being  continually  done  here  in  the  anticipation 
of  demand  by  buying  for  future  delivery. 


50f 


By  Senator  Boyd  : 

Q.  You  made  a statement  a short  time  ago  which  I think  you  would 
probably  correct  if  you  thought  over  it.  You  criticized  some  of  the 
gentlemen  in  your  own  remarks  and  I want  to  draw  your  attention  to 
it  for  that  purpose ; you  said  that  speculation  paid  the  taxes  ? 

A.  I say  largely  helps  to  pay  taxes. 

Q.  Is  it  not  true  that  labor  and  the  natural  products  of  the  country, 
which  labor  develops,  primarily  pay  all  taxes  ; that  they  are  the  pri- 
mary source  of  all  the  wealth  of  the  country  ? 

A.  I think  you  are  entirely  right  in  that  when  you  come  to  the  fun- 
damental elements  that  where  we  obtain  the  money  for  the  operation 
of  the  government,  and  the  support  of  the  people,  is  from  the  soil, 
that  it  comes  from  the  soil  in  some  way  ; now  the  New  York  Pro- 
duce Exchange  is  putting  up  a building  that  will  cost  it  something 
like  $2,000,000  ; I was  looking  into  that  very  question,  being  some- 
what of  an  inquiring  turn  of  mind,  and  taking  up  every  element  in 
that  construction  and  seeing  how  much  there  was  paid  for  actual  labor 
upon  the  construction  of  that  building,  I could  not  find  a single  ele- 
ment in  it  that  was  not  a representative  of  labor  to  the  extent  of  about 
ninety  per  cent  of  that  whole  amount  there  in  that  immense  building. 

Q.  And  the  balance  of  ten  per  cent  represented  what  ? 

A.  The  balance  represented  the  cost  perhaps ; take  the  quarry  that 
they  paid  for,  to  get  the  stone,  and  then  to  buy  the  land  on  which  the 
timber  grew  and  which  the  iron  came  out  of;  but  all  these  things 
being  considered  I estimated  it  at  ninety  per  cent  of  actual  labor  ; 
but  then  what  gives  effect  to  the  expenditures  of  that  labor  ? It 
is  the  fact  that  the  New  York  Produce  Exchange  is  an  association 
of  merchants  and  requires  room  for  the  operation  of  its  busi- 
ness ; therefore  in  labor  is  this  large  sum  of  money  expended’ to  facili- 
tate the  continuation  of  that  business  which  had  enabled  the  members 
of  the  Exchange  to  obtain  that  money  to  expend  for  labor. 

Q.  Then  speculators  are  only  the  manipulators  of  those  commodi- 
ties which  nature  and  labor  have  produced  ? 

A,  Speculators  you  might  say  are  the  farmers,  the  mechanics,  the 
financial  and  mercantile  classes. 

Q.  Answer  my  question,  please.  The  question  is,  are  not  speculators 
only  the  manipulators  of  those  commodities  which  nature  and  labor 
have  combined  to  produce? 

A.  If  you  will  change  the  word speculators  ” to  the  commercial 
community,  I will  answer,  yes;  but  I think  you  have  no  right  to  at- 
tach the  word  speculator,”  if  you  mean  it  to  be  an  epithet  of  com- 
parative contempt  to  the  mercantile  community. 


} 


502 

Q.  No  ; I don^t  mean  it  in  that  sense  ; I mean  it  simply  as  the 
speculator  or  professional  dealer  ? • 

A.  I am  a merchant  and  at  the  same  time  the  great  element  in  my 
business  is  what  might  be  termed  actual  speculations.  I have  riot  a 
positive  knowledge  of  the  result  of  that  which  I intelligently  enter 
into  as  a business.  Who  are  speculators  ? Is  not  the  school-boy  a 
speculator  when  he  sits  down  and  tries  to  map  out  for  himself  the 
choice  that  is  to  direct  his  future  life  ? He  speculates  upon  what  par- 
ticular department  his  talents  will  bring  him  in  the  best  return. 
Take  yourself  for  instance;  I donT  fancy  that  you  are  simply  a sena- 
tor of  the  State  of  New  York  merely  for  the  emolument  that  you  re- 
ceive for  your  action  as  a senator.  You  may  have  other  views  and 
you  bring  yourself  prominently  before  the  public  and  you  fit  yourself 
for  other  positions.  After  all  it  is  to  a certain  extent  a speculation, 
for  you  are  not  positive  of  the  result.  So  a doctor  and  a clergyman 
when-  they  are  turning  their  attention  to  their  particular  avenues  in 
life  speculate  to  that  extent  that  there  is  no  positive  assurance  that 
the  result  of  their  intention  will  be  realized. 

Q.  I recognize  that  the  fact  of  a senator  serving  the  public,devoting 
his  talents  to  discharge  the  duties  of  a public  office  and  the  doctor  at- 
tending upon  his  patient  are  both  laborers.  They  are  helping  to  pro- 
duce the  wealth  of  the  country. 

A.  But  at  the  same  time  they  are  receiving  an  equivalent  in  some 
way  that  is  satisfactory  to  themselves.  You  can’t  call  them  philan- 
thropists. Your  definition  would  be  more  of  a philanthropic  char- 
acter than  it  would  be  of  the  pursuit  of  a man’s  usual  avocations  for 
the  purposes  of  livelihood.  I take  exception  to  calling  you  a philan- 
thropist, or  a doctor  a philanthropist,  merely  because  he  is  following 
a particular  line  of  business  which  is  called  a profession. 

Q.  My  object  was,  that  I thought  you  would  modify  the  expression 
that  all  taxes  were  paid  by  speculation? 

A.  I think  Dr.  John  Hall  was  the  author  of  the  statement  that 
when  mercantile  men  are  prosperous,  almost  all  other  departments  of 
society  are  also  prosperous,  because  after  all  you  take  the  agricultural, 
the  mechanical,  the  mercantile  elements  of  the  country  and  they  are 
the  foundation  stones  of  our  prosperity.  I take  the  arts  and  the 
sciences,  and  the  professions  to  be  more  like  the  branches  of  a tree, 
but  after  all,  these  I name  are  the  great  trunk  of  the  tree,  and  sustain 
and  support  the  branches,  the  branches  perhaps  being  the  more  orna- 
mental part  and  the  trunk  being  the  sustaining  part. 

Q.  d’hey  are  usually  helpful  in  this  way  that  they  develop  natural 
resources  and  apply  them  to  the  arts,  to  the  development  of  tlie  com- 


503 


forts  of  life.  For  instance,  the  electrician  discovers  the  telegraph  and 
the  telephone,  and  they  have  turned  out  to  be  immense  mercantile 
agents  and  of  great  benefit  to  mankind.  The  engineer  who  builds  a 
railroad  which  is  one  of  the  great  commercial  highways  produces  for 
mankind.  So  these  that  you  call  ornamental  may  be  useful  ? 

A.  I mean  useful  and  ornamental.  I don’t  mean  simply  ornamental. 
The  great  difference  between  the  merchant  and  the  scientist  is  this 
that  the  merchant  will  contribute  of  his  capital  to  sustain  and  assist 
the  development  of  science,  and  then  when  the  scientist  lias  developed 
it  he  is  quick  to  assist  and  utilize  it  to  his  purposes. 

Q.  So  long  as  the  merchant  is  the  legitimate  agent  for  the  transac- 
tion of  business  between  the  legitimate  producer  and  the  legitimate 
consumer,  then  his  profession  is  a noble  and  honorable  one  ; but  when 
it  degenerates  into  the  profession  of  merely  taking  advantage  of  cer- 
tain peculiar  local  advantages  or  otherwise  in  order  to  unduly  enrich 
himself  at  the  expense  of  the  producer  and  of  the  consumer,  then  we 
find  fault  with  it  and  think  it  is  time  some  remedy  should  bo  discov- 
ered ? , 

A.  I would  heartily  echo  that  sentiment,  and  if  you  would  take  the 
trouble  to  investigate  the  rules  and  by-laws  and  regulations  laid  down 
,by  the  New  York  Produce  Exchange,  you  would  see  that  they  in  like 
manner*from  the  A to  the  Z of  those  things,echo  just  exactly  what  you 
have  stated.  Our  aim,  and  I believe  we  have  resulted  in  producing  it, 
is  to  create  an  intelligent,  active  and  honest  body  of  merchants  who 
have  first  of  all,  as  we  all  have,  an  aim  in  life  for  their  own  advantage, 
but  in  the  prosecution  of  that  a desire  to  elevate  the  mercantile  inter- 
ests of  the  whole  country  and  especially  to  make  prominent  the  city 
in  which  we  live. 

Q.  There  is  just  one  more  question.  You  spoke  of  a transaction 
or  an  instance,  where  several  sales  w^ere  had,  say  thirty-four  without 
any  actual  delivery  of  goods.  On  each  of  those  sales,  which  were 
separate  transactions  in  regard  to  that  commodity,  were  commissions 
paid  ? 

A.  I could  not  possibly  tell  what  was  the  character  of  the  business 
of  those  other  than  my  own  firm  ; but  judging  from  my  experience  I 
believe  that  every  party  to  that  transaction  was  exactly  in  the  same 
light  as  my  own  firm  was  and  on  all  those  transactions  a remuneration 
of  some  kind  was  paid  to  the  agent  — assuming  that  they  were  agents 
— but  a good  many  of  those  parties  may  have  been  perhaps  acting  for 
themselves  and  they  may  have  either  lost  or  made  upon  the  transac- 
tion. 

Q.  Supposing  that  each  of  those  transactions  was  conducted  through 
a broker  or  commission  merchant,  would  there  have  been  a commission 
paid  on  each  transaction? 


504 


. ^ 

•» 


A.  There  would. 

Q.  And  the  commodity  would  have  had  to  bear  that  additional  ex- 
pense ? 

A.  Oh,  not  at  all.  There  may  have  been  a large  measure  of  loss  to 
some  of  those  parties,  and  a large  measure  of  gain  to  some  of  them 
without  the  commodity  having  to  bear  it  at  all. 

Q.  Supposing  they  all  gain  ? 

A.  But  it  is  impossible,  because  the  price  of  the  article  wasn’t 
changed  a single  dollar  that  day.  That  was  merely  the  facility  for 
consummating  and  ending  the  transaction,  instead  of  having  to  make 
actual  deliveries  to  each  party  having  one  particular  lot  of  property 
and  having  an  actual  payment. 

Alexander  R.  Hammond,  being  duly  sworn,  was  interrogated  as 
follows: 

By  Senator  Boyd: 

Q.  Where  do  you  reside  ? 

A.  I reside  in  the  State  of  California. 

Q.  Where  do  you  reside  now? 

A.  I am  living  in  New  York,  have  been  doing  business  here  for  the 
last  year.  • 

Q.  What  is  your  business  ? 

A.  Grain  and  provisions. 

Q.  Where  is  your  place  of  business  ? 

A.  42  Broadway. 

Q.  Are  you  a member  of  a firm  ? 

A.  I am  a member  of  the  firm  of  Hammond  & Dodge. 

Q.  How  long  have  you  been  carrying  on  a business  at  that  place? 

A.  We  have  not  been  in  existence  long  there;  we  used  to  do  busi- 
ness at  30  Broadway.  • 

Q.  How  long  have  you  carried  on  business  in  the  city  of  New 
York  ? 

A.  Since  the  16th  day  of  last  May. 

Q.  Have  you  association  with  any  houses  in  other  cities  — business 
association  ? 

A.  We  have  association  in  that  line  of  business  in  Chicago. 

Q.  State  to  the  committee,  please,  what  the  nature  of  your  business 
is  and  your  method  of  carrying  it  on? 

A.  We  do  a regular  brokerage,  a regular  commission  business.  By 
the  way  I prepared  a statement  in  regard  to  it  this  morning,  and  I 
had  my  type-writer  get  it  up  in  a few  minutes.  I.  didn’t  receive  a 
notice  in  regard  to  this  matter  until  Saturday. 


505 


Q.  Have  you  got  that  statement  with  you  ? 

A.  Yes,  sir ; .1  have  it. 

Q.  And  is  that  statement  a correct  one  ? 

A.  Yes,  sir,  as  far  as  it  pertains  to  our  business  ; if  there  is  any 
thing  further  I would  be  pleased  to  answer  your  interrogatories  in  re. 
gard  to  it;  I have  not  had  much  time  to  look  info  this  matter,  only 
since  Saturday. 

The  witness  then  read  as  follows: 

Mr.  CHAiiiMAit — The  statement  made  in  your  summons  to  the  firm 
of  Hammond  & Dodge  to  appear  before  your  commission  reads  as  fol- 
lows : The  cornering  of  grain  and  other  articles  has  become  a promi- 
nent feature  of  modern  business  transactions. 

This  seems  to  us  to  be  an  assertion  made/rom  false  premises  ; the 
testimony  of  Captain  Edward  Hincken,  taken  before  your  commission 
and  published  in  Sunday’s  Herald,  goes  to  show  that  as  long  as  fifty 
years  ago  he  was  engaged  in  the  business  of  “ cornering  ” freights,  con- 
sequently the  word  ‘‘modern,”  used  above,  should  be  changed  to  “ an- 
cientan  old  axiom,  “custom  makes  and  prescribes  the  proper  use 
of  the  English  language,”  is  applicable  to  the  regulation  of  matters  of 
business,  either  commercial  or  financial,  and  it  would  appear  that  the 
business  of  dealing  in  different  articles,  as  suggested  in  your  summons, 
is  as  legitimate  now  as  it  has  been  since  our  English  cousins  left  these 
shores  for  their  own  homes. 

The  business  of  dealing  in  “futures,”  as  understood  by  us,  is  simply 
a desire  on  part  of  one  individual  to  speculate  in  some  chosen  article, 
whether  it  be  grain,  railroad  or  mining  stock,  cotton,  oil  or  any  thing 
else  subject  to  speculation  ; when  the  question  comes  down  to  one 
principle,  and  it  is  claimed  specularors  in  grain  are  “gamblers,”  then 
the  answer  to  that  assertion  is  that  all  who  may  be  engaged  in  dealing 
in  any  commodity  must  necessarily  belong  to  that  fraternity. 

There  is  no  law  in  the  world  that  compels  a man  to  invest  money 
in  “ options,”  any  more  than  there  is  to  force  him  into  playing  faro, 
chuck-a-chuck,  poker  or  any  other  game  so  fashionable  even  among  the 
so-called  “higher  classes;”  no  broker  employs  men  to  button-hole 
customers  on  the  street  and  drag  them  into  their  places  of  business, 
nor  do  they  employ  “ commercial  travelers,”  formerly  known  as  drum, 
mers,  as  is  the  case  among  the  majority  of  so-called  mercantile  con- 
cerns in  this  city. 

The  term  “bucket-shop,”  introduced  in  former  testimony,  is  simply 
a name  given  to  one  branch  of  the  business  of  dealing  by  another 
branch  ; it  is  conceded  that  the  larger  Exchanges,  such  as  the  New 
York  Stock  Exchange,  deals  in  greater  amounts,  but  the  manner  of 
conducting  business  is  similar,  with  the  exception  that  no  realization 
60 


50G 


can  bo  made  in  less  time  than  twenty-four  liours  after  date  of  contract 
in  the  former  case,  while  in  the  mis-named  bucket-shop  profits  are 
paid  immediately  on  their  accruing,  if  desired  ; in  the  business  we 
represent  the  dealer  becomes  his  own  broker,  which  is  not  tlie  case  in 
any  other  speculative  branch  of  trade.  He  personally  makes  his  con- 
tract, upon  his  own  judgment,  unbiased  and  untrarnmeled  ; he  watches 
the  quotations  from  the  Oliicago  Board  of  Trade  and  received  in  our 
office  seven  minutes  from  date  of  the  transaction ; he  deposits  his 
money  with  the  dealer  and  draws  his  profit,  if  any,  from  the  cashier 
on  representation  of  his  contract.  If  any  gentleman  connected  with 
this  commission  desires  to  test  the  truth  or  falsity  of  the  foregoing 
statement,  we  cordially  invite  him  to  make  a contract  with  us  over  our 
counter  and  thus  see  if  he  is  not  quickly  served  and  honestly  dealt 
with  according  to  rule.  Indeed,  we  will  make  no  distinction  between 
any  of  the  gentlemen  composing  this  august  body,  and  our  regular 
customers,  among  whom  we  count  many  of  the  leading  retired  mer- 
chants of  New  York  city. 

In  reference  to  the  matter  of  necessary  legislation,^’  it  appears  to 
us  that  the  law  affecting  contracts  made  between  individuals  should 
be  sufficient  to  protect  both  parties  to  a transaction.  If  our  business 
was  carried  on  in  some  back  room  with  secrecy,  and  cappers  or  drummers 
employed  to  invite  custom,  then  some  reason  could  be  given  why  it 
might  be  called  a gambling  business  to  deal  in  grain  and  provisions  ; 
but  as  the  doors  of  our  place  of  business  are  always  open  to  customers 
and  the  public,  our  books  ready  for  inspection  at  any  time,  and  the 
dealers  satisfied  with  our  way  of  doing  business,  added  to  the  fact 
that  no  house  of  similar  character  was  ever  brought  into  court,  we 
can  see  no  valid  reason  for  the  raid  now  being  made  upon  a respectable 
industry. 

Perhaps  this  commission  do  not  realize  the  magnitude  of  the  work 
they  are  undertaking  to  perform,  or  the  ramifications  the  proposed 
legislation  must  enter  into.  We  now  have  the  Maritime,  Produce, 
Cotton,  Oil,  Kailroad,  Real  Estate,  Iron,  Mining  and  other  Exchanges, 
whose  business  absorbs  the  attention  of  many  thousands  of  people 
and  millions  of  money  invested  variously,  the  profits  from  which  have 
served  to  build  up  the  lower  portion  of  Broadway  with  palatial  busi- 
ness houses,  and  done  more  to  make  that  portion  of  the  city  remun- 
erative to  property  owners  than  any  other  line  of  business  carried  on 
since  our  English  cousins  left  the  Battery,  ninety-nine  years  ago. 

From  our  standpoint  Ave  consider  our  business  Avill  stand  the  test  of 
examination  in  all  its  branches  and  come  out  as  pure  as  any  represented 
by  the  would-be  i-eforrners. 

In  concliibioii,  wc  cannot  refrain  from  calling  attention  to  the  lesti- 


507 


mony  of  Captain  Edward  Hincken,  before  referred  to,  and,  like  the 
man  who  was  too  lazy  to  repeat  the  Lord’s  Prayer  on  retiring,  prefer- 
ring to  print  the  verses  at  the  head  of  his  bed,  say  : Them’s  our 

sentiments.” 

Captain  Edward  Hincken,  a ship-owner  and  broker,  in  William 
street,  next  testified  : He  was  not  prepared  to  say  much  against  the 
business  of  making  corners ; he  had  been  trying  to  corner  the  freight 
market  for  years  ; sometimes  he  hit  it  and  sometimes  he  didn’t ; it 
. was  his  business  to  anticipate  the  condition  of  the  market  if  he  could, 
and  he  considered  it  to  be  perfectly  legitimate  ; if  he  wanted  to  sell 
wheat  or  buy  wheat,  and  there  was  money  enough  on  either  side  to 
make  the  transaction  good,  he  thought  he  had  a perfect  right  to  do 
so  ; to  sell  that  which  one  did  not  possess  might  not  be  called  legiti- 
mate commerce,  but  it  had  been  done  in  one  way  and  another  ever 
since  he  could  remember,  and  he  had  an  experience  of  fifty  years  in 
business ; the  Keene  corner  of  1880  had  the  effect  of  keeping  some 
shipping  idle  for  a time  ; but  every  vessel  took  away  something,  and 
eventually  all  the  grain  had  to  be  exported  ; if  a pendulum  was  held 
up  one  way,  it  was  bound  to  swing  the  other,  when  let  go ; he  looked 
upon  contracts  for  future  sales  as  simple  mediums  of  exchange  : he 
had  known  one  contract  for  680  bales  of  cotton  to  pass  through  sixty- 
four  successive  ownerships,  one  firm  getting  possession  of  it  three  dif- 
ferent times  ; about  thirty-three  and  one-third  per  cent  of  the  whole 
amount  went  to  the  brokers  for  commissions ; that,”  said  the  wit- 
ness, laughing,  ‘Ms  where  we  make  our  money.”  The  added  cost,  of 
• course,  was  all  borne  by  the  consumer,  eventually;  there  was  no  seller 
without  a buyer,  and  no  buyer  without  a seller,  and  this  struggle  be- 
tween the  two  constituted  commerce. 

Must  Fay  for  it. 

Q.  Suppose  the  consumer  cannot  pay  the  price  which  is  forced  upon 
him  by  means  of  this  intermediary  speculation  ? 

•A.  Then  he  cannot  buy. 

Q.  He  would  have  to  starve,  would  he  not  ? 

A.  He  would  have  to  starve,  I suppose,  but  such  things  never  hap- 
pen ; there  is  a hidden  law  that  governs  all  these  things  ; I have  al- 
ways found  that  I could  get  out  of  a snarl  by  paying  for  it,  and  I have 
had  to  pay  for  it  several  times  (laughter). 

Witness  went  on  to  say  that  he  thought  the  only  legislation  needed 
was  that  which  would  reqirire  bargains,  once  made,  to  be  fulfilled 
strictly  ; a man  who  sold  him  a contract  should  not  be  allowed  to 
plead  the  baby  act,  and  call  him  a gambler,  because  he  had  chosen 
sell  that  contract  to  some  one  else. 


508 


Q.  You  think  bargains  should  be  made  compulsory  in  all  cases, 
legitimate  future  dealings  as  well  as  illegitimate  ? 

A.  Yes  ; 1 don’t  see  how  you  can  separate  the  two.  < 

Q.  Don’t  you  look  upon  dealing  in  futures,  where  no  actual  delivery 
is  intended,  as  gambling  ? 

A.  Well,  all  commerce  is  gambling  ; if  I guarantee  that  I will  carry 
certain  freight  for  you  from  Liverpool  to  New  York,  in  a certain 
length  of  time,  I am  gambling  on  the  winds  ; that  has  been  our  bus- 
iness since  1882. — Sunday’s  Herald,  November  26,  1882. 

By  Mr.  Browning  : 

Q.  Where  do  you  carry  on  business  ? 

A.  42  Broadway. 

Q.  You  have  a sign  up  there  over  the  door  ? 

A.  Yes,  sir. 

Q.  With  the  name  of  the  firm  ? 

A.  Yes,  sir. 

Q.  And  the  business  carried  on  ? 

A.  Yes,  sir  ; offices  5,  6,  7,  8,  9 and  10. 

Q.  Is  it  on  the  first  floor  ? 

A.  Yes,  sir,  right  off  the  street  from  New  street  and  Broadway. 

Q.  What  is  the  size  of  your  premises  ? 

A.  About  125  or  130  feet  in  length  I think  by  the  width  of  the 
building  — all  the  offices. 

Q.  You  have  desks  and  tables  and  dhai^  there  ? 

A.  Yes,  sir,  and  carpeted  throughout  to  the  back  ; the  floors,  I be- 
lieve, are  all  carpeted. 

Q.  Do  you  have  a blackboard  there  ? 

A,  We  have  a quotation  blackboard  ; a bulletin  board  there. 

Q.  With  the  names  of  the  grains  and  different  stock  on  it  ? 

A.  Yes,  sir. 

Q.  And  on  those  you  put  up  the  Chicago  quotations  ? 

A.  Just  as  they  are  received  from  Chicago. 

Q.  And  a man  comes  in  that  place  and  puts  up  his  margin  and  says, 
want  to  buy  so  much,  or  want  to  sell  so  much,”  and  that  is  the 
transaction  ? 

A.  There  is  something  more  to  it  than  coming  in  there  and  offering 
to  put  up  his  money ; he  enters  into  a written  contract  with  us. 

Q.  What  is  the  least  amount  of  money  you  will  take  ? 

A.  We  never  sell  a less  amount  of  grain  than  they  do  in  the  Grain 
Exchanges  — from  500  bushels  to  25,000  or  50,000.  • 

Q.  And  what  amount  do  you  require  a jnirchaser  to  put  up  upon  a sale? 

A.  All  the  way  from  one  to  five  or  six  per  cent,  just  as  the  purchase 
is  made. 


509 


Q.  From  one  to  five  or  six  per  cent  of  the  total- amount? 

A.  Yes,  sir;  that  is,  the  margin  would  be  about  from  one  to  six  per 
cent. 

Q.  And  what  is  the  lowest  lot  you  will  sell  ? 

A.  We  sell  in  sums  about  the  same  as  they  do  in  the  Grain  Ex- 
changes— 500  bushels;  I believe  they  will  never  sell  less  than  500 
bushels  ; in  the  Grain  Exchanges  they  sell  that. 

Q.  Is  that  the  fact  ? 

A. 'Yes;  you  can  go  into  the  Exchanges  and  buy  500  bushels  of 
grain  to-day  if  you  want  to,  if  you  get  there  in  time. 

Q.  Or  to-morrow  ? 

A.  Yes,  sir. 

Q.  From  a regular  broker  ? 

A.  From  a regular  broker;  they  don’t  have  any  other  kind  of  people 
in  there  selling  grain. 

Q.  Do  you  know  Mr.  Miller,  connected  with  the  Exchange? 

A.  I have  heard  of  him  ; we  do  business  entirely  on  Chicago  quota- 
tions, although  we  are  connected  here ; we  are  represented  in  this 
Exchange  ; we  have  a broker  here  who  will  transact  any  business  that 
is  necessary  ; still  we  deal  entirely  with  the  Chicago  quotations ; we 
have  a party  who  will  buy  or  sell  grain  for  us  whenever  we  want  him  to. 

Q.  Then  you  don’t  make  any  pretense  whatever  of  handling  the 
article  itself? 

A.  Of  course  we  don’t  get  the  bags  down  into  our  office  g 

Q.  It  is  purely  a speculative  business  ? 

A.  Certainly,  every  thing  is  speculative. 

Q.  You  deal  in  options  ? 

A.  We  deal  in  options  and  we  have  grain  delivered  to  us,  and  we 
have  to  pay  charges  in  the  elevators  for  having  the  same,  if  it  happens 
to  fall  on  us  during  the  present  month,  if  the  present  option  happens 
to  fall  on  us,  and  we  are  dealing  in  an  article. 

Q.  Are  your  firm  members  of  the  Produce  Exchange  in  New  York  ? 

A.  Not  here. 

Q.  Of  Chicago  ? 

' A.  We  are  represented  there  in  Chicago. 

Q.  Do  you  ever  buy  in  the  open  market  yourself  ? 

A.  Very  seldom ; we  do  not  go  in  here;  we  have  nothing  to  do 
with  the  New  York  market,  only  occasionally  we  have  an  order;  we 
might  have  an  order  to-day,  or  to-morrow,  to  fill  a contract  order  for 
say  500  or  5,000,  or  20,000  bushels  of  grain,  or  something  of  that  kind, 
and  we  w^ould  send  it  down  and  have  it  filled. 

Q.  Then  your  business  is  a cash  business  on  paper  without  the  act- 
ual delivery  ? 


510 


A.  All  our  grain  is  delivered  if  it  falls  at  the  present  option,  if  the 
present  option  falls  upon  the  house  the  month  that  the  option  falls  on, 
that  the  contract  falls  due. 

Q.  Is  your  place  one  of  the  places  they  call  bucket-shops  ” described 
in  your  paper  ? 

A.  AVe  have  no  bucket  there  in  our  house,  we  have  nothing  to  put 
in  them. 

Q.  You  have  named  bucket-shop  in  your  paper ; is  your  house 
sometimes  called  a bucket-shop  ? 

A.  I don’t  know  of  anybody  ever  calling  it  a bucket-shop”  ; they 
might  call  it  a ‘‘bucket-shop,”  if  they  wanted  to,  or  they  might 
say  every  man  in  town  was  running  a “bucket-shop”;  I don’t 
understand,  exactly,  really,  the  term  “bucket-shop”  m3^self;  I sup- 
posed it  was  where  they  put  up  some  articles  of  food  in  buckets  ; they 
might  put  up  butter  or  meats,  or  something  of  that  kind,  and  ship  it; 
or  they  might  call  a man  a Peter  Funck,  or  something  of  that  kind, 
that  dealt  in  gold  watches;  it  don’t  make  it  so;  we  do  a regular  cofn- 
missioii  business  ; and  every  man  fares  alike  that  comes  in  there. 

By  Senator  Browning: 

Q.  He  puts  up  his  money  and  wins  or  loses  his  money  inside  of  an 
hour  ? 

A.  I don’t  consider  it  gambling,  though. 

Q.  That  is  the  fact,  is  it  not,  that  he  puts  up  his  money? 

^ A.  We  do  the  same  business  they  "do  in  the  regular  Exchange  ; he 
puts  up  a margin  ; for  instance,  he  buys  a quantity  of  grain  of  us  ; he 
may  come  in  there  a stranger  to  us;  we  don’t  know  who  he  is ; we 
demand  a margin  from  him  and  he  puts  up  his  margin  to  make  his 
contract  good  ; there  is  a consideration  ; the  market  slumps  off  to’ 
ward  evening  or  any  time,  and  he  is  required  to  re-margin  or  we  sell 
the  grain  to  somebody  else. 

Q.  And  that  wipes  out  his  margin  ? 

A.  That  wipes  out  his  margin. 

Q.  If  he  buys  and  grain  goes  up,  he  comes  up  to  the  desk  and  de- 
mands the  difference  ? 

A.  He  may  in  the  mean  time  sell  his  contract  to  somebody.  He  may 
say  may  be  “ 1 liave  got  a contract  for  10,000  bushels  of  corn,”  say 
January  corn,  ‘‘and  since  I made  tlie  purchase  I iiave  found  that  it 
has  advanced  two  and  one-lialf  cents  a bushel.  Now  Jim  I want  to 
sell  this  contract.  1 had  to  i)ut  up  a margin  of  two  and  one-half  cents 
a bushel  on  it  to  secure  it  ; you  give  me  back  what  I have  paid  on  this 
niai-gin,  and  })ay  me  what  it  has  advanced  and  I will  give  you  the 
benefit  of  it.” 


511 


Q.  And  he  can  go  right  to  your  desk  and  make  that  same  agree- 
ment ? 

A.  He  can  come  up  and  have  it  settled  ; he  may  say/‘  I want  to  sell 
you  this  grain,’’  if  I want  it,  I may  buy  it  from  him  ; I am  not  obliged 
to. 

Q.  You  do  take  it? 

A.  We  take  it  because  we  have  some  one  that  we  can  sell  it  to,  and 
if  I can  purchase  any  thing  and  can  sell  it  to  some  other  man,  and 
think  I can  make  a profit  on  it,  I will  do  so. 

Q.  But  you  assume  that  risk  yourself  ? 

A.  Yes,  sir ; so  does  every  other  man  that  does  business. 

Q.  If  I go  down  there  and  put  up  my  margin  and  I come  up  and 
say,  Mr.  Hammond,  I have  made  $20  on  this,  and  I want  my 
money  ” — 

A.  You  can  sell  that  wheat  to  me  ; I will  buy  it  back  from  you  and 
there  is  a contract  passes  between  us. 

Q.  I get  say  twenty  bushels  and  if  it  'goes  down  I can  walk  out 
without  my  money? 

A.  No,  sir. 

Q.  I have  lost  ? 

A.  No,  sir. 

Q.  I have  been  cleaned  out,  haven’t  I ? 

A.  No,  sir;  you  can  re-margin. 

Q.  Suppose  I don’t  care  to  go  any  more  and  stop? 

A.  If  you  have  got  no  confidence  in  your  own  judgment,  of  course, 
you  take  a back  seat. 

Q.  And  I get  out  ? 

A.  Y"es,  sir. 

By  Senator  Boyd: 

Q.  Will  you  please  describe  how  you  operate  your  bulletin  board? 

A.  We  operate  it  just  the  same  as  they  do  upon  any  Exchange;  any 
parties  who  are  doing  any  such  business.  For  instance  in  the  Produce 
Exchange  here  there  are  two  or  three  tickers  in  the  room.  The  quo- 
tations come  over  in  seven  minutes  from  Chicago,  and  they  are  called 
oft  there  and  are  placed  up  for  the  benefit  of  the  public  or  the  brokers 
who  may  be  in  there  wishing  to  deal. 

Q.  On  the  blackboard  ? 

A.  Yes,  sir;  it  is  a matter  of  record  also.  They  are  kept  in  the 
office  in  sheets  to  refer  to  at  any  time  in  the  future. 

Q.  You  commence  in  the  morning  by  putting  up  the  morning  quo- 
tations from  Chicago,  do  you  not? 


512 


A.  Yes,  sir ; we  take  first  the  receipts  of  hogs ; that  is  placed  on 
there  ‘‘  Receipts  from  Chicago,  Hogs  ; ” then  as  soon  as  ’Chatige  opens 
we  receive  the  morning  quotations,  the  first  quotations,  and  they  are 
placed  on  the  board.  ' 

Q.  Then  any  person  coming  in  to  do  business  in  your  office  looks  at 
those  quotations  as  marked  on  the  board  ? 

A.  Yes,  sir. 

Q.  And  buys  a quantity  at  that  price  ? 

A.  Yes,  sir,  provided  he  can  ; sometimes  we  are  not  always  ready  to 
sell  it. 

Q.  Supposing  there  is  a transaction,  he  buys  at  that  price  ? 

A.  Yes,  sir,  certainly. 

Q.  And  puts  up  a margin  on  the  purchase  ? 

A.  Yes,  sir. 

Q.  Of  about  how  much  usually  on  wheat  ? 

A.  About  one  cent  per  bushel  if  the  market  is  not  bobbing  around 
too  fast. 

Q.  How  long  does  he  require  to  wait  before  there  is  a change  — 
does  he  usually  wait  there  until  there  is  a change  in  the  market  ? 

A.  He  can  remain  there,  and  if  there  is  a change  in  ten,  fifteen  or 
twenty  minutes,  and  he  sees  he  has  made  a profit,  he  says,  I wish  to 
dispose  of  my  contract  to  somebody  else  very  often  he  disposes  of 
it  to  people  in  the  Exchange,  who  are  standing  around  there ; they 
are  dealers  and  they  hold  it  an  hour  or  two  and  then  it  is  sold  to  us  and 
it  is  sometimes  passed  through  a dozen  hands  with  the  indorsements 
of  the  parties  to  the  contract. 

Q.  There  is  always  a written  contract  ? 

A.  Yes,  sir. 

Q.  Suppose  he  loses,  who  receives  the  profit  of  the  margin  that  he 
puts  up  ? 

A.  The  man  w^ho  holds  the  grain. 

Q.  Hoes  he  always  pay  a commission  to  you  as  brokers  or  commis- 
si'in  merchants  on  that  transaction  ? 

A.  Most  certainly. 

Q.  How  much  ? 

A.  Twenty-five  per  cent  is  the  regular  brokerage;  on  some  articles, 
such  as  lard  and  pork,  there  is  a difference ; but  that  is  upon  grain  ; 
the  regular  percentage  throughout  the  city  is  twenty-five  per  cent. 

Q,.  On  the  value  of  the  produce  ? 

A.  No,  sir;  upon  the  margin  that  is  deposited. 

(}.  How  much  money  is  deposited  on  an  average  daily  ;in  your  of- 
fice on  such  margins  ? 

A.  I don’t  know  as  T have  kept  any  particular  account  of  it  since  we 


513 


I 


established  our  new  house,  but  it  will  average  about  probably  820,000 
to  825,000  or  $30,000  a month  upon  margins.  We  have  not  been  open  a 
great  while  and  are  not  doing  as  heavy  a business  as  some  people. 

Q.  And  that  is  on  all  margins  for  all  kinds  of  produce  ? 

A.  Yes,  sir. 

Q.  Y"ou  receive  twenty-live  per' cent  on  that  as  your  commissions  ? 

A.  It  is  not  to  be  considered  that  we  take  twenty-live  percent  upon 
all  that,  because  on  some  articles  there  is  not  as  heavy  a commission 
as  there  is  upon  others,  and  another  thing  is  that  a great  deal  of  this 
money  is  re-margins.  Some  man  comes  in  and  re-margins.  Of  course 
we  have  nothing  to  do  with  what  they  re- margin.  We  merely  give  him 
credit  for  that,  don’t  charge  him  any  thing  on  what  he  re-margins  ; we 
merely  do  the  business  just  as  it  is  done  on  the  Stock  or  Produce  Ex- 
change or  by  any  brokers  on  the  street. 

Q.  Do  you  understand  the  system  of  betting  in  pools  on  horse- 
races ? 

A.  I think  I do  if  I remember  any  thing  about  it. 

Q.  AYill  you  explain  to  the  committee  your  knowledge  of  that  sys- 
tem of  doing  business  ? 

A.  It  is  far  different  from  grain,  because  there  are  more  horses  in 
the  race  in  the  first  place.  There  are  generally  from  three  to  five 
horses  running  where  there  is  a pool.  The  men  that  manage  that  of 
course  make  the  average  on  the  amount  of  money  that  is  received  on 
any  one  particular  horse,  and  they  keep  that  average  so  as  to  protect 
themselves,  and  some  of  those  people  who  run  a French  pool,  where 
there  is  only  five  dollars  invested,  charge  a commission  on  it.  In 
French  pool  they  charge  a commission  on  the  amount  of  money  de- 
posited, and  it  is  averaged  up  and  divided  up  between  those  who  may 
win  on  any  particular  horse,  as  I understand  it.  I never  ran  a French 
pool-game,  but  I have  nad  some  sugar  invested  in  it. 

■Q.  Will  you  state  to  the  committee  wherein  your  system  of  doing 
business  by  the  bulletin  board  differs  from  the  system  of  doing  busi- 
ness in  the  French  pool  institutions  ? 

A.  It  is  entirely  different. 

Q.  Wherein  does  it  differ? 

A.  In  the  first  place  I don’t  deal  in  horses  to  start  with ; we  deal  in 
grain;  and  the  next  thing,  we  deal  in  regular  articles  of  commerce 
and  an  article  of  food  that  is  necessary  to  sustain  life,  and  we  pur- 
chase it  and  sell  it  with  the  idea  that  we  are  going  to  make  something 
out  of  it  ; we  sometimes  lose  ; it  is  speculative. 

Q.  Is  it  not  a system  of  betting  in  reality  ? 

A.  No,  sir,  I don’t  see  how  it  can  be. 

Q,  Betting  on  the  probable  prices  or  change  in  prices  ? 

65 


514 


A.  It  is  speculating  upon  the  prices,  but  not  betting  ; there  is  no 
particular  bet  made. 

Q.  A man  makes  a contract,  makes  a purchase  of  a quantity  of 
grain  at  a certain  price  and  puts  up  his  margin  ; he  assumes  the  risk 
of  that  grain  decreasing  in  value,  does  he  not  ? 

A.  Yes,  sir. 

Q.  Then  it  is  a risk  in  reality  ? 

A.  It  is  a risk  for  any  man  to  purchase  any  thing  and  hold  it  think- 
ing he  will  get  a higher  price. 

Q.  How  many  teiich  j)laces  of  doing  business  are  there  in  the  city  of 
New  York  — places  such  as  yours? 

A.  I don’t  know  ; I think  there  are  about  1,500  or  1,600  of  them  all 
told  doing  business  here  ; I think  there  are  that  many,  I don’t  know, 
but  a great  many  more,  who  purchase  articles  and  deal  in  options 
That  is,  there  are  about  that  many  men  ; I don’t  suppose  there  are 
that  many  lirms  ; but  I understand,  from  information  I received,  that 
there  is  about  that  many  who  are  doing  business  here  in  grain  and 
produce.  Besides  there  are  a great  many  others. dealing  in  other  arti- 
cles of  commerce  that  do  the  same  kind  of  business. 

By  Senator  Browj^ing  : 

Q.  What  is  the  form  of  your  contract  between  you  and  the  buyer 
and  the  seller  ? 

A.  ‘‘We  agree  to  buy  5,000  bushels  of  grain  to  be  delivered  to  us 
in  the  month  of  November  or  January,”  for  instance  say  No.  2 wheat, 
at  a certain  price  which  is  at  that  time  probably  posted,  which  came 
over  the  wire  from  Chicago,  upon  which  he  deposits  a margin  and 
signs  his  name  on  a contract,  which  is  received  at  'our  office  and  made 
a record  of.  That  is  merely  an  application,  and  then  we  make  out  a 
contract  for  him,  a written  contract,  in  which,  if  he  agrees  to  buy,  we 
agree  to  sell,  in  writing,  a certain  amount  of  grain,  to  be  delivered  at 
that  time  to  him.  We  have  not  the  grain  at  our  disposal,  and  if  we 
think  we  cannot  get  it  we  telegraph  to  Chicago  an  order  to  our  broker 
to  })urchase  that  grain  in  the  tnarket.  If  we  have  tiie  grain  on  our 
hands  and  the  month  of  January  arrives  it  may  be  delivered  to  us  at 
any  time. 

Q.  I am  not  speaking  about  a transaction  of  that  kind.  If  I come 
down  in  your  place  to  invest  $25  or  $30  this  afternoon  or  to-morrow 
morning  and  I want  to  get  a return  within  twenty  or  twenty-five 
minutes  of  my  transaction,  such  as  you  described  a moment  ago,  what 
sort  of  a contract  do  you  give  to  me  if  I want  to  buy — do  you  simply 
agree  to  sell  it  at  such  a ])rice? 

A.  Yes,  sir.  You  make  an  application  in  writing.  We  take  no 


515 


man’s  word.  He  signs  an  application  in  writing.  We  have  them  there 
printed.  We  pull  down  a slip  and  he  makes  that  application  in  writ- 
ing for  so  much  grain  or  pork  or  lard.  It  is  handed  to  us.  If  we 
accept  of  it  we  make  out  a contract. 

Q.  Now  I want  the  form  of  that  contract  ? 

A.  We  receive  his  application  and  make  out  a contract  in  which 
we  agree  to  sell  for  future  delivery. 

By  Senator  Boyd  : 

Q.  State,  if  you  please,  the  words  of  that  contract,  if  you  remember 
them  ? 

A.  We  agree  to  sell  to  Mr.  John  Smith  5,000  bushels  of  No.  2 
corn  to  be  delivered  in  the  month  of  January  at  55  cents  a bushel.” 

By  Senator  Browning  : 

Q.  And  you  sign  your  name  ? 

A.  We  use  a stamp  for  the  house,  the  firm. 

Q.  And  you  hand  that  to  me  ? 

A.  Yes,  sir. 

Q.  That  is  your  agreement  with  me  to  sell  me  ? 

A.  Yes,  sir. 

Q.  And  then  I watch  the  board  and  I find  that  it  has  gone  up — 
this  is  an  instance  where  you  agree  to  sell  me — I have  made  a profit  on 
the  transaction  ? 

A.  Yes,  sir. 

Q.  I step  up  to  you  and  hand  you  back  the  paper  and  say,  ^^I  want 
you  to  take  this  back  and  give  me  the  difference  betjveen  the  price  I 
paid  you  and  the  price  of  this  new  quotation.” 

A.  You  want  to  sell  it  back  to  us  ? 

Q.  Yes. 

A.  If  we  think  we  can  make  any  thing  out  of  it  we  will  take  it. 

Q.  Won’t  you  take  it  ? 

A.  We  will  take  it  to  balance  our  books  ; we  often  take  it. 

Q.  That  is  what  you  call  a contract  ? 

A.  Yes,  sir  ; it  is  a contract  in  writing. 

Q.  It  is  stamped  with  a stamp  ? 

A,  Yes,  sir;  it  is  stamped  by  the  firm. 

Q.  And  who  has  charge  of  that  stamp  ? 

A.  One  of  the  clerks;  we  keep  about  a dozen  clerks. 

Q.  Each  one  of  these  clerks  has  a stamp  ? 

A.  No,  sir;  only  one. 

Q.  That  contract  clerk  makes  a contract  for  your  firm  ? 

A.  It  goes  before  the  general  manager  of  the  house,  and  if  he  wants 
to  do  it  — 


516 


• Q.  How  long  does  it  take  to  do  that  ? 

A.  It  depends  upon  the  amount  of  the  business  ; sometimes  it  takes 
twenty  minutes  and  sometimes  two  minutes  and  a half. 

Q.  And  if  I was  right  up  to  the  desk  it  wouldn’t  take  long  ? 

A.  Well,  say  five  minutes. 

Q.  AVhat  will  the  receipts  in  your  house  average  a day? 

Q.  They  will  average  probably  $25,000  to  $30,000  a month. 

Q.  That  is,  that  amount  of  money  will  pass  through  your  hands  ? 

A.  Yes,  sir. 

Q.  On  that  you  receive  how  much  commission  ? 

A.  It  is  not  all  to  be  taxed  by  commissions. 

Q.  What  will  the  commission  average? 

A.  I am  unable  to  tell  you  at  the  present  time  in  this  new  house ; 
we  are  not  prepared  to  say  at  present ; we  have  only  been  open  for  a 
short  time. 

Q.  Five  per  cent? 

A.  I suppose  one-half  of  that  amount  is  taxable  with  commission, 
to  be  subject  to  brokerage. 

Q.  One-half  of  what  amount  ? 

A.  $25,000  to  $30,000  a month. 

Q.  'About  $15,000  you  put  a commission  on  ? 

A.  Yes,  sir. 

Q.  Why  don’t  you  put  it  on  all  ? 

A.  Because  some  of  it  is  re-margins ; for  instance  if  you  made  a 
contract  there  and  your  judgment  was  wrong  and  you  wanted  to  re- 
margin to  save  yourself,  you  put  up  some  more  money,  and  we  don’t 
propose  to  tax  you  for  every  cent  you  put  up. 

Q.  What  is  the  commission  you  put  on  tlie  other  $15,000  ? 

A.  The  regular  brokerage,  such  as  is  customary  here  in  the  street 

Q.  What  is  the  customary  brokerage  ? 

A.  Twenty-five  per  cent  upon  the  original  margin. 

Q.  So  that  your  profit  would  be  one-quarter  of  the  $15,000  ? 

A.  That  pertains  to  grain  entirely  ; but  upon  the  pork  and  lard  it 
is  different. 

Q.  More  or  less  ? 

A.  Some  less,  some  more. 

Q.  And  the  $30,000  that  passes  through  your  hands  is  on  account 
of  transactions  in  grain,  lard,  pork  and  every  thing? 

A.  Oh,  yes,  sir,  grain  and  provisions. 

Q.  Not  especially  grain  ? 

A.  No,  sir,  grain  and  provisions. 

Q.  Do  yon  ever  make  an  actual  delivery  of  grain  ? 

A.  A delivery  is  often  made  to  us  in  person. 


517 


Q,  It  is? 

A.  Yes,  sir,  delivery  is  made  to  ns  in  Chicago.  We  deal  in  Chicago. 

Q.  Do  you  ever  transfer  the  grain  right  away  from  one  party  to 
another? 

A.  The  contract  calls  for  the  grain  and  it  is  transferred  by  an  in- 
dorsement. 

Q.  You  just  deal  in  these  contracts.  That  is  all,  isn’t  it?  Your 
business  is  making  contracts  with  your  customers,  and  there  is  no 
more  than  that  in  it  ? 

A.  We  are  acting  as  a broker  as  between  customers  certainly. 

Q.  What  I mean  to  say  is,  you  don’t  receive  cargoes  of  grain  that 
are  sent  to  yon,  and  all  that  sort  of  thing  ? 

A.  There  is  not  a broker  in  the  street  who  does  it  scarcely,  who  re- 
ceives the  cargo  himself.  He  very  often  purchases  it  for  others  and 
deals  for  others.  The  deliveries  are  all  made  in  Chicago.  For 
instance,  if  I buy  25,000  bushels  of  grain  to-morrow  on  December 
option,  when  December  arrives  it  is  delivered  to  me  and  I have  to  pay 
storage  ; they  will  charge  me  for  it  down  here  and  I may  sell  it  in  500 
'bushels  lots  to  anybody. 

By  Senator  Boyd  : 

Q.  Is  it  not  a fact  that  the  majority  of  people  who  transact  business 
in  your  office  and  who  lose  their  margins  do  not  re-margin  ? 

A.  That  depends  entirely  upon  the  character  of  the  operator.  It  is 
considered  by  many  that  the  man  who  re-inargins  is  not  as  successful 
as  the  one  who  lets  it  go  and  makes  a new  contract.  Of  course  these 
matters  of  speculation  are  judged  differently  by  some  from  what  they 
are  by  others,  because  you  may  say  it  is  a speculation  entirely. 

Q.  Then  the  majority  of  people  do  not  re-margin  ? 

A.  I can’t  say  the  majority.  There  is  a great  number  re-margin. 
I am  not  prepared  to  say  whether  the  majority  re-margin  or  not. 

Q.  What  proportion  of  the  men  that  re-margin  in  case  of  their  loss 
of  their  second  margin,  put  up  another  margin  ? 

A.  A great  many.  A great  many  margin  up  grain  25  cents  a bushel 
sometimes  when  there  is  a great  slump  in  grain.  They  may  re-margin 
if  they  have  purchased.  If  they  sell  it  is  the  same  way  they  are  called 
on  for  more  margin  by  the  purchaser. 

Q.  What  proportion  of  your  customers  have  ever  called  for  an  actual 
delivery  of  the  grain  sold  ? 

A.  They  all  do  it  when  the  month  arrives. 

Q.  What  proportion  ? ^ 

A.  Everybody  who  has  a contract  and  wishes  to  settle  that  day,  and 
wishes  the  grain  delivered  to  him. 


518 


Q.  What  proportion  of  persons  who  do  business  in  your  office  would 
they  make  — such  persons  as  continue  to  hold  their  contracts  ? 

A.  To  make  the  delivery  ^ 

Q.  Yes  ? 

A.  Everybody  holding  the  contract  for  grain  wishes  it  delivered 
to  him  that  day  ; he  wishes  to  settle  it ; if  we  have  sold  it  to  him  he 
wants  it  delivered. 

Q.  If  he  has  lost  his  margin,  he  is  out  of  the  transaction,  is  he  not  ? 

A.  Certainly. 

Q.  Unless  he  re-margins  or  makes  a new  contract  ? 

A.  Unless  he  re-margins.  If  a man  makes  a contract  and  puts  up 
a margin  and  forfeits  it,  it  is  over. 

Q.  Of  all  the  persons  who  make  contracts  with  you,  what  propor- 
tion of  them  demand  a fulfillment  of  those  contracts? 

A.  Everybody  demands  a fulfillment  of  their  contract. 

Q.  Of  the  delivery  of  the  grain  ? 

A.  They  call  for  the  contract  to  be  fnlfilled,  and  it  has  got  to  be 
fulfilled  or  the  margin  falls  in  other  hands. 

Q.  I don’t  think  you  understand  me  just  yet  ; you  say  that  a man 
who  loses  his  margin  is  out  of  the  contract  ? 

A.  Certainly.  He  puts  it  up  to  secure  good  faith,  and  of  course  if 
the  grain  goes  away  from  him,  if  the  price  goes  away  from  him,  if  we 
have  the  article  for  him,  he  is  required  to  hold  that  article  and  he  has 
got  to  put  up  another  margin  to  hold  it. 

Q.  You  say  that  a large  mumber  of  them  do  not  put  up  another 
margin  ? 

A.  A great  many  of  them  are  not  prepared,  and  a great  many  think  if 
grain  is  going  up,  they  will  wait  till  higher  prices  and  sell  another  lot, 
and  they  will  have  a better  advantage  in  another  market ; those  parties 
let  the  grain  go,  and  go  in  higher  up  or  lower  down.  It  depends  upon 
whether  they  have  bought  or  sold  grain  ; they  wait  until  the  market 
has  got  to  its  bottom,  or  until  it  has  got  to  its  height  to  get  in  again. 

Q.  Of  all  the  persons  who  make  original  contracts  with  you,  you 
say  a large  number  of  them  do  not  re-margin ; so  they  lose  ? 

A.  Some  of  them;  I don’t  say  a large  number  — a portion  of 
them  do. 

Q.  Of  all  the  persons  who  make  original  contracts  with  you,  what 
proportion  of  them  demand  the  ^'fulfillment  of  their  contracts  at 
maturity  ? 

A.  Every  one  of  them. 

Q.  Even  though  a man  loses  his  margin  ? 

A.  A man  who  loses  his  margin  has  got  nothing  left  to  ask  for. 

Q.  That  is  what  I want  to  get  at;  of  all  the  parties  who  make 


519 


\ 

original  contracts,  how  many  demand  a fulfillment  of  the  contracts  at 
maturity  ; how  many  do  actually  make  demand  for  the  fulfillment  of 
the  contracts  ? 

A.  All  those  who  hold  contracts;  every  man  who  has  a contract, 
and  there  is  any  thing  left  in  the  contract  to  demand  any  thing  for, 
comes  forward  for  settlement. 

Q.  What  proportion  do  they  bear  to  the  whole  number  of  con- 
tractors ? 

A.  It  is  hard  to, establish  that  ? 

Q.  About  what  proportion  ? 

A.  It  is  impossible  to  say ; it  would  require  a party  to  go  through 
our  books. 

Q.  Do  ten  per  cent  come  forward  ? 

A.  Why  certainly ; if  they  didn’t  we  would  all  get  rich  down  there. 

Q.  Do  fifteen  per  cent  ? 

A.  Yes,  sir  ; there  have  been  over  fifty  per  cent  of  them  in  the  last 
month,  that  is  fifty  per  cent  of  the  money  invested  in  the  last  month 
has  gone  against  us;  in  other  words,  we  have  done  a losing  business 
up  to  date  in  our  business. 

Q.  You  say  then  that  fifty  per  cent  of  them  did  come  and  demand 
the  fulfillment  of  their  contracts  at  maturity ; who  was  the  last  man 
with  whom  you  carried  out  that  contract  and  where  was  it  done  ? 

A.  I am  afraid  you  do  not  understand  this  business  thoroughly  ; if 
you  would  call  down  there  I could  explain  it  a great  deal  better  there 
than  I could  here  upon  a table;  not  that  I have  any  particular  object 
in  getting  you  there  for  any  other  purpose. 

Q.  You  say  you  enter  into  contracts  with  certain  purchasers  of 
grain  to  make  deliveries  at  future  dates  and  I want  to  know  what  pro- 
portion of  these  purchasers  you  carry  out  your  contract  with  ? 

A.  We  carry  out  our  contracts  in  full  wfith  everybody. 

Q.  I mean  by  delivery  of  the  grain  ? 

A.  We  indorse  the  amount  and  we  have  it  in  Chicago;  of  course 
the  actual  grain  does  not  go  into  his  possession,  but  he  gets  a contract 
for  it. 

Q.  Do  you  in  any  case  give  the  actual  possession  of  the  grain  to  the 
person  making  the  contract? 

A . The  actual  possession  of  the  grain  itself  ? 

Q.  Yes. 

A.  No,  sir,  and  there  are  very  few  houses  in  New  York  that  do  it. 

Q.  You  don’t  do  it  in  any  instance  ? 

A.  It  is  hardly  ever  done ; the  actual  grain  is  never  turned  over. 

Q.  You  say  that  those  persons  who  have  their  contracts  in  opera- 
tion and  effect  at  maturity  come  and  demand  their  fulfillment  and 


520 


you  carry  them  out  by  indorsing  them  and  sending  them  to  Chicago 
to  get  a delivery  of  their  goods  ? 

A.  You  don’t  understand  me  yet ; I see  that  I will  have  to  educate 
you  a little  on  this  question  of  grain;  we  will  say  every  gentleman  in 
this  house  walks  up  to  me  and  says,  “I  want  to  buy  a lot  of  grain,” 
some  of  them  want  to  buy  for  November,  some  for  January,  February, 
March,  April  and  May;  the  quotations  are  there  of  the  prices  and  1 would 
sell  to  them  ; very  well ; I go  into  the  Chicago  market  or  telegraph  to 
the  Chicago  market  and  I say,  Purchase  me  Uj,  lot  of  grain  up 
there ;”  say  it  is  100,000  bushels  ; I know  I can  purchase  it  there  be- 
cause I have  my  associates  there  and  I make  the  contracts  here  for  the 
delivery  of  that  grain  to  these  people. 

Q.  In  Chicago  or  here  ? 

A.  I make  the  contracts  here. 

Q.  For  the  delivery  of  the  grain  here  ? 

A.  No,  sir.  There  is  nothing  in  regard  to  where  it  is  delivered 
sj^ecified,  but  it  is  supposed  if  he  deals  in  Chicago,  it  will  be  delivered 
to  him  there. 

Q.  Supposing  it  was  named  as  to  where  the  delivery  would  take 
place  ? 

A.  The  grain  is  delivered  to  them  through  me.  1 am  acting  as 
broker  for  all  you  people  here.  Say  for  instance  that  25,000  bushels 
of  that  grain  is  the  November  option,  and  it  has  been  delivered.  In 
other  words  I have  a receipt.  I have  information  that  that  amount  of 
cash  grain  has  fallen  uiion  my  hands,  and  I am  paying  storage  on  it  in 
an  elevator.  I immediately  notify  these  people  that  they  must  come 
forward  and  settle  on  that  day,  the  last  day  of  the  month.  It  is  the 
same  thing  that  is  done  in  the  regular  Exchange,  if  you  understand 
that.  The  same  business  that  is  conducted  in  our  place  of  business  is 
done  upon  the  Produce  Exchange,  as  this  gentleman,  Mr.  Orr  here, 
has  explained  to  you. 

Q.  You  notify  them  to  come  and  settle,  and  they  come  and  settle, 
do  they  ? 

A.  A great  many  of  them,  certainly — those  who  have  got  any 
thing. 

Q.  Explain  the  process  of  settlement  and  what  the  result  is  ? 

A.  They  come  to  us  and  say  : ‘‘We  want  you  to  take  our  grain.” 
Very  well,  we  take  it  off  their  hands,  and  we  pay  them  for  it.  W® 
hand  them  back  the  original  margin,  and  if  they  have  got  ten  cents  a 
bushel  profit,  we  give  them  the  profit. 

Q.  But  you  never  in  any  instance  deliver ‘the  grain  ? 

A.  The  delivery  is  made  by  a contract. 

Answer  the  (juestion,  please,  categorically.  You  never  deliver 
the  grain  actually  ? 


521 


A.  I don’t  understand  what  you  mean  by  that. 

Q.  You  don’t  make  a physical  delivery  of  the  grain,  do  you  ? 

A.  Certainly.  We  tell  them  that  this  grain  is  to  be  delivered  to 
them  in  Chicago.  It  is  delivered  to  us  as  their  broker.  We  are  paying 
storage  on  the  grain.  We  are  brokers  for  these  people.  We  have  to 
pay  storage  on  the  grain  for  them  and  call  on  them  to  settle  with  us. 

Q.  You  do  actually  deliver  the  grain  in  Chicago  to  some  parties  ? 

A.  It  is  delivered  to  us,  and  we  charge  these  people  with  the  amount 
of  the  expense  that  is  necessary  that  accrues  upon  this  quantity  of 
grain. 

Q.  That  is,  charge  your  customers  ? 

A.  Certainly,  we  charge  them  with  a commission. 

Q.  Who  was  the  last  man  that  accepted  an  actual  delivery  of  the 
grain  from  you,  and  when  was  it  ? 

A.  They  are  accepting  it  every  day.  I couldn’t  tell  the  name. 
There  are  a great  many  old  merchants  down  there. 

Q.  According  to  your  statement,  they  only  accept  a delivery  by  con- 
tract ? 

A.  They  don’t  do  it  in  the  regular  Exchanges  ; they  merely  indorse- 

Q.  Can  you  tell  the  committee  one  individual  who  after  the  com- 
pletion of  your  contract  that  you  have  just  described,  has  received  a 
physical  delivery  of  grain  for  which  he  contracted  in  your  office  ? 

A.  I don’t  know  as  I can  give  his  name  particularly ; I don’t  know 
as  a man  is  obliged  to  give  any  person’s  particular  name  who  is  deal- 
ing with  him,  but  I would  do  it  if  I had  it  ; for  instance- 500  men 
come  in  there  and  say,  “ I want  to  buy  500  bushels  or  want  to  sell  it.” 

Q.  When  was  the  last  time  that  you  transacted  business  with  any- 
body who  received  a physical  delivery  of  the  grain  ? 

A.  You  mean  the  grain  in  sacks  and  elevators  and  one  thing  and 
another. 

Q.  Yes,  given  to  him  ? 

A.  I have  explained  to  you  that  the  grain  is  delivered  to  us  and  we 
are  the  broker  for  this  party. 

Q.  Delivered  to  you  in  Chicago  ? 

A.  Delivered  to  us  in  Chicago. 

Q.  I want  to  get  at  the  last  time  you  delivered  it  to  your  customers  ? 

A.  They  do  not  want  the  delivery ; we  notify  them  every  day  to 
come  up  and  settle, 

Q.  If  they  don’t  come  up  and  settle  what  is  the  consequence  ? 

A.  We  take  and  sell  it  to -somebody  else  if  it  is  on  the  last  day  of  the 
month  ; we  generally  take  it. 

Q.  And  their  contract  is  forfeited  ? 

A.  Yes,  sir ; it  expires  on  the  last  day  of  the  month  of  their  option. 

66 


522 


Q.  Wliut  proportion  of  your  customers  allow  their  contracts  to  for- 
feit in  that  way  ? 

A.  Very  few  ; you  are  speaking  of  the  actual  delivery  of  the  grain; 
here  last  week  I suppose  that  the  grain  market  of  New  York,  that  is 
that  the  grain  in  New  York,  was  sold  about  500  times  ; there  is  just 
about  grain  enough  in  New  York  at  the  present  time  to  feed  the  horse 
here  for  twenty-four  hours  ; I think  they  would  eat  it  up  in  forty- 
eight  completely  ; there  have  been  large  transactions  based  upon  the 
amount  of  grain  that  is  in  these  elevators  here  ; it  is  purchased,  it  is 
sold  and  delivered ; the  contract  for  the  delivery  is  handed  to  you  ; I 
deliver  you  that  amount  of  grain,  say  a thousand  bushels  ; you  receive 
it  and  deliver  it  to  B.,  who  receives  it  and  delivers  it  to  0. 

Q.  Your  delivery  of  grain  is  simply  by  the  delivery  of  a contract  — 
by  contract  ? 

A.  We  will  give  them  the  cash  corn  if  they  want  it  ; hardly  anybody 
ever  wants  the  cash  corn  ; we  take  it  ourselves;  we  will  get  any  man 
the  casli  corn  if  he  wants  to  pay  the  difference  ; I have  had  cash  corn 
delivered  to  us  in  Chicago,  some  8U,000  bushels  not  long  ago.  • 

Q.  About  how  much  of  the  margins  that  are  deposited  in  your  office 
are  forfeited  by  your  customers  ? 

A.  It  is  a very  small  amount. 

Q.  What  proportion  ? 

A.  I don’t  think  it  would  exceed  five  per  cent ; I am  speaking 
rather  at  random  about  it,  but  I don’t  think  it  would  exceed  five  per 
cent  and, probably  not  over  three. 

Q.  Who  gets  that  forfeited  margin  ? 

A.'  It  goes  to  parties  who  have  taken  the  responsibility  of  carrying 
the  grain  for  them. 

Q.  Who  are  they  ? 

A.  They  are  the  brokers. 

Q.  That  is  yourself  ? 

A.  The  house. 

Q.  Then  all  the  forfeited  margins  go  to  the  house  ? 

A.  Forfeited  margins,  if  they  are  purchases,  go  to  the  one  that  sold 
to  them  for  the  non-fulfillment  of  the  contract. 

Q.  Then  at  the  rate  of  five  per  cent  how  much  would  the  forfeited 
margins  be  on  your  dealings  during  the  last  month  ? 

A.  It  is  a matter  that  can  be  easily  computed.  We  will  say  for  in- 
stance, we  have  done  $15,000  worth  of  business  in  the  last  month, 
and  there  is  three  per  cent  of  that  that  are  forfeited  margins.  It 
don’t  amount  to  much  of  any  thing;  $30  on  a thousand.  There  is, 
say  $15,000.  It  don’t  amount  to  much.  We  depend  entirely  upon  a 
regular  commission  there. 


523 


By  Senator  Browking  : 

Q.  There  is  no  way  you  can  lose,  is  there  ? 

A.  We  have  lost  every  day  we  have  been  open  except  three  — this 
last  house. 

Q.  How  can  you  lose  if  you  do  a business  on  commission? 

A.  Very  often  we  carry  a lot  of  grain  or  material  that  we  lose  on. 
We  sell  a party  a lot  of  grain  and  don’t  prepare  for  it  in  time  in  the 
Chicago  market.  We  don’t,  in  othe^r  words,  hedge  on  it.  We  take  a 
little  interest  ourselves  in  speculation.  A man  buys  grain  and  we 
think  it  is  going  away  from  him  and  we  buy  it  and  lose  on  it. 

Q.  What  is  the  smallest  amount  of  money  you  will  take  ? 

A.  From  five  dollars  to  five  thousand  dollars. 

Q.  You  will  take  five  dollars  ? 

’ A.  We  will  take  any  amount  a man  has  got.  We  hardly  ever  take  as 
low  as  five  dollars.  If  a man  comes  in  and  wants  to  buy  500  bushels  of 
corn  and  the  market  looks  steady  we  will  take  five  dollars. 

Q.  He  goes  in  and  bets  five  dollars  that  the  price  will  go  up  and  you 
bet  it  won’t  ? 

A.  I dispute  that ; I am  not  a gambler. 

Q.  That  is  about  the  size  of  it,  isn’t  it  ? He  goes  in  .there  and 
you  agree  to  sell  him  and  he  puts  up  the  five  dollars  and  comes  to  you 
in  twenty  minutes  and  says,  ‘‘  I have  won  and  I want  it,”  and  you  pay 
him  ? 

A.  If  you  make  it  any  other  way  besides  betting.  If  you  come  in  and 
say,  I speculate  with  you,  I will  take  the  chances  with  my  money 
that  corn  is  going  up  to-day,”  and  I sell  it  to  you,  and  I say  it  is  for 
future  delivery  or  any  other  time,  it  is  a contract  and  I have  to  make 
it  good.  In  the  first  place  we  make  it  good  by  putting  up  a margin 
on  it. 

Q.  I have  heard  men  say  that  they  were  going  down  to  bet  and  that 
is  what  they  called  it.  I have  not  been  down  there.  I don’t  know 
any  thing  about  it  ? 

A.  You  were  in  Harlem,  for  instance,  this  morning  and  you  went 
down  to  the  elevated  road  and  paid  ten  cents  to  come  down  to  Yew 
York.  You  bet  your  life  against  ten  cents  that  you  would  be  sent  to 
New  York  some  time  in  the  future  and  you  may  not  get  there.  You 
put  up  ten  cents  to  be  delivered  to  New  York  in  the  future  some  time. 

Q.  Do  you  think  that  is  a fair  illustration  ? 

A.  That  is  exactly  the  same  thing  ; a man  has  got  a corner  on  a rail- 
road, and  runs  it  to  make  money,  and  you  get  on,  his  railroad  and  put 
up  your  money. 

Q.  You  are  at  his  mercy  ? 

A.  If  you  have  not  got  anybody  else  to  be  at  the  mercy  of,  you  are. 


524 


Q.  Is  there  a limitation  to  margins  ? 

A.  No,  sir.  1 

Q.  How  many  times  can  a man  re-margin  ? 

A.  He  can  re- margin  as  long  as  he  lives,  if  he  wants  to,  up  to  the 
time  that  the  option  takes  place. 

Q.  Suppose  a man  comes  in  your  place  and  puts  up  his  $20,  and  you 
agree  to  sell  him,  and  he  goes  out  and  comes  back  in  three  hours  ; 
in  the  mean  time  it  has  gone  down  so  far  that  it  has  wiped  out  his 
margin,  and  when  he  comes  back  he  sees  the  quotation  is  above  it,  it 
has  gone  back  again  above  the  amount,  and  he  says,  I am  a fortu- 
nate fellow  ; it  has  gone  up,”  does  he  get  his  money,  or  do  you  remind 
him  of  the  fact  that  it  has  gone  down  since  he  was  there,  and  he  has 
lost  ? 

A.  He  is  just  two  hours  late. 

Q.  If  he  buys  for  January,  and  holds  that  little  piece  of  paper  which 
says  that  you  agree  to  sell  for  future  delivery  in  January,  if  he  should 
come  back  in  January  and  say  he  wants  it,  you  will  say  it  is  wiped 
out  ? 

A.  If  he  comes  to  me  as  a broker  and  wants  me  to  carry  it,  I would 
say:  ‘‘  What  do  you  want  me  to  carry  on,  your  money  or  your  wind  ? 
Put  up  your  bank  account  and  I will  carry  it  for  you;”  if  a man 
comes  in  and  puts  up  ten  cents,  and  says,  re-margin  it  for  me  when 
necessary,”  we  will  do  it. 

Q.  There  is  no  limit  ? 

A.  There  is  no  limit ; he  can  'go  as  high  as  the  price  of  the  cash 
stuff  that  he  deals  in. 

Q.  Do  you  ever  deal  in  grain  certificates  ? 

A.  Very  often;  I have  a great  many  people  who  deal  in  grain  cer- 
tificates ; I have  dealt  in  grain  certificates. 

Q.  What  proportion  of  your  business  is  in  grain  certificates  ? 

A.  Not  very  much,  because  we  don’t  deal  with  New  York ; we  deal 
with  Chicago  business. 

A.  Have  any  men  ever  made  money  in  these  transactions  in  your 
office  ? 

A.  We  have  some  of  the  leading  people  in  New  York  doing  busi- 
ness there,  and  they  wear  good  clothing,  and  they  always  answer  to 
the  ringing  of  the  first  bell. 

Q.  Have  they  made  any  money  in  these  transactions  ? 

A. -Yes,  sir  ; a great  many  of  them  make  money;  if  it  was  not  a 
})lacc  wliere  a man  would  be  squarely  and  honestly  dealt  with,  they 
wouldn’t  patronize  us ; you  would  be  surprised  to  come  to  our  place 
of  business  and.  find  ])eople  there;  wo  have  men  there  sixty  years  old 
that  have  heeji  doing  business  thirty  years  in  New  York,  some  of 


525 


them  old  retired  merchants  that  do  not  feel  like  going  on  the  street 
amongst  young  men,  that  come  down  there  with  $500  or  $1,000, 
whatever  they  may  choose  to  bring,  and  because  their  judgment  tells 
them  corn  is  going  up  and  there  is  a demand  for  it,  and  not  a suffi- 
cient supply,  and  they  can  make  money,  they  invest ; and  another 
class  of  people  who  think  there  is  a large  crop  in  the  AVest  that  can  be 
furnished  in  sufficient  time  to  make  it  good,  turn  and  say,  we  will 
sell  it/’ 

By  Senator  Boyd  : 

Q.  Is  there  any  thing  in  your  contract  that  says  if  the  market  goes 
down  the  contract  is  void  ? 

A.  I think  there  is,  but  I am  not  positive  ; I will  send  you  a con- 
tract if  it  will  be  of  any  use  to  you ; I will  send  you  up  an  application 
and  a blank  contract.  ^ 

H.  H.  Honor e,  Jr.,  being  duly  sworn,  was  interrogated,  and  testified 
as  follows : 

By  Senator  Boyd  . 

Q.  Where  do  you  reside  ? 

A.  48  West  Twenty-sixth  street,  New  York. 

Q.  What  is  your  business  ? 

A.  Trading  in  grain  and  provisions. 

Q.  Where  is  your  place  of  business  ? 

A.  34  New  street. 

Q.  Are  you  a member  of  a firm  ? 

A.  Yes,  sir. 

Q.  What  is  the  name  of  your  firm  ? 

A.  Honore  Brothers  & Glover. 

Q.  State,  if  you  please,  your  knowledge  and  opinion  in  reference  to 
the  whole  system  of  making  corners  with  reference  to  its  effect  upon 
commerce  and  its  influence  upon  the  public  welfare  ? 

A.  I think  that  has  been  clearly  elucidated  by  Mr.  Orr,  here.  I 
substantially  agree  with  him ; I am  a little  more  of  the  opinion,  how- 
ever, that  sliort  sellers  have  more  to  do  with  making  corners  than  peo- 
ple who  buy  the  grain. 

Q.  You  think  that  is  so? 

A.  I think  so, 

Q.  Do  you  think  that  the  evils  arising  from  this  system  of  doing 
business  are  caused  chiefly  by  the  short  sellers  ? 

A.  I am  not  very  clear  that  the  evils  are  substantial  at  all  from  the 
fact  of  a corner  having  been  made. 


526 


Q.  Do  you  know  of  any  evil  that  results  from  the  fact  of  persons 
selling  short  ? 

A.  It  perhaps  costs  the  consumer  a trifle  more  money  per  annum  in 
case  there  are  a number  of  corners;  but  it  is  a great  benefit  to  the 
producer,  and  inasmuch  as  we  are  largely  an  agricultural  country  and 
large  shippers  of  grain,  I think  probably  it  inures  to  the  greater  num- 
ber of  people  as  an  advantage  rather  than  a disadvantage. 

Q,  All  except  the  consumers  ? 

A.  I say  the  greater  number  of  the  people. 

Q.  Except  consumers  ? 

A.  Except  consumers. 

Q.  Tlie  burden  of  any  additional  cost  or  tax  upon  the  necessaries  of 
life  that  result  from  these  transactions  falls  upon  the  men  that  eat  the 
bread  and  other  products  ? 

A.  Yes,  sir^  the  consumers ; but  that  is  so  trifling  that  I don’t  think 
it  amounts  to  any  thing;  I take  it  that  th<?re  is  not  over  a barrel  and 
a half  of  flour  eaten  by  any  one  individual  in  the  course  of  twelve 
months;  that  is  about  seventeen  bushels  of  wheat;  if  there  is  an 
increase  on  that  barrel  of  flour  of  half  a dollar  or  six  bits,  I don’t  think 
it  makes  much  difference  in  twelve  months’  operations  ; but  it  makes 
a great  difference  to  the  producer  who  has  a great  amount  of  grain  to 
ship  from  this  country. 

Q.  As  a matter  of  public  morality  don’t  you  think  it  is  wrong  that 
the  consumer  should  be  made  to  pay  even  fifty  cents  a barrel  on  flour 
more  than  what  the  natural  value  calls  for  ? 

A.  I don’t  think  it  usually  affects  flour;  the  corners  that  have  been 
made  heretofore  that  you  allude  to,  I presume,  are  in  wheat  and  pork. 

Q.  Any  other  product  ? 

A.  I think  it  is  greatly  to  their  disadvantage  ; but  I don’t  see  how 
they  are  going  to  be  avoided ; so  long  as  the  public  or  the  trading 
public  will  sell  more  than  they  can  actually  deliver  within  a given 
space  of  time,  corners  will  occur. 

Q.  Then  the  speculators  are  the  cause  of  these  difficulties  ? 

A.  The  people  who  sell  it. 

By  Senator  IBiownin-q  : 

Q.  Is  it  not  a fact  that  your  business  is  in  speculating  on  the  prices 
in  the  Chicago  market  and  with  no  idea  of  actually  handling  the  prop- 
erty bouglit  and  sold? 

A.  1 doa’t  say  so ; tlie  intent  of  every  transaction  that  ever  was 
made  in  my  oilice,  eitlier  })urcliase  or  sale,  was  with  the  idea  of  the 
delivery  of  the  material  or  its  reception. 

(^.  But  the  fact  is  tiiat  most  of  your  customers  settle  through  your 
house  by  cash  paymenis  and  not  by  actual  delivery  ? 


527 


A.  If  a man  buys  for  future  delivery  and  determines  before  the 
actual  material  is  delivered  to  him  that  he  had  better  sell  it,  he  can 
get  his  difference  or  pay  it;  but  in  the  mean  time  he  must  re-margin 
us  and  we  who  make  the  purchase  in  Chicago  are  bound  to  receive  the 
material  unless  we  have  it  sold. 

Q.  Do  your  house  carry  grain? 

A.  Very  frequently  large  amounts  of  it;  we  have  had  600,000  or 
800,000  bushels  delivered  at  a time. 

Q.  Then  your  house  suffers  a loss  on  that  account  ? 

A.  Not  if  we  are  properly  margined;  we  don’t  speculate  at  all;  we 
do  business  for  other  people  purely. 

Q.  As  a commission  house  ? 

A.  Purely. 

Q.  When  you  carry  grain,  you  do  that  on  your  own  account  ? 

A.  We  never  do  that  except  for  our  customers. 

Q.  When  you  carry  grain  you  carry  it  for  others  ? 

A.  Yes,  sir. 

Q.  And  your  business  is  commission  business  ? 

A.  Purely. 

Q.  You  receive  a percentage  on  the  amount  of  business  done  in 
your  house  ? 

A.  That  is  it. 

Q.  You  are  a medium  between  the  parties  to  the  transaction  ? 

A.  That  is  it. 

Q.  And  upon  that  business  you  realize  a percentage  ? 

A.  Yes,  sir. 

Q.  Do  you  want  to  state  what  amount  of  margins  are  put  up  in 
your  house  during  a year,  or  a month,  or  a week,  or  a day  ? 

A.  I have  not  the  slightest  idea.  I have  had,  I suppose,  in  one  day 
as  high  as  $250,000  put  in  my  hands  as  margin,  and  I have  had  on 
hand  at  one  time  in  margins  $500,000  or  $600,000. 

Q.  Upon  which  amounts  you  received  commission? 

A.  It  is  not  affected  by  the  amount  of  margin  I have.  It  is  on  the 
actual  transactions  in  grain. 

I Q.  The  number  of  bushels  ? 

A.  The  number  of  bushels. 

Q,  One-half  a cent  a bushel. 

A.  No,  sir,  a quarter.  That  is  the  regular  charge  on  all  future  trad- 
ing. When  the  actual  cash  stuff  is  delivered,  however,  or  shipped  to 
New  York,  or  held  in  Chicago  and  paid  for,  the  commission  is  one- 
half  a cent  a bushel. 

Q.  Your  dealings  are  all  in  futures  and  options  ? 

A.  Very  largely,  yes,  sir. 


Q.  You  uever  sell  spot  ? 

A.  Very  seldom,  we  have  done  it,  because  we  frequently  have  had 
grain  on  hand. 

Q.  But  that  very  rarely  occurs  ? 

A.  Very  rarely. 

Q.  Nearly  all  in  futures  and  options  ? 

A.  Not  in  options.  I never  did  an  option  trade  in  my  life.  I mean 
by  an  option  the  buying  and  selling  of  a put  or  a call  which  is  a 
privilege  to  call  or  to  place  grain  at  a certain  price.  That  is  what  i 
call  an  option.  I never  did  that  in  my  life.  That  is  not  recognized 
in  our  board  in  Chicago  or  New  York. 

Q.  But  you  agree  to  buy  or  sell  futures  ? 

A.  Yes,  sir. 

Q.  Do  you  agree  with  tlie  last  witness  that  there  are  1,500  such 
houses  in  New  York  city  ? 

A.  No,  sir,  I don’t.  ' 

Q.  How  many  houses  do  you  suppose  there  are  like  yours  doing 
business  in  New  York  ? 

A.  I have  no  idea  ; but  we  don’t  do  the  kind  of  business  that  he  does. 

Q.  Are  you  represented  on  the  Exchange  floor  ? 

A.  Yes,  sir,  here  and  in  Chicago  and  in  St.  Louis. 

Q.  You  have  a connection  in  Chicago  ? 

A.  Yes,  sir,  we  are  members  of  that  Board. 

Q.  And  in  St.  Louis  ? 

A.  We  have  a connection  in  St.  Louis. 

Q.  What  is  the  name  in  Chicago  ? 

A.  We  have  four:  E.  A.  Driver  & Co.,  Smith,  McCormack  & Co., 
F.  C.  Polk  & Co.,  and  McCormack  & Beebe.  We  have  sometimes 
used  a dozen  houses  there. 

Q.  Do  you  sell  and  buy  on  the  Chicago  quotations  ? 

A.  Not  at  all. 

Q.  Do  you  sell  on  New  York  quotations  ? 

A.  Wo  trade  in  the  Chicago  board  at  the  market  price  when  our 
orders  arrive  there. 

Q.  So  that  any  business  you  do  here  is  done  as  the  agent  ot  the  ' 
Chicago  house  ? 

A.  Not  at  all ; they  represent  us  simply.  For  instance,  you  come 
to  my  office  and  tell  me  you  want  to  buy  100,000  bushels  of  January 
wheat  in  Chicago. 

Q.  How  much  do  I have  to  put  up  for  that  ? 

A.  Five  tiiousand  dollars. 

(2.  1 think  this  last  witness  made  the  statement  that  all  houses  take 
low  arnounls.  What  is  the  lowest  amount  that  your  house  will  take 
as  a margin  ? 


029' 


A.  It  depends  altogether  on  who  the  man  is  we  get  the  order  from. 

Q.  Sometimes  you  will  take  his  word  ? 

A.  Yes,  sir,  if  he  is  a very  wealthy  man  and  I know  him  to  be 
such,  and  I know  I can  get  a very  large  amount  of  money  from  him 
instantly  if  I want  it,  I execute  his  order  without  receiving  a check; 
otherwise  I demand  it  from  him. 

Q.  If  a stranger  came  in  you  would  demand  the  margin  ? 

A.  Yes,  sir. 

Q.  What  is  the  smallest  amount  you  would  take  from  a stranger  ? 

A.  Five  cents  a bushel. 

Q.  What  is  the  smallest  amount  you  would  sell  ? 

A.  Five  thousand  bushels.  That  is  the  smallest  amount  you  can 
trade  in,  in  Chicago,  unless  you  buy  car-loads  for  retailers. 

Q.  And  your  business  is  done  on  the  Chicago  floor  ? 

A.  Yes,  sir. 

By  Senator  Boyd: 

Q.  Do  you  say  5,000  is  the  lowest  amount  that  you  can  trade  upon 
in  Chicago  ? 

A.  Yes,  sir,  on  a future. 

Q.  When  the  last  witness  stated  that  they  sold  lots  of  500  bushels  — 

A.  He  meant  to  indicate,  in  evading  your  question,  that  you  could 
go  and  buy  a car-load  of  cash  grain,  which  would  be  500  bushels, 
which  you  could  do  ; but  in  all  transactions  for  future  delivery  the 
smallest  amount  of  grain  traded  in  is  5,000  bushels. 

Q.  So  far  as  the  operation  of  your  business  is  concerned  you  could 
carry  it  on  if  there  was  not  any  Produce  Exchange  in  New  York  city 
at  ail  ? 

A.  Yes,  but  we  do  business  in  this  city  occasionally. 

Q.  You  could  wipe  it  out  entirely,  and  your  business  would  go  on 
just  the  same  ? 

A.  Yes,  sir. 

Q.  Independent  of  it  ? 

A.  Yes,  sir. 

By  Senator  Browning  : 

Q.  Do  you  have  a bulletin-board  in  your  office  giving  quotations  of 
the  prices  in  Chicago? 

A.  Yes,  sir. 

Q.  The  same  as  the  last  witness  ? 

A.  No,  sir ; I don’t  know  what  his  way  is ; it  is  merely  for  the  conven- 
ience of  people  making  purchases ; we  don’t  make  any  trades  ourselves. 

Q,  Do  you  make  any  quick  trades  like  this  other  house  in  twenty 
minutes  or  a half  an  hour  ? 

67 


530 


A.  We  very  frequently  make  trades  in  Chicago  in  twenty  minutes. 

Q.  And  that  settles  the  transaction  ? 

A.  No,  that  is  impossible. 

Q.  How  quick  can  I get  a result  from  an  option  in  your  house  ? 

A.  That  depends  very  largely  upon  the  way  the  Western  Union 
wires  and  Mutual  Union  wires  are  working. 

Q,  In  a day  ? 

A.  Probably  not ; very  few  transactions  are  ever  made  in  my  office 
and  closed  in  a day. 

Q.  Could  you  close  it  in  two  days  ? 

A.  You  can  do  it  in  an  hour. 

Q.  You  could  do  it  in  an  hour  if  you  wanted  to  ? 

A.  Yes,  sir. 

Q.  I can  come  in  and  put  up  my  margin  and  say,  ‘‘just  as  soon  as 
it  rises  half  a cent  or  three-quarters  of  a cent,  sell  ? ” 

A.  Yes,  sir. 

Q.  And  you  do  it  ? 

A.  Yes,  sir;  I send  the  order  to’Chicago  to  sell  it ; it  may  be  down 
thougli  before  it  gets  there. 

Q.  What  opportunity  do  you  give  a man  to  re-margin  — must  he  put 
up  the  re-margin  before  the  first  margin  is  wiped  out,  or  can  he  put  it 
up  afterward  ? 

A,  I give  him  an  opportunity  by  personal  notification  that  I want 
money  or  else  I will  close  his  account. 

Q.  You  first  notify  him  that  his  margin  is  exhausted  and  he  must 
put  up  more  ? 

A.  Yes,  sir. 

Q.  And  if  he  don’t  put  up  more  he  forfeits  what  he  has  already  put 
up? 

A.  I sell  out  the  grain. 

Q.  And  he  has  lost  ? 

A.  He  may  have,  and  I may  have  too,  if  he  has  not  margined  enough 
to  make  it  right. 

Q.  So  that  there  is  a risk  in  your  business  ? 

A.  Very  considerable  — not  more  than  the  usual  business  risk,  how- 
ever. 

By  Senator  Boyd  : 

Q.  Supposing  he  does  not  lose  but  forfeits  his  margin  ? 

A.  He  can’t. 

il  He  can’t  forfeit  his  margin  ? 

A.  No,  sir  ; if  he  don’t  lose  he  doesn’t  forfeit  his  margin  ; his  mar- 
gin is  good. 

Q.  If  it  goes  down  to  the  limit  of  the  margin? 


531 


A.  He  has  lost  that  much  money  on  the  margin. 

Q.  To  whom  does  that  money  go  ? 

A.  It  goes  to  the  man  who  has  made  the  contract  with  him  in  Chi- 
cago on  the  Board  of  Trade. 

Q.  Does  any  portion  of  that  money  go  to  your  house  ? 

A.  Not  a particle. 

Q.  You  heard  the  last  witness’s  statement  that  a portion  of  the 
margin  went  to  his  firm  ? 

A.  I inferred  from  his  conversation  that  he  had  a bucket-shop,  what 
we  would  ordinarily  term  a bucket-shop. 

Q.  Then  you  know  that  such  institutions  do  exist  ? 

A.  I understand  there  are  several  in  New  York.  I never  was  in  one 
of  them. 

Q.  Do  you  understand  their  operations,  their  mode  of  doing  business  ? 

A.  No,  sir. 

Robert  H.  Parks,  being  duly  sworn,  was  interrogated,  and  testified 
as  follows : 

By  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  In  New  York,  the  Windsor  Hotel. 

Q.  What  is  your  business  ? 

A.  Broker  in  stocks,  grain  and  cotton. 

Q.  Where  is  your  place  of  business  ? 

A.  72  Broadway  and  13  New  street. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  About  twenty  years. 

Q.  Are  you  a member  of  any  firm  ? 

A.  Yes,  sir. 

Q.  What  is  the  name  of  your  firm  ? 

A.  R H.  Parks  & Co. 

Q.  Please  state  to  the  committee  your  knowledge  and  opinion  in 
relation  to  the  whole  system  of  making  corners  and  dealing  in  futures 
with  reference  to  its  effect  upon  commerce  and  its  influence  upon  the 
public  welfare  ? 

A.  That  is  a pretty  long  question  ; all  my  life  I don’t  know  any- 
thing else  ; I have  been  educating  myself  to  believe  it  is  a pretty 
straight  business,  as  good  as  any. 

Q.  Do  you  think  that  the  making  of  corners  in  produce,  stocks  and 
other  commodities  is  justifiable? 

A.  If  a man  sells  what  he  has  not  got,  he  has  got  to  hunt  for  it  and 
get  it ; it  is  no  more  than  is  done  in  any  other  kind  of  business  ; if  a 


532 


man  takes  a contract  to  build  a house  he  has  not  got  the  lumber  or 
bricks  ; he  sells  himself  short. 

Q.  Do  you  know  of  any  corners  that  have  been  made  in  stocks  in 
the  last  year  or  two  ? 

A.  I know  a little  about  some  of  them. 

Q.  Which  of  them  ? 

A.  In  Hannibal  and  St.  Joe  I think  there  was  a corner. 

Q.  When  was  that  ? 

A.  Some  time  within  the  last  year. 

Q.  Who  were  interested  in  getting  up  that  corner  ? 

A.  I had  nothing  to  do  with  it.  I couldn’t  recall.  Kennedy, 
Hutchinson  & Co.,  so  the  newspapers  say.  I had  nothing  to  do  with 
it.  I had  no  deal  in  it.  I didn’t  have  a transaction  in  my  office  in 
connection  with  it. 

Q.  What  was  the  result  on  the  community  of  the  corner  ? 

A.  It  was  the  same  as  any  other  corner.  It  was  not  very  pleasant 
to  the  people  who  sold  the  stock  short. 

Q.  Do  you  know  of  any  failures  resulting  from  it  ? 

A.  I don’t  think  there  were  any,  I can’t  remember  any. 

Q.  Who  is  president  of  the  Hannibal  and  St.  Joe  Railroad  ? 

A.  I think  Mr.  William  Dowd,  the  president  of  the  Bank  of  North 
America. 

Q.  He  was  president  at  that  time  ? 

A.  Yes,  sir. 

Q.  Do  you  understand  how  that  corner  was  operated  ? 

A.  I never  looked  into  it.  I didn’t  have  any  deal  in  it.  I avoid 
those  things. 

Q.  Do  you  know  ot  any  instance  where  corners  were  made  upon 
grain  recently  ? 

A.  Yes,  sir,  there  have  been  some  corners  this  summer,  this  last  sea- 
son. 

Where  were  they  principally  operated  ? 

A.  Some  in  New  York  and  some  in  Chicago. 

Q.  State  those  that  occurred  in  New  York,  what  you  know  of 
them  ? 

A.  The  corner  in  wheat,  I didn’t  have  any  thing  to  do  with  it.  I 
stayed  away  from  it.  There  was  a corner  in  wheat  in  August,  I think, 
of  this  year,  or  September. 

Q.  Did  it  result  disastrously  to  any  persons  ? 

A.  I don’t  think  it  hurt  anybody. 

Q.  You  don’t  know  of  any  failures  resulting  from  it  ? 

A.  No. 

Q.  What  is  your  opinion  with  reference  to  the  system  ol  dealing  in 
futures  and  options  ? 


533 


A.  It  is  just  as  legitimate  as  dealing  in  cash  property.  It  is  abso- 
lutely necessary  to  do  it  that  way. 

Q.  Do  yon  know  any  thing  about  the  existence  of  certain  places 
called  “bucket-shops”  ? 

A.  I know  there  are  such  things,  I never  patronized  tliein,  never 
have  been  in  them,  don’t  know  any  thing  about  the  workings  of  them. 
I know  in  general  principles  that  they  don’t  make  any  trade  at  all  ; 
they  go  by  the  quotations. 

Q.  You  heard  the  testimony  of  Mr.  Hammond  on  the  stand  ? 

A.  No,  I just  came  in. 

Q.  From  your  knowledge,  from  what  you  do  know,  what  is  your 
opinion  of  the  system  of  business  done  in  those  places? 

A.  The  worst  kind  of  gambling  on  earth.  It  is  different  from  buy- 
ing or  selling  property  for  future  delivery.  I am  a broker  dealing  in 
actual  property  for  others.  If  I sell  wheat  for  a gentleman  for  Jan- 
uary delivery  before  he  sells,  he  has  good  reasons  for  it  and  I know  if 
he  has  not  the  wheat,  he  has  got  to  provide  for  it.  He  may  have  it  in 
the  country,  I can’t  tell.  I have  no  reason  to  know. 

Q.  Do  you  deal  in  margins? 

A.  Yes.  I have  to  take  security,  the  same  as  any  other  kind  of  busi- 
ness. 

Q.  You  heard  Mr.  Honore’s  testimony  ? 

A.  Yes,  sir. 

Q.  Is  your  system  of  doing  business  the  same  ts  is  conducted  in  his 
house  ? 

A.  Yes,  sir. 

Q.  And  you  concur  with  him  in  his  statement  in  regard  to  his 
style  of  doing  business  ? 

A.  Yes,  sir ; all  reputable  brokers  do  business  the  same  way. 

Q.  You  regard  the  “ bucket-shop  ” system  then  as  the  worst  kind 
of  gambling  ? 

A.  Pernicious  ; the  worst  kind  of  gambling,  worse  than  faro  houses; 
they  should  be  put  down.  They  are  a great  harm  to  the  community. 

Q.  What  are  the  chief 'evils  of  such  places  to  the  community? 

A.  Just  the  same  as  a faro  bank,  except  that  they  are  a little  larger 
that  is  all. 

Q.  You  mean  that  unsuspecting  people  are  induced  to  go  into  those 
places  and  invest  their  money  aud  lose  it  ? 

A.  Yes,  sir,  and  there  is  no  help  for  it  at  all.  If  a man  buys  prop- 
erty in  Chicago,  buys  wheat  for  January  at  one  dollar  a bushel  and  it 
goes  down  to  ninety  cents,  he  has  not  made  any  loss  unless  he  sells 
his  wheat.  In  a bucket-shop,  if  you  buy  it  they  can  shut  you  off  any 


534 


time  they  have  a mind  to.  They  don’t  pretend  to  handle  any  prop- 
erty, and  in  my  business  I am  obliged  to  handle  the  property  myself. 
Every  deal  that  I make  for  anybody  is  a legitimate  deal  in  its  incep- 
tion. 

Q.  Does  the  bucket-shop  business  tend  to  injure  your  legitimate 
business  in  any  way  ? 

A.  Yes,  sir. 

Q.  To  what  extent  ? 

A.  To  a tremendous  extent.  They  are  all  around  me,  I understand. 
It  is  a positive  vice.  Young  men  and  women  and  everybody  go  into 
it.  It  is  a i^ositive  vice. 

Q.  Have  you  any  remedy  that  you  could  suggest  to  this  committee? 

A.  Arrest  them  just  as  a man  that  runs  a faro  bank.  Wipe  them 
out  the  same  as  a man  that  runs  a faro  bank.  That  is  the  only 
remedy  that  I know  of  — to  crush  them. 

Q.  Do  you  know  any  places  where  the  illegitimate  dabbling  in  stocks 
is  carried  on  ? 

A.  I presume  it  is  in  these  same  shops  that  work  the  grain  and 
cotton. 

Q.  They  deal  in  all  kinds  of  stuff  ? 

A.  Yes,  sir. 

Q.  Without  any  substantial  foundation  for  carrying  on  their  busi- 
ness ? 

A.  None  at  all.  I never  saw  the  workings ; I don’t  know  the  way 
of  working,  except  I know  they  handle  no  property  and  don’t  pretend 
to.  A man  lays  down  $20  and  bets  on  500  bushels,  and  when  his 
money  is  gone  he  is  just  sponged  off,  and  they  take  his  money  and  off 
he  goes,  and  if  he  wins,  he  takes  his  money  just  the  same.  Of  course 
they  expect  to  win,  those  that  go  in  there,  or  I suppose  they  wouldn’t 

go- 

Q.  Do  you  know  the  class  of  youn  gmen  who  patronize  those  bucket- 
shops  ? 

A.  In  our  vicinity  they  are  mostly  clerks,  young  men,  men  of  small 
means,  “ busted  ” speculators,  who  have  only  a few  dollars  left,  who 
have  not  sufficient  left  to  deal  in  actual  property  and  they  go  to  those 
places. 

Q.  Mostly  young  men  ? 

A.  Mostly  young  men. 

Q.  And  it  has  a corrupting  and  demoralizing  influence  ? 

A.  Yes,  sir. 

And  frequently  they  spend  their  last  doUar  in  these  shops  ? 

A.  Yes,  sir,  and  rob  their  employers  to  get  money. 

Q.  Are  you  a member  of  the  Produce  Exchange  ? 


535 


A.  Yes,  sir, 

Q.  Do  you  know  that  that  sort  of  system  is  tolerated  on  the  floor  of 
the  Produce  Exchange  ? 

* A.  I don’t  think  it  is  done  there  at  all. 

Q.  If  you  should  discover  that  that  did  exist  there,  would  you  be 
surprised  ? 

A.  Yes^  sir,  I never  heard  of  its  being  done  there. 

Q.  Do  you  know  of  scalpers  on  the  Exchange  floor  ? 

A.  Oh,  yes,  that  is  only  a slang  name  for  the  people  that  work  the 
market  every  day. 

Q.  Then  you  have  got  scalpers  on  the  floor  of  the  Exchange  who 
will  scalp  the  market  ? 

A.  What  I understand  by  a scalper  is  a man  who  will  buy  and  sell 
for  half  a cent  a bushel.  That  is  if  he  buys  50,000  bushels  of  wheat 
and  gets  one-half  a cent  profit  he  is  satisfied  for  the  day,  and  he  buys 
the  next  day  ; but  it  is  actual  property  and  there  is  no  nonsense  about 
it. 

Q.  I have  heard  of  one  individual  on  the  floor  of  the  Exchange  wlio 
will  take  small  amounts  from  clerks,  messengers  and  boys  employed 
on  the  floor  of  the  Exchange,  as  low  as  $5  ? 

A.  He  should  be  expelled  from  the  Exchange.  It  is  a very  respect- 
able organization. 

Q.  I have  been  told  that  that  practice  does  prevail  on  the  floor  of 
the  Exchange  ? 

A.  If  you  will  tell  me  who  did  it,  I will  make  it  my  business  to 
make  an  example  of  him. 

Q.  We  shall  subpoena  that  gentleman  before  the  committee  before 
we  get  through,  and  I will  give  you  his  name  before  you  leave  this 
room  ? 

A.  It  is  pernicious  and  bad,  and  if  the  respectable  part  of  the  Board 
knew  it,  it  wouldn’t  be  tolerated.  There  is  a rule  I think  by  Avhich 
he  could  be  expelled. 

Q.  I don’t  know  that  this  is  a fact.  I have  been  told  that  it  was  a 
^act,  that  is  all. 

A.  It  is  your  duty,  and  it  is  the  duty  of  the  people  that  have  the 
power,  to  make  an  example  of  such  a man. 

Percy  Lawrence,  being  duly  sworn,  was  interrogated  and  testifled  as 
follows  : 

By  Senator  Boyd: 

Q.  Where  do  you  reside  f 

A.  1,695  Broadway. 

Q.  What  is  your  business  ? 


536 


A.  Studying  law  ; I am  a law  student  with  a firm  in  Temple  Court 
in  Beekman  street. 

Q.  Have  you  any  knowledge  of  the  system  of  making  corners  at>d 
dealing  in  futures  ? 

A.  I was  managing  clerk  for  a representative  house  in  New  York, 
a house  that  represented  Chicago  people  who  were  members  of  the 
Chicago  Board  of  Trade,  and  the  New  York  Produce  klxchange. 

Q.  What  house  was  that  ? 

A.  It  was  Simpson  & Carroll  then  ; it  is  now  Simpson  & Sou. 

Q.  How  long  had  you  been  their  managing  clerk? 

A.  They  have  only  been  in  business  about  six  months;  I was  wiih 
them  for  throe  months  and  over. 

Q.  And  the  knowledge  you  formed  in  those  three  months  is  the 
only  knowledge  you  possess  of  this  subject. 

A.  I have  been  in  the  stock  business  as  clerk  ever  since  I have 
been  twelve  years  of  ago,  down  in  Wall  street,  with  different  firms: 
I have  been  on  and  off  down  there  almost  all  my  life,  and  I thoroughly 
understand  the  way  the  commission  business  in  grain  is  conducted  at 
present. 

Q.  What  sort  of  business  do  the  firm  transact  that  you  were  with  ? 

A.  Strictly  commission  business  on  the  Board  of  TiaJe  in  Chicago. 

Q,.  Do  they  deal  in  futures  and  options  ? 

A.  Oh,  yes,  they  deal  in  future's ; they  don’t  deal  in  privileges  at 
all. 

Q.  Is  that  a term  applied  to  options? 

A.  No ; you  say  a future  option  to  deliver  in  a certain  month. 

Q.  Then  the  word  implies  a privilege  ? 

A.  A privilege  would  be  a put  or  call ; that  is  an  entirely  different 
thing ; they  don’t  deal  in  puts  and  calls. 

Q.  Do  you  understand  the  difference  between  the  legitimate  methods 
of  carrying  on  the  grain  and  other  produce  business,  and  what  is 
usually  known  as  the  purely  speculative  or  illegitimate  ? 

A.  You  might  class  the  purely  speculative  as  the  bucket-shop  busi- 
ness, and  the  speculative  business  through  legitimate  brokers;  the 
majority  of  business  done  in  New  York  through  legitimate  brokers  on 
the  Chicago  Board  of  Trade  and  New  York  Produce  Exchange  is 
altogether  speculative ; they  deal  entirely  on  margin  ; for  instance, 
saying  that  they  will  buy  or  sell,  they  will  buy  January  wheat,  and 
they  understand  thoroughly  that  before  that  wheat  is  to  bo  received, 
they  will  have  sold  it  again;  that  their  broker  while  making  a legiti- 
mate transaction  on  the  Ciiicago  Board  of  Trade,  or  the  New  York 
Produce  Exchange,  will  have  an  offset  to  that  transaction  before  that 
time  ; tliey  will  never  receive  the  stuff,  because,  if  they  want  to  con- 


537 


tinue  the  transaction,  they  will  transfer  it  to  another  month  by  paying 
what  is  called  a difference  ; that  is,  they  will  sell  the  January  wheat 
that  they  have  bought,  and  buy  February  wheat  instead,  making  a 
difference  in  the  transaction.  ^ 

Q.  So  that  they  never  intend  to  make  an  actual  physical  delivery  of 
the  produce  ? 

A.  In  all  my  experience  in  the  business  and  my  knowledge  of  its  ob- 
jects, I have  never  known  such  a thing  as  an  actual  delivery  ; there  is 
never  expected  to  be  by  the  speculative  traders. 

Q.  Do  you  understand  the  bucket-shop  system  of  doing  business  ? 

A.  Yes,  thoroughly. 

Q.  Please  explain  to  the  committee  what  that  is,  how  it  is  carried  on, 
how  it  differs  from  legitimate  business,  and  what  the  result  is  to  the 
community  and  to  the  customers  that  frequent  such  places  ? 

A.  A legitimate  trader  in  a broker’s  office  will  give  an  order  to  his 
broker  either  to  sell  stock  at  a market  or  to  sell  at  ’Change  ; the  broker 
transmits  the  order  to  the  person  on  ’Change,  and  if  it  can  be  executed 
it  is  executed  ; he  only  acts  as  a broker;  a bucket-shop  is  carried  on 
altogether  on  quotations  ; they  place  the  quotations  on  a black-board 
and  stand  by  certain  rules  which  they  have  in  the  different  establish- 
ments ; say  their  commission  is  one-quarter  per  cent,  as  this  gentle- 
man said  his  commission  was,  and  corn  is  selling  at  sixty  cents ; you 
desire  to  buy  corn  and  the  quotation  comes  at  sixty  cents;  you  go  up 
at  once  and  you  buy  500  bushels  ; that  is  the  smallest  amount  he  will 
deal  in  of  corn  ; you  deposit  $5  margin  ; you  get  a contract  stating 
that  you  buy  the  corn  at  sixty  and  one-fourth  cents,  and  you  have  de- 
posited this  one  per  cent  margin.  When  the  corn  reaches  the  price  of 
fifty-nine  and  one-fourth  cents  that  contract  is  null  and  void  withoct 
notice  at  all;  buying  your  corn  at  sixty  and  one-quarter  cents,  aud 
having  deposited  one  per  cent  margin  when  the  transaction  reaches 
fifty-nine  and  one-fourth  cents,  the  margin  is  exhausted  or  wiped  out, 
as  they  call  it.  Therefore  there  is  no  intent  to  deliver  the  grain  over, 
no  actual  intent  to  deliver  the  grain  even  as  a broker  for  either  side, 
and  the  money  that  is  lost  by  the  customer  is  absorbed  bv  the  firm 
Or  if  you  buy  at  sixty  and  one-quarter  cents  and  it  goes  up  any  thing 
above  that,  and  the  rule  is  that  it  is  on  immediate  quotation,  you  have 
a right  to  hand  it  in  and  have  it  closed.  They  reserve  the  right  to  re- 
fuse any  and  all  contracts  or  to  refuse  to  close  a contract,  but  it  is 
never  exercised. 

By  Senator  Browkikg: 

Q.  They  pay  ? 

A.  They  always  pay  or  close.  The  same  thing  is  done  in  petroleum 
and  in  grain  and  in  all  food  products. 

68 


538 


By  Senator  Boyd  : 

Q.  Then  when  the  party  goes  up  there  where  there  has  been  a rise 
in  price,  they  pay  over  the  dilTerence,  do  they  ? 

A.  Yes,  sir.  , 

Q.  Do  they  pay  the  margin  back  ? 

A.  Of  course ; and  the  legitimate  trader  on  the  Board  will  pay  you 
the  difference  within  a day  or  so  ; he  don’t  wait  till  the  maturity  of 
the  contract ; if  you  buy  50,000  bushels  on  the  Chicago  Board  of 
Trade  and  it  rises  you  can  sell  it  the  same  day  if  you  should  want  to  ; 
they  don’t  wait  until  the  following  January,  until  the  grain  is  received 
and  delivered;  they  pay  you  the  money  in  every  case  if  you  want  it  ; 
which  further  proves  that  the  transaction  is  speculative  and  not  legiti- 
mate ; I have  never  known  a case  where  they  waited  until  that  time  ; 
but  if  you  close  a transaction  and  buy  the  wheat  and  it  goes  down,  the 
transaction  is  literally  exhausted;  as  a rule  a commission  house-will 
demand  more  margin,  and  if  they  don’t  receive  the  margin  you  are 
notified  that  unless  it  is  paid  they  will  close  you  out,  and  they  gener- 
ally 3o  close  you  out  ; whether  they  have  a right  at  law  to  do  so  or  no. 
I don’t  know  ; I don’t  think  they  have;  but  you  don’t  have  to  wait 
until  an  actual  delivery  of  the  property  for  your  balance  on  a margin  ; 
it  will  be  paid  you  at  once. 

Q.  Have  you  in  your  experience  known  of  many  cases  of  bankruptcy 
resulting  from  these  speculations  ? 

A,  I have  known  of  severe  losses  to  people  who  couldn’t  afford  them  ; 
I could  hardly  say  bankruptcy  ; I have  known  of  defaults  by  people 
unable  to  pay  their  losses  to  brokers  ; but  it  is  not  altogether  caused 
by  corners  ; corners  are  carried  on  in  a very  different  way ; we  represen- 
ted Peter  McGill  who  is  considered  one  of  the  leading  men  of  the 
West,  and  who  operates  principally  in  corners  in  a very  large  way,  that 
is  they  will  form  a combination,  Peter  McGill  and  Armour  and  several 
men  in  New  York;  I have  known  of  one  firm  in  New  York  that  failed 
from  speculation,  Eichardson,  Boynton  & Co.  ; Mr.  Eichardson  was 
considered  one  of  the  largest  speculators  in  New  York  on  the  Chicago 
market. 

Q.  Do  you  know  the  amount  of  Ins  failure  ? 

A.  I don’t  know  ; it  is  on  record  in  connection  with  his  note  broker. 

Q.  Did  others  fail  with  him  ? 

A.  Yes,  sir ; several  others. 

Q.  How  did  that  failure  originate  ? 

A.  That  originated  through  speculation  ; of  course  I am  not  speak- 
ing from  actual  knowledge  ; T cannot  say;  he  was  known  to  be  a very 
large  operator  in  the  Chicago  market ; it  is  supposed  it  originated 


539 


through  his  paper  being  shayed,  an  overissue  of  commercial  paper ; 
the  process  of  cornering  in  Chicago  is  fostered  here  to  a great  extent 
through  combining  very  large  orders  for  the  purchase  of  grain  for  any 
commodity  there  and  in  combination  with  the  dealers  out  there  they 
will  buy  up  every  thing  they  can  get  and  lock  it  up  ; there  is  always  a 
certain  export  demand  in  this  city  and  there  is  always  a large  con- 
sumptive demand,  people  who  desire  to  consume  this  stuff,  and  as  the 
stuff  itself  is  locked  up  so  to  speak,  at  different  points  of  accumulation, 
it  is  impossible  to  get  any  and  the  price  of  course  advances  ; I have 
known  a case  of  that  this  very  last  spring. 

Q.  Who  were  engaged  in  that  ? 

A.  It  was  a very  large  clique  ; I couldn’t  state  the  names ; it  was  a 
combination  of  New  York,  Chicago  and  Milwaukee  dealers  ; they  ad- 
vanced the  wheat  a very  large  advance. 

Q.  What  is  your  opinion  of  the  result  of  these  speculations  upon 
our  social  condition  and  commercial  interests  ? 

A.  I think  it  is  prejudicial  to  legitimate  commerce,  and  morally  it 
is  prejudicial,  because  really  it  is  a system  of  gambling;  it  is  nothing 
else  ; it  could  be  stopped  verry  easily. 

Adjourned  to  December  14,  1882,  at  11  o’clock,  a.  m. 


New  York,  Thursday,  Dec,  14,  1882. 

The  Committee  met  at  the  Metropolitan  Hotel  in  the  city  of  New 
York,  pursuant  to  adjournment. 

Present  — Senators  Boyd  and  Browning,  of  the  Committee,  John 
W.'  Corning,  Sergeant-at-Arms  of  the  Senate,  and  Daniel  A.  Cooney, 
Clerk  of  the  Committee. 

Leonard  G.  Quinlan  was  then  sworn,  and  being  interrogated,  testi- 
fied as  follows  : 

By  Senator  Boyd  : 

0.  Where  do  you  reside  ? 

A.  In  New  York  city. 

Q.  What  is  your  business  ? 

A.  My  business  is  commission  merchant. 

Q.  Are  you  a member  of  any  firm  ? 

A.  Of  L.  Gr.  Quinlan  & Co.,  02  Broadway. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  I have  been  here  about  three  years  ; going  on  three  years. 


540 


Q.  In  New  York  c?ty  ? 

A.  Yes,  sir. 

Q.  Were  you  in  business  anywhere  else  previous  to  that  ? 

A.  Yes,  sir;  I have  been  in  this  line  of  business  for  twenty-hve 
years  or  more.  ' 

Q.  In  what  other  cities  ? 

A.  In  St.  Louis  and  Chicago. 

Q.  What  does  your  business  chiefly  consist  of? 

A.  My  business  is,  chiefly,  the  buying  and  selling  of  grain  and  pro- 
visions. 

Q.  Are  you  familiar  with  the  system  of  making  corners  and  dealing 
in  futures  ? 

A.  I am  not,  sir;  I am  not  familiar  with  it  from  tlie  fact  that  I 
have  never  been  associated  with  any’ thing  connected  with  the  corner 
line. 

Q.  But,  from  observation  and  report,  are  you  acquainted  with  it  ? 

A.  I know  the  routine  of  how  corners  are  made. 

Q.  Please  state  what  your  experience  has  been  in  reference  to  cor- 
ners ? 

A,  Simply  disastrous  to  all  concerned. 

Q.  How  are  they  created  ? 

A.  By  an  overpurchase  of  the  property. 

Q,  Do  you  recollect  any  special  instance  where  a corner  was  created 
which  proved  disastrous  to  the  parties  interested  ? 

A.  I only  know  from  hearsay.  I have  known  of  a great  many,  and  I 
have  never  heard  of  bat  one  or  two,  one,  I believe,  that  was  ever  car- 
ried through  successfully. 

Q.  What  one  was  that  ? 

A.  That  was  a corner  in  provisions  in  Chicago,  some  two  years  ago, 
McKeogh  against  Arnold.  As  a general  thing,  corners  are  disastrous 
to  all  concerned.  ' 

Q.  How  do  they  affect  the  public  interest  ? 

A.  They  are  demoralizing. 

. Q.  What  is  your  opinion  in  relation  to  the  system  of  dealing  in 
futures  ? 

A.  I think  that  is  simply  indispensable  to  trade.  Futures  were 
created  for  legitimate  purposes,  the  legitimate  handling  of  grain,  but 
they  have  been  abused. 

What  do  you  think  of  the  system  as  it  is  .being  abused. 

A.  T have  tried  to  think  a good  deal  of  it,  and  the  more  I think  of 
it,  the  less  1 know  how  to  correct  the  evil,  if  tliat  is  what  you  want  to 
get  at. 

(2.  You  admit,  however,  tliat  an  evil  does  result  from  the  illegiti- 
mate 8])eculation  or  corners,  and  sol  speak  of  futures  ? 


541 


A.  Well,  of  course,  it  must  result  in  such  instances  as  corners  ; I 
only  speak  of  futures.  Take  myself  ; at  one  time  I was  a largo  pur- 
chaser of  grain  upon  railroads  in  the  interior  of  the  country ; made 
large  advances  on  purchases  up  the  river,  when  I lived  in  St.  Louis. 
The  rivers  were  all  frozen  up,  and  my  stuff,  or  property,  or  provis- 
ions, or  whatever  it  might  have  been,  corn  or  wheat,  was  sold  for 
spring  deliveries.  As  I say,  these  futures  were  created  for  that  purpose. 
Speculation,  however,  took  advantage  of  it  — takes  it  to  a great  extent, 
and  carries  it  to  this  excess  of  corners. 

Q.  Then  your  experience  has  been  that  the  speculative  aspect  of 
dealing  in  futures  leads  to  corners  ? 

A.  No,  not  necessarily,  at  all. 

Q.  I thought  you  said  so  ? 

A.  No,  sir ; I don’t  wish  to  be  understood  so,  at  all.  I think,  as  I 
said,  that  futures  are  indispensable  to  trade;  that  trade  could  hardly 
exist  without  futures ; but  if  any  one  said  that  men,  you  and  I,  for 
instance,  should  combine  to  go  to  work  and  buy  up  a lot  of  stuff  to 
try  to  corner  the  market,  it  would  not  affect  the  whole  trade. 

Q.  To  deal  in  futures  where  there  is -an  intention  to  .deliver  the 
property  is  perfectly  legitimate  and  that  we  concede,  but  when  there 
is  no  intention  of  delivering  the  property,  what  is  your  opinion  about 
such  a transaction  as  that  ? 

A.  You  can  hardly  put  a construction  upon  that  from  my  stand- 
point ; I am  doing  business  in  futures  and  cash  and  every  thing  else 
and  we  call  it  futures  simply  from  this  fact ; you  come  into  my  office 
and  say  ^‘Mr.  Quinlan  I want  to  buy  4,000  barrrels  of  pork  for  May” 
— or  January  or  February  — I take  that  order  in  good  faith  from  you 
that  you  want  that  property  ; in  fact  if  you  were  to  tell  me  it  was  an 
option  I wouldn’t  take  your  order  ; but  it  is  not  for  me  to  ask  every 
man  who  comes  into  my  office  whether  he  will  tire  of  his  contract,  of 
his  purchase  or  not  ; and  after  you  have  made  this  purchase  thirty  or 
sixty  days  you  may  tire  of  it  or  may  have  profit  enough  in  it  ; you  may 
say  ‘‘  Quinlan  I want  to  get  rid  of  this  pork ; I have  got  profit  enough 
in  it”;  then  you  necessarily  force  me  to  sell  your  property  out  to 
somebody  else  — sell  out  your  contract  ; which  I do  the  best  I can. 

Q.  I see  the  train  of  thought  which  is  in  your  mind  that  it  is  in  re- 
lation to  the  option  business  ? 

A.  Yes. 

Q.  That  you  disapprove  of? 

A.  No,  sir  ; I don’t  disapprove  of  it,  because  1 think  the  option  busi- 
ness is  dependent  to  a great  extent ; that  the  business  is  dependent 
upon  the  option  business  to  a great  extent ; without  the  option  busi- 
ness nobody  could  do  business  at  all ; but  as  an  option  business  for  the 


542 


purpose  of  running  corners  I disapprove  of  that  — with  that  intent ; 
since  I have  been  here,  and  have  beenMn  Chicago,  since  I have  lived 
there,  I have  been  invited  to  go  into  little  operations  that  were  going 
on  with  a view  to  a corner,  but  I have  always  abandoned  them  — 
would  have  nothing  to  do  with  them;  I think  there  is  scope  enough 
in  the  market,  the  legitimate  ups  and  downs  of  trade,  enough  for  me» 
to  answer  my  purposes  sufficiently  so  to  keep  me  up. 

Q.  Do  you  understand  the  system  of  puts  and  calls  ? 

A.  To  some  extent ; more  from  hearsay  than  any  thing  else. 

Q.  AVhat  is  your  opinion  in  regard  to  that  system  of  doing  business  ? 

A.  I don’t  know  that  I could  give  an  expression  that  is  worth  any 
thing;  I know  in  regard  to  puts  and  calls  that  some  people  buy  them 
and  sell  them  for  protection ; I know  more  about  them  from  reading 
than  from  personal  handling  or  trading  in  them  ; I never  traded  in 
them  at  all. 

Q.  The  majority  of  speculators  in  grain  make  money,  do  they  not  — 
get  rich  ? 

A.  That  is  another  hard  one  for  me  to  answer  from  my  standpoint; 
some  make  money  and  some  lose  ; I believe  as  far  as  I am  concerned, 
on  my  books,  the  a m’age  customer  has  made  money. 

Q.  You  mean  the  speculator  ? 

A.  Yes,  the  trader  or  whatever  you  call  him  — the  client. 

Q.  Who  bears  the  burden  of  that  profit  made  by  the  speculators  ? 

A.  It  is  a chance  of  the  market;  if  a man  happens  to  strike  a favor- 
able market  he  makes  money,  and  if  he  buys  property  and  it  goes 
down,  he  loses.;  from  my  experience  with  people  who  are  trading  it  is 
generally  the  weak  parties  who  lose  the  money  ; people  who  generally 
over-trade  ; thus,  for  instance,  if  a man  has  a thousand  dollars  or  five 
thousand  dollars  he  should  buy  probably  100  or  200  barrels  of  pork  ; 
instead  of  that,  if  he  is  a speculator,  he  would  want  to  buy  five  times 
that  amount ; when  the  advance  in  property  comes  or  the  decline — the 
fluctuations  which  occur  — it  is  the  weak  ones  who  are  generally  out 
and  the  big  ones  make  the  money  from  the  strength  of  their  ability  to 
hold  and  carry  the  product. 

Q.  It  does  affect  the  price  of  commodities  more  or  less,  does  it  not, 
the  speculative  system  ? 

A.  In  very  large  volumes  such  as  corners  and  leading  to  corners  and 
all  that  kind  of  tiling,  I think  it  does  necessarily,  it  must. 

(.1.  And  the  burden  of  that  enhanced  price  falls  upon  the  consumer 
of  course  ? 

A.  Yes,  sir. 


543 


By  Senator  Brownin-g  : 

Q.  What  is  the  form  of  that  contract  between  you  and  your  cus- 
tomers ? 

A.  I have  no  special  form. 

Q.  Is  that  your  form  ? (Handing  witness  paper.) 

A.  The  form  of  an  order  to  buy. 

Q.  That  is  an  order  to  buy? 

A.  Yes,  sir. 

Q.  What  is  the  form  of  the  contract  ? 

A.  We  have  no  form  of  contract  farther  than  say,  after  you  bought 
this  you  came  in  and  gave  me  the  same  kind  of  an  order  to  sell  unless 
you  wanted  a written  contract. 

Q.  That  is  about  all  the  form  you  have,  isiiT  it  ? 

A.  That  is  about  the  form  for  purchases  or  sales  ; it  is  a guide. 

Q.  That  is  what  you  call  a contract  ? 

A.  No,  sir;  that  is  an  order. 

Q.  What  do  you  call  a contract  — you  refer  to  contracts  of  where  a 
person  comes  in  and  makes  a contract  to  purchase  for  delivery  in  Jan_ 
uary,  or  where  he  agrees  to  sell  in  January,  that  that  is  a contract, 
and  if  you  thought  the  man  came  into  your  office  to  deal  in  futures, 
you  wouldn’t  tolerate  it,  that  is  your  statement  ? 

A.  Yes,  sir. 

Q.  What  is  the  form  of  contract  you  enter  into  between  you  and 
your  customer  who  wants  to  buy  or  sell  for  January  ? 

A.  If  he  was  to  give  me  an  order  to  buy  or  sell  500  barrels  of  pork, 
or  1,000  barrels  of  pork. 

Q.  What  does  he  deposit  as  a consideration  or  earnest  of  his  good 
faith  to  keep  that  contract  ? 

A.  Well,  many  men  make  no  deposit. 

Q.  Do  you  call  it  a contract  without  a consideration  ? 

A.  It  depends  upon  the  man’s  credit  with  me  ; if  you  are  doing 
business  with  me  and  are  in  good  credit  with  me,  and  I know  that  my 
wants  will  be  supplied  whenever  I call  upon  you,  I don’t  call  upon 
you  when  you  give  me  an  order  for  the  property  until  I want  the 
money  ; if  I want  a margin  I then  go  to  you  for  it. 

Q.  Are  you  in  the  habit  of  making  other  contracts  outside  of  your 
own  business?  Have  you  ever  made  a contract  between  a builder  or 
any  one  doing  business  outside  of  your  own  house  where  a contract 
’'""as  required  ? 

A.  Well,  I don’t  know  that  I have. 

Q.  Have  you  ever  signed  articles  of  agreement  ? 

A,  I have,  of  partnership. 

Q.  Was  there  a consideration  ? • 


544 


A.  Of  partnership  ? 

Q.  Did  you  ever  know  of  a 'bona  fide  contract  that  did  not  carry  a 
consideration  withjit  as  a matter  of  business  ? 

A.  Yes,  they  all  must  have  considerations. 

Q.  Then  this  contract  that  you  went  into  is  not  that  sort  of  a con- 
tract ? 

A.  A contract  with  consideration  ? 

Q.  Yes,  you  make  contracts  without  consideration  ? 

A.  For  dollars  and  cents  we  buy  property. 

Q.  I am  talking  now  about  the  contract  you  make  when  you  don’t 
require  a consideration,  when  you  say  a man’s  credit  is  good. 

A.  When  I want  considerations  I get  them. 

Q.  Take  such  a contract,  where  you  take  a consideration,  how  much 
would  you  take  ? . 

A.  What  do  you  allude  to? 

Q.  I will  speak  now  definitely  ; say  I go  into  your  office  and  want 
to  buy  for  January  delivery  50,000  bushels  of  oats  ; what  would  I have 
to  deposit  with  you? 

<A.  Twenty-five  hundred  dollars  as  a margin. 

Q.  That  is  the  consideration  I put  up  ? 

A.  Yes,  sir. 

Q.  And  you  and  I enter  into  a contract  by  which  I shall  have  de- 
livered to  me  in  January,  50,000  bushels  of  oats  ; does  that  considera- 
tion hold  good  until  the  contract  matures  ? 

A.  Yes,  sir. 

Q.  It  does  ? 

A.  Yes,  sir,  unless  you  should  get  tired  ol  it ; that  contract  holds 
good  until  it  is  delivered  ; that  property  will  absolutely  be  delivered. 

Q.  I don’t  understand  it  so  ; I understand  that  I am  required  to  re- 
margin provided  the  price  goes  up  ? 

A.  Of  course  you  are  required  to  keep  the  value  of  the  property  in 
the  market, 

Q.  Then  that  earnest  that  I put  up  will  not  hold  good  in  case  the 
market  goes  up  ? 

A.  In  case  the  market  goes  up  or  goes  down,  as  the  case  may  be ; 
of  course,  if  you  buy  property  you  have  got  to  keep  it  to  the  market- 
price,  if  you  buy  100  shares  of  stock  or  100  barrels  of  flour. 

Q.  So  that  if  I make  a contract  with  you,  for  you  to  deliver  to  me 
50,000  bushels  of  oats  in  January,  and  I deposit  $2,500  as  an  earnest 
of  my  good  faith  to  take  the  grain,  at  the  time  of  the  maturity  of  the 
contract,  if  the  price  should  fluctuate  in  the  mean  time  so  that  you 
should  feel  it  was  unsafe,  the  contract  would  fail  unless  I ]mt  iqi  an- 
other margin  ? 


545 


A.  No,  sir,  I would  call  on  you  for  more  margiu. 

Q.  That  is  what  I know  you  would  do  and  that  is  just  where  I 
think  it  fails  to  be  a contract  because  the  consideration  of  the  earnest 
money  ought  to  hold  good  until  the  contract  matures,  no  matter  what 
tlie  fluctuations  may  be.  If  I put  up  $2,500,  it  ought  to  be  an  earnest 
of  my  intention  to  take  this  grain  at  the  time,  and  the  fact  that  you 
require  me  to  re-margin  is  evidence  that  it  is  purely  speculative  ? 

A.  You  may  consider  it  as  you  choose.  A great  many  people  like 
to  buy  large  amounts  of  property  on  small  margins,  five  cents  a bushel 
or  ten  cents  a bushel.  You  come  in  and  say  “ T donT  want  to  put  up 
all  my  money  on  this  property  until  the  property  is  matured  or  deliv- 
erable,” and  it  is  an  ordinary  request  — five  cents  or  ten  cents  a bushel, 
or  five  or  ten  per  cent,  just  as  it  is  a matter  of  ease  to  the  purchaser 
that  this  five  per  cent  or  ten  per  cent  is  put  up. 

Q.  That  is  the  only  form  of  a contract  you  have  ? 

A.  Except  when  we  purchase  some  or  buy  some  ourselves,  we  in  ?ur 
turn  notify  the  seller  that  we  have  bought  or  sold  for  his  account  this 
property. 

Q.  Have  you  suggested  to  any  one  that  it  would  be  a good  thing  to 
have  a State  grain  inspector  ? 

A.  I think  that  would  be  a magnificent  thing. 

Q.  Why  do  you  think  so  ? 

A.  To  establish  uniform  grades  of  grain,  that  people  would  know 
what  they  were  trading  in. 

Q.  Haven’t  you  such  an  officer  on  the  floor  of  the  Produce  Ex- 
change now  ? 

A.  I think  nothing  but  one  that  is^appointed  by  the  Board  itself. 

Q.  By  what  Board  ? 

A.  By  the  Board  of  Trade  here. 

Q.  Do  you  know  him  ? 

A.  No,  sir,  I do  not.  I think  that  that  is  one  of  the  most  impor- 
tant things  that  the  city  of  New  York,  or  the  State  of  New  York, 
want  at  this  day,  a rigid  State  inspection.  I think  that  the  grain 
trade  of  New'  York  has  been  driven  away  to  a very  large  extent  from 
the  fact  that  we  have  had  no  reliable  grades  of  inspection. 

Q.  When  you  buy,  you  buy  grain  as  it  is  graded  in  Chicago,  don’t 
you  ? 

A.  You  see  the  grades  change  very  much,  the  adulteration  of  grades 
here  — w’e  have  got  what  we  call  a standard  of  New  York  No.  2 red, 
and  New'  York  No.  2 spring,  and  these  parties  here  buy  these,  and  buy 
lower  grades  of  Chicago  and  they  mix  them  all  up  and  call  it  Board 
of  Trade  inspection.  In  Chicago  they  have  got  a State  board  of  in- 
spection, a very  thorough  one,  a very  reliable  one.  If  a man  buys  by 


sample  an  inspection  of  No.  2 property  or  No.  3,  or  whatever  it  is 
graded  and  stamped  in  Chicago,  he  can  depend  upon  it  at  the  other 
end  of  the  route.  It  is  something  that  you  can  depend  upon,  and  that 
is  what  this  State  wants,  and  until  it  gets  it,  its  trade  Avill  be  lost  as 
it  has  been  to  a great  extent  for  the  last  one  or  two  years  or  more, 
as  is  shown  by  the  way  the  orders  go  to  Baltimore,  Philadelphia 
and  many  of  them  to  interior  towns  for  wheat,  simply  because 
of  this  inspection  that  exists  here.  I am  told  that  that  is 
a l)ona  fide  thing,  that  the  mixing  and  adulteration  here 
is  simply  intolerable  and  can  never  be  regulated  only  by  rigid  State 
inspection,  something  similar  to  the  State  laws  of  Illinois. 

By  Senator  Boyd  : 

Q.  Is  there  no  fixed  standard  of  value  by  which  grades  are  decided 
upon  in  New  York  State? 

•A.  My  understanding  is  we  have  got  a city  inspection  the  same  as 
city  weighing.  They  fix  the  grades  and  I don’t  knowhow  these  things 
are  done,  but  you  know  how  adulterations  can  be'done,  and  manipula- 
tions of  this  kind  go  on  all  the  time  by  private  inspections. 

By  Senator  Browniis'G  : 

Q.  Are  you  in  the  Produce  Exchange  ? 

A.  Yes,  sir ; the  only  w'ay  t^at  I can  see  that  such  things  as  that 
can  be  remedied  is  by  a high  moral  standard  of  State  inspection. 

Q.  Then  you  think  that  an  officer  ought  to  be  appointed  by  the 
State  ? 

A.  I do  most  unhesitatingly  think  so. 

Q.  And  w'ho  are  the  inspeetors  now  ? 

A.  I don’t  know  who  they  are  personally ; I don’t  make  any  per- 
sonalities but  I am  speaking  now  generally. 

Q.  By  whom  are  they  appointed  ? 

A.  I think  they  are  appointed  by  the  Board  of  Trade  here, 

Q.  What  do  you  mean  when  you  say  the  Board  of  Trade? 

A.  The  Chamber  of  Commeree  ; I think  it  is  designated  as  the 
Board  of  Trade  of  Chicago  and  the  Prodnee  Exchange  here. 

Q.  Don’t  you  know  there  is  a chief  grain  inspector  appointed  by  the 
Produce  Exchange  and  on  the  Exchange  floor  all  the  time  ? 

A.  Yes,  sir  ; I know  there  is  a city  inspector  here. 

Q.  He  is  considered  an  expert,  isn’t  he  ? 

A.  Yes,  sir  ; but  you  know^  how  it  is  with  many  things,  there  is  al- 
ways a wheel  within  a wheel. 

Q.  What  do  you  mean  by  that  ? 

A.  Passing  from  one  hand  to  another.  An  inspector  may  pass 


54? 


property  as  being  all  right  according  to  a standard  grade  which  they 
adopt  and  are  to  live  up  to,  and  after  it  goes  from  his  hands  it  is 
turned  into  somebody  else’s  hands,  so  that  this  barge  of  property  which 
is  passed  as  No.  2 by  the  inspector  deteriorates  some  way  or  another, 
I don’t  know  how  ; but  I know  there  is  great  complaint  about  our  in- 
spections. 

Q.  Where  is  that  complaint  heard  ? 

A.  From  Liverpool ; from  foreign  buyers. 

Q.  Do  they  say  the  grain  is  graded  too  high  or  too  low  ? 

A.  It  is  mixed. 

Q.  There  is  an  uncertainty  about  the  grade  ? 

A.  There  is  an  uncertainty  about  the  grade ; they  have  got  so  that 
they  will  only  buy  by  sample  now  to  a very  great  extent.  They  will 
say,  ‘^If  you  have  got  a car-load  of  wheat  I will  buylthatibecause 
there  is  a sample  of  it;  but  if  you  take  that  and  dump  it  all  together, 
this,  that  and  the  other,  and  make  forty  mixtures,  then  it  is  equal  to 
the  standard  for  that  moment ; but  somehow  oFother  it  varies  ” when 
there  is  no  State  inspection. 

Q.' There  is  No.  2 extra  — that  is  what  you  mean  ? 

A.  Yes,  sir,  but  I don’t  know.  It  strikes  me  that  these  foreign 
buyers  could  give  you  a better  exemplification  of  what  I mean  than 
what  I can  myself,  but  it  is  certainly  something  very  much  needed  for 
the  wants  of  this  port. 

Q.  Do  you  know  by  whom  the  grades  are  fixed  now  ? 

A.  Usually  by  an  appointed  few,  three  or  five  different  members  of 
a board  who  run  in  the  channel  of  grain,  for  instance  you  are  trading 
in  grain  and  myself  and  this  other  gentleman,  we  will  probably  be 
three  of  five  and  we  will  say  what  the  grade  shall  be  this  year  and 
what  the  grade  shall  be  next  year.  They  change  their  grades  every 
year  according  to  the  crops. 

Q.  Is  that  grade  not  fixed  upon  the  floor  of  the  Produce  Ex- 
change ? 

A.  Yes,  sir ; and  given  to  this  chief  inspector,  and  it  is  his  duty  to 
live  up  to  it,  and  I believe  he  does  as  far  as  he  is  concerned  individu- 
ally. 

Q.  Is  there  a uniformity  in  the  grades  between  New  York  dealers 
and  dealers  in  other  cities  ? 

A.  There  used  to  be  a uniform  . grade  of  No.  2 spring  wheat  of  Chi- 
cago, Milwaukee  and  here  until  this  mixing  commenced.  They  will 
take  No.  2 Chicago  and  mix  it  after  it  gets  here  and  sell  it  as  No.  2 
Chicago  and  ship  it  to  Europe  as  No.  2 Chicago,  and  it  is  absolutely 
adulterated  stuff. 

Q.  Then  the  system  of  grading  is  in  your  opinion  absolutely  unsat- 
isfactory at  the  present  time  as  pursued  in  the  city  of  New  York? 


548 


A.  Yes,  sir;  as  it  is  at  present.  I don’t  wi^h  to  impute  any  thing 
to  any  single  inspector,  because  I would  hate  to  do  that,  and  1 have 
no  reason  to  do  so,  but  I think  the  system  of  inspection  ouglit  to  be 
remedied  for  the  port’s  good.  I think  that  is  one  of  the  most  im- 
portant things  to  tlie  State  at  this  time. 

Q.  And  what  remedy  would  you  suggest  ? 

A.  Have  a State  board  of  inspection,  authorized  by  the  State,  and 
held  up  strictly  to  the  letter  and  any  deviation  from  it  make  amenable 
in  some  way  the  same  as  other  laws. 

Q.  Would  you  have  the  standards  of  grades  fixed  by  act  of  the 
Legislature  ? 

A.  That  could  be  fixed  by  common  consent  and  agreement  between 
merchants  as  to  what  the  grades  shall  be  tliis  year . 

Q.  Is  not  that  the  fact  now? 

A.  It  is  to  a certain  extent ; but  it  is  not  lived  up  to.  That  is  all 
there  is  about  it. 

By  Senator  Boyd  : 

Q.  Don’t  you  think  that  the  system  of  selling  by  sample  would  be 
much  more  correct  tlian  the  present  system  of  selling  by  grade  ? 

A.  It  would  be,  but  it  is  too  narrow  ; there  is  not  scope  enough  in 
it  to  handle  it.  In  these  times  we  want  facilities  to  move  stuft,  and 
we  can’t  handle  things  by  sample  any  more.  The  trade  has  got 
too  large  for  us. 

Q.  What  effect  have  the  corners  upon  the  transportation  interests? 

A.  It  is  demoralizing.  All  corners  in  all  shapes  are  demoralizing. 

Q.  To  all  interests  ? 

A.  To  all  interests. 

William  H.  Yanderlilt  was  then  sworn  and  being  interrogated,  testi- 
fied as  follows  : 

By  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  640  Fifth  avenue.  • 

Q.  What  is  your  business  ? 

A.  Itailroading. 

Q.  How  long  have  you  been  in  that  business? 

A.  About  nineteen  years. 

Q.  You  are  president  otf  the  New  York  Central  and  Hudson  River 
railroad  ? 

A,  I am,  sir. 

(L  Wliat  is  your  opinion  concerning  the  whole  system  of  making 
corners  in  produce  and  other  commodities  and  dealing  in  futures  in 
the  same,  and  what  is  its  effect  upon  commerce  and  its  influence 
• ui)on  tlie  j)ublic  welfare? 


/ 


549 

A,  Well,  gentlemen,  I will  premise  what  I have  to  say  by  stating 
that  you  have  got  me  on  a subject  that  I don’t  know  much  about.  I 
never  dealt  in  the  grain  and  I can’t  tell  much  about  the  effect  only  as 
a general  principle.  Corners,  as  the  gentlemen  formerly  remarked,  I 
think  are  very  injurious  to  any  trade.  All  I can  speak  of  is  the  gen- 
eral effect  upon  railroads,  and  what  affects  railroads  probably  affect  all 
the  trades.  This  buying  and  selling  grain  on  delivery  may  have  a 
very  injurious  effect  upon  the  railroads,  and  through  the  railroads  upon 
thepublic  at  large,  by  furnishing  in  very  large  'quantities  transportation 
for  the  railroads  when  they  are  unable  to  carry  it  and  at  other  times  leav- 
ing them  comparatively  nothing  to  carry  and  their  rolling  stock  idle. 
Whether  corners  are  the  immediate  cause  of  that  the  committee  are 
just  as  competent  to  judge  as  I am.  We  at  times  have  from  20,000  to 
50,000  tons  of  goods  waiting  at  this  end  for  delivery  to  steamers  and  to 
merchants  and  so  on,  and  then  again  we  will  be  entirely  free  and  have 
none.  All  operations  of  that  kind  are  injurious  to  railroads,  and  what  is 
injurious  to  railroads  is  injurious  to  every  patron  of  the  railroads.  We 
have  experts  in  this  business  who  build  our  elevators  and  so  on,  and  in 
building  them  we  advise  with  these  people  who  are  presumed  to  be 
experts  in  this  particular  business.  In  old  times,  may  be  ten  or  fif- 
teen years  ago,  all  sorts  of  grain,  Mr.  A’s  grain,  Mr.  B’s  grain,  and 
every  thing  of  that  kind  were  all  kept  separate.  The  business  got  to 
be  of  such  magnitude  it  was  impossible  for  us  to  carry  it  on  any 
longer  in  that  way,  and  we  built  elevators.  That  led  the  gentlemen 
experts  employed  by  the  railroads  to  look  around,  for  how  they  could 
mix  up  all  these  grains  instead  of  keeping  each  lot  separate,  and  they 
adopted  among  themselves  a system  of  grading  by  which  Mr.  A’s  grain 
could  be  put  with  Mr.  B’s  grain  as  long  as  it  was  the  same  quality  and 
so  bn,  and  kept  in  the  same  bin  instead  of  separate  bins  in  the  ele- 
vator. Our  Mr.  Enter  went  through  that  matter  and  in  connection 
with  the  other  gentlemen  of  the  other  roads,  and  in  connection  with 
the  public  Exchange  they  arrived  at  the  conclusion  that  it  was  best  for 
all  hands  to  adopt,  and  we  adopted  it,  and  tli^t  is  the  way  we  built 
our  elevators,  according  to  that  agreement  with  these  gentlemen. 

Q,  AVhere  are  your  elevators  situated  ? 

A.  Up  in  Sixtieth  street,  in  that  neighborhood  — Sixtieth,  Sixty- 
first  and  Sixty-second  streets. 

Q.  In  the  city  of  New  York  ? 

. A.  Yes,  sir  ; and  we  have  elevators  in  Buffalo  and  we  have  elevators 
in  Albany  ; the  elevators  in  Albany  and  Buffalo  are  more  for  the  ac- 
commodation of  handling  grain,  taking  it  without  subjecting  people 
to  the  annoyance  in  waiting  and  so  on  — vessels  ; for  instance  a lot  of 
grain  will  arrive  at  Buffalo  to  go  by  canal  ; we  accommodate  that 


550 


grain  the  same  way  that  we  do  our  own  grain  that  comes  by  rail ; 
a man  may  ship  a lot  of  grain  from  Chicago  and  his  orders  may  be 
from  Chicago  to  ship  it  by  canal,  and  when  it  gets  to  Buffalo  we  make 
no  distinciion  in  that;  and  then  when  in  transit,  while  it  is  coming 
from  Chicago  to  Buffalo,  the  market  may  fluctuate  or  alter  so  that  it 
is  to  his  advantage  to  come  to  New  York  as  quick  as  he  can,  and  for 
that  reason  he  may  change  his  transportation  and  send  it  by  rail  and 
get  it  to  New  York  as  quick  as  he  can;  we  think  the  canal  helps  the 
railroad  in  that  way  ; it  gives  us  an  opportunity  of  getting  freights 
that  we  wouldn’t  otherwise  have,  and  we  think  we  have  an  opportunity 
of  getting  freights  which,  if  there  were  not  a canal,  we  wouldn’t  have 
any  chance  of  getting  at  all. 

Q.  And  there  is  really  no  conflict  in  regard  to  that  interest  between 
the  railroad  and  the  canal  ? 

A.  Not  at  all. 

Q.  Do  you  understand  the  system  of  dealing  in  futures  ? 

A.  I do  not,  sir,  any  more  than  as  you  gentlemen  do ; all  I under- 
stand about  it  is  the  general  principle  and  what  is  seen  in  the  news- 
papers. 

Q.  Would  you  kindly  state  to  the  committee  what  your  opinion  is 
from  the  knowledge  of  dealing  in  futures  concerning  it  ? 

A.  That  can  be  inferred  from  the  general  remark  1 have  made  in  re- 
gard to  it ; if  I still  sell  grain  to  be  delivered  next  July  or  August  or  any 
thing  else,  and  I am  what  some  people  call  a grain  operator,  or  specu- 
lator— they  are  known  by  different  names  — it  is  a matter  entirely 
governed  by  one’s  means ; if  a man  is  worth  $25,000  he  will  probably 
go  into  that  business  according  to  his  means  ; if  he  is  worth  $250,000 
he  will  go  according  to  that  and  so  on,  but  if  I buy  grain  to  be  de-  • 
livered  next  July  or  August  or  September,  1 will  of  course  fashion  my 
course  to  make  money  out  of  that  grain  the  same  as  any  other  kind  of 
business,  and  what  that  course  may  be  I am  in  entire  ignorance  of,  I 
don’t  know. 

Q.  I see  you  speak  o%  the  legitimate  system  of  dealing  in  grain  for 
future  delivery,  but  there  is  what  is  called  an  illegitimate  system,  that 
is  to  say,  the  buying  and  selling  certain  quantities  of  grain  without  the 
intention  of  ever  delivering  or  ever  receiving  it  ? 

A.  Of  ever  receiving  a bit  of  it. 

Q.  What  is  your  opinion  of  that  system  ? 

A.  Well,  common  custom  has  in  the  last  few  years  made  it 
very  common  for  men  to  do  business  that  they  heretofore  would 
not  have  thought  of  doing  at  all,  and  every  man  of  course 
that  is  engaged  in  the  business  brings  himself  to  think  that 


551 


that  is  a fair,  legitimate  business,  or  he  wouldn’t  enter  into  it,  and 
in  speaking  of  it  at  all  I was  onl}^  speaking  of  it  as  to  the  effect  upon 
the  railroads  and  as  to  the  effect  upon  the  transportation  of  the  coun- 
try generally.  You  have  often  heard  that  -on  such  and  such  roads 
you  can’t  get  any  car,  while  on  other  roads  you  might  get  them.  That 
is  owing  to  the  section  of  the  country  through  which  the  roads  run. 
I am  now  interested  in  roads  where  you  can’t  get  any  cars  because  they 
are  in  a particular  class  of  business,  and  that  particular  class  of  busi- 
ness is  being  very  largely  engaged  in  and  absorbing  all  the  cars  of  the 
company.  On  other  roads  they  are  in  another  kind  of  business  where 
there  is  not  anything  much  over  the  usual  run  of  things  doing  in  that 
kind  of  business.  The  cpnsequence  is  they  have  got  plenty  of  cars. 
Then  again  it  leads  to  difficulLy  in  this  respect ; for  instance  there 
would  be  a very  large  foreign  demand  for  grain  here  and  all  our  eleva- 
tors and  every  thing  we  have  got  can’t  accommodate  that  demand. 
All  at  once  the  demand  will  cease.  Our  elqv’ators  will  be  full  of  grain, 
we  will  have  GOO  or  700  cars  on  our  track,  sometimes  2,500  cars  on  our 
track,  filled  with  grain  that  have  got  to  wait  there  to  accommodate 
these  very  gentlemen,  the  speculators  in  grain.  That  demoralizes 
their  business.  A man  that  has  got  100  barrels  of  apples  or  anything 
else  up  in  the  country,  looking  for  cars,  don’t  know  whether  he  can 
get  his  cars.  It  demoralizes  every  thing.  Whereas  we  can  take  that 
same  business  and  divide  it  equally  through  twelve  months  and  there 
will  be  no  trouble  in  doing  it ; but  our  rolling  stock  may  lie  idle  for 
' three  months  and  then  again  it  may  have  a duty  imposed  upon  it  of 
three  months  in  thirty  days  and  it  can’t  do  it.  We  often  times 
have  in  the  interior  of  the  State  certain  times  of  year,  when  these 
• gentlemen  have  got  a large  quantity  of  apples  and  other  things  to 
send,  and  it  often  times  happens  that  just  at  that  time  there  is  an 
immense  quantity  of  grain  to  move.  People  will  come  to  us  and  en- 
gage 500  or  1,000  cars  to  move  grain.  They  get  it  down  here  and 
there  is  no  one  to  take  it  and  it  has  to  lie  in  the  cars  and  the  apple 
man  and  other  men  are  angry  with  us,  because  we  can’t  .furnish  cars. 
It  is  not  our  fault ; it  is  the  fault  of  the  manner  the  transportation  is 
done.  We  do  the  best  we  can.  It  may  be  more  to  our  interest  to  get 
the  apples  to  market  than  the  grain,  because  the  apples  can  afford  to 
pay  more  than  the  grain  could. 

Q.  Do  those  fluctuations  tend  to  enhance  the  price  of  the  necessar- 
ies of  life  ? A.  I can’t  say  that  they  do.  Railroading  is  like  any 
other  business.  At  times  a person  may  think  so  and  at  the  same  time 
it  may  not  really  be  so.  A man  that  is  in  the  railroad  business,  a 
freight  agent  of  a railroad,  it  is  his  business  to  keep  his  cars  employed 


and  the  railroad  people  ahead  of  him,  to  wliom  lie  is  subservient,  look 
upon  him  to  be  able  to  do  that  and  to  use  his  own  judgment 
about  doing  it.  They  don’t  give  directions,  only  he  has  a 
general  jirinciple,  the-  first  come,  the  first  served.  Jf  a 
man  engages  one  hundred  cars  from  him  to  remove  any  class  of  trade, 
it  makes  no  ditference  what  it  may  be,  he  takes  his  turn,  and  he  gets 
that  turn,  and  that  is  the  grand  principle  of  every  thing,  and  the  pub- 
lic have  confidence  in  that  general  agent  that  he  will  give  them  that 
turn,  or  we  wouldn’t  have  him,  it  would  not  be  to  our  interest,  but 
he  is  entirely  dependent  upon  that  turn.  When  he  will  get  it,  as  I 
said  before,  is  all  owing  to  how  he  can  move  his  cars,  whether  they  are 
full  or  not.  We  have  lots  of  cars  here.  At  times  we  have  had  3,000 
or  4,000  cars  loaded  standing  on  our  tracks  that  we  couldn’t  deliver, 
and  we  would  say  to  these  gentlemen  here  : ‘‘  We  can’t  stand  tin's; 
you  must  ])ay  us  a demurrage.”  As  soon  as  you  talk  aliout  that' they 
are  all  up  in  arms,  they  won’t  pay  any  demurrage  ; didn’t  calcu- 
late on  that  when  they  started,  would  take  away  all  the  profits  of  the 
grain  and  every  thing  else.  The  railroads  are  entitled  to  it,  and  it  is 
reasonable  and  right.  We  have  arriving  here  on  an  average  from  100 
to  150  car-loads  of  potatoes.  It  takes  an  enormous  ciuantitv  of  ground 
to  handle  150  car-loads  of  potatoes  and  unload  tiiein.  ^Some-times  tlie 
market  will  be  so  glutted  that  these  men  can’t  sell  the  potatoes,  and 
they  come  to  us,  and  our  rule  is  to  put  a heavy  demurrage  on  them, 
because  we  want  to  use  these  cars.  That  is  allowing  to  circumstances 
whether  we  insist  upon  collecting  that,  all  owing  to  our  neighbors  and 
to  our  competitors,  what  they  do  ; it  is  a good  deal  owing  to  that.  And 
they  come  to  us  and  say:  ‘‘We  cannot  unload  our  potatoes  on  the 
ground;  that  they  will  freeze  to-night,”  and  they  do  not  unload,  and 
they  sell  the  potatoes  from  the  cars.  We  are  subject  to  all  those  things, 
and  it  is  all  part  and  parcel  of  the  transportation  business.  It  is  the 
same  way  with  apples  and  other  things.  Potatoes  and  apples,  prob- 
ably, in  proportion,  for  those  reasons,  pay  us  more  freight  than  the 
grain  pays,  for  the  reason  that  we  have  them  do  those  things.  It  is 
done  just  exactly  as  any  other  class  of  business  is  done,  just  as  you 
would  do  business  in  the  country  or  anywhere  else.  If  you  had  to  pay 
$15  out  to  get  a car-load  of  any  thing  delivered,  you  wouldn’t 
naturally  pay  that  $15  out  yourselves  yon  would  charge  it  on  your 
books.  Sometimes  we  have  to  stand  that  to  a very  great  extent  our- 
selves. Sometimes  we  have  large  shippers,  and  very  often  pay  out  a 
great  deal  of  money.  It  is  not  to  our  interest  to  quarrel  with  those  ship- 
])ers.  They  would  go  to  other  roads.  They  have  got  means  of  com- 
munication to  the  different  points  where  they  could  take  advantage  of 
us,  ami  they  are  under  no  obligations,  only  they  will  go  to  the  man 


553 


that  treats  them  best,  and  even  in  maintaining  rates  all  those  rules 
prevail.  Our  rates  are  oftentimes  maintained  strictly  between  the 
roads,  but  then  the  man  who  patronizes  tlie  road  West  will  say  : 
“ Well,  these  folks  treat  me  pretty  well,  I will  stick  to  them,  and  if  the 
other  folks  treat  me  better  I will  go  to  thenij”  and  so  on. 

Q.  What  remedy  would  you  suggest  for  the  evils  to  which  you  have 
referred  ? 

A.  I have  talked  a good  deal  abou  t this  question  to  our  people,  but 
I can’t  say  that  we  have  come  to  the  same  conclusion  on  it.  Different 
things  suggest  themselves  and  different  circumstances  suggest  them- 
selves at  different  times  ; as  you  are  probably  aware  we  have  had  sev- 
eral pretty  serious  ffghts  with  the  roads  touching  at  Baltimore  — not 
so  much  Philadelphia  as  Baltimore;  there  has  been  a difference  of 
rate  between  Baltimore  and  New  York;  that  difference  of  rate  has 
been  brouglit  about  by  the  difference  in  transportation  ; Baltimore  has 
no  port  charges  ; you  will  find  the  captains  and  the  owners  of  vessels 
will  make  great  remonstrances  wdtli  us  about  the  port  charges  and 
about  the  dock  privileges,  etc.,  in  New  York  as  against  Baltimore,  and 
we  have  had  them  go  so  far  as  to  say,  “we  can  afford  to  bring  freight 
to  New  Yoi'k  and  discharge  it  and  go  to  Baltimore  and  get  the  freight 
home  at  same  price, as  we  can  come  in  New  York  ; ” we  think  they  ought 
to  pay  more;  it  is  farther  ; and  all  those  circumstances  attending  it 
are  attended  with  trouble  and  expense  to  the  shipper  ; and  then,  again, 
in  regard  to  Baltimore,  we  have  thought  that  they  had  a different  sys- 
tem of  grading  grain,;  we  have,  for  instance,  on  our  lines,  the  White 
Line  ; that  runs  over  our  road  and  runs  over  the  Philadelphia  road  and 
the  Baltimore  road ; the  line  belongs  to  the  New  York  Central ; we 
run  to  all  tliose  places ; and  then,  again,  we  have  the  Red  Line  that  tends 
more  to  New  York  and  more  to  New  England  ; we  have  had  offered  to 
us  a cent  a bushel  more  to  take  grain  from  a point  out  West  to  Balti- 
more in  a White  Line  car,  than  we  could  take  that  same  gram  m a 
Red  Line  car  to  New  York  to  New  England;  they  have  a way  of  doing 
their  business  that  we  can’t  ffnd  out,  but  we  know  the  fact;  we  know 
it  is  so,  and  there  is  no  reason  in  the  world  why  freight  should  go  to 
Baltimore  cheaper  than  it  does  to  New  York ; we  think  tliat  their 
charges  in  Baltimore  are  very  much  less  ; in  fact  we  think  that  all  the 
ports,*  not  only  Baltimore,  but  all  the  ports  of  entry  in  this  country 
are  very  much  more  favorable  in  every  other  place  than  they  are  in 
New  York,  simply  because  the  great  bulk  of  the  business  comes  to  New 
York ; in  our  opinion,  without  regard  to  other  people,  we  think  that 
New  York,  in  that, respect,  stands  very  much  in  her  own  light. 

Q.  We  like  to  hear  a criticism  from  Mr.  Vanderbilt  on  our  charges 
and  facilities  ? 

70 


554 


A.  That  is  a general  principle  ; there  is  no  reason  why  because  New 
York  does  two-thirds  of  the  business  of  the  country,  tliat  she  should 
not  do  her  business  as  cheap  as  her  neighbors  ; you  take  up  the  papers 
of  the  last  few  years,  and  you  will  see  how  Baltimore  has  gained  ; 
there  is  no  reason  why  New  York  should  not  have  kept  up  her  busi- 
ness. 

Q.  The  port  charges  are  too  high  ? 

A.  Yes,  sir  ; certainly  ; take  the  lines  of  steamers'that  come  to  New 
York;  why  do  they  come  here?  because  the  bulk  of  traveling  comes 
here ; there  are  lines  of  steamers  in  New  York  now  that  pay  as  high 
as  ^40,000  a year  fora  dock;  we  have  built  our  docks  up  in  Sixtieth 
street;  we  have  five  or  six  docks  100  feet  long,  and  offer  them  free  to 
anybody  that  comes;  it  is  land  underwater;  we  own  all  the  land 
up  there;  when  we  build  docks  out  here  the  corporation  gives  us 
permission  to  build  the  dock  and  we  have  to  pay  tliem  for  all  those 
privileges,  and  those  folks,  as  I said  before,  to  get  the  same  accommo- 
dations down  where  the  corporation  owns  the  docks,  though  we  give 
them  for  nothing,  they  have  to  pay  $40,000  for  a dock ; we  have  to 
j)ay  the  corporation  for  tlie  privilege  of  building  our  docks  because  the 
corporation  claims  to  owning  the  streets,  and  yet  in  building  their 
streets  they  build  a dock  sixty  feet  wide  and  the  vessels  lie  on  our  land 
along  side  of  the  dock,  but  we  have  to  pay  the  corporation,  we  have 
got  to  do  it ; the  water  up  there  is  about  seventy  feet  deep  on  which 
we  pay  the  rental  to  the  city. 

• 

By  Senator  Browj^ijs’G  : 

Q,  How  many  docks  have  you  ? 

A.  We  have  got  five  or  six  and  we  are  going  on  building  every  year, 
and  we  keep  on  building. 

Q.  Are  they  near  each  other  ? 

A.  200  feet  apart  — 150  feet  apart. 

Q.  And  you  have  bulk-heads  between  and  all  that  ? 

A.  Yes,  sir;  certainly,  elegant  docks,  as  fine  docks  as  there  are  in 
New  York,  and  covered  by  two  story  store-houses  — warehouses  two 
stories  high,  and  every  thing  that  goes  in  and  out  of  them,  goes  in  by 
steam  — as  fine  docks  as  there  are  in  this  country. 

Q.  Wliere  are  those  located  ? 

A.  At  the  foot  of  Sixtieth  street;  we  own  all  the  land  from  Sixtieth 
street  to  Seventy-second  street  and  when  we  get  that  filled  up  with 
docks,  if  tlie  business  recpiires  we  will  go  up  to  Harlem  and  get  some 
more  docks. 

Q.  'I'liat  is  on  the  North  or  East  river? 

A.  fi'he  Nortii  river;  we  have  made  tliere,  ourselves,  including  the 


555 


the  docks,  about  100  acres  of  laud,  and  twelve  years  ago  we  hadn’t  a 
facility  at  all  up  there  ; which  shows  you  how  the  business  has  grown; 
but  we’  have  to  do  as  our  neighbors  do,  and  we  have  got  to  provide  for 
business  if  we  calculate  to  do  it. 

Q.  What  legislation  in  relation  to  the  subject  of  cornering  would 
you  suggest,  if  any  ? 

A.  That  is  a matter  I don’t  know  enough  about  to  make  any  sug- 
gestions;  when  you  and  I were  ten  years  younger  than  we  are  now, 
we  never  heard  of  such  a thing  as  corner  in  grain  or  wheat  or  such 
things;  there  will  be  now  probably  500  or  1,000  men  engaged  in  it  the 
same  as  in  Wall  street,  there  are  500  men  or  2,000  men  there  now 
probably  and  they  make  their  money  so  easy,  and  they  never  see  a 
bushel  of  grain  that  they  buy;  if  it  was  confined  to  actual  delivery  and 
people  not  allowed  to  make  their  speculations,  it  will  be  just  like  the 
law  that  they  tried  to  put  in  force  here  last  Sunday,  that  there  should 
not  be  any  hacks  or  cabs  or  any  thing  of  that  kind  opened  — the  very 
minute  they  get  a chance  they  will  do  it;  that  is  all  there  is  about 
it;  it  never  was  intended  when  made  to  be  carried  to  that  excess. 

Q.  Is  the  system  of  dealing  in  futures  in  grain  similar  to  the  system 
of  dealing  in  stocks  in  Wall  street  ? 

A.  That  I can’t  tell  you ; I never  have  had  any  experience  in  it ; 
I don’t  know  any  thing  at  all  about  it, 

Q.  You  have  had  experience  in  the  dealing  in  stocks,  have  you 
not  ? 

A.  No,  sir  ; people  give  me  the  credit  of  being  a, great  speculator  in 
stocks;  I am  very  glad  to  testify  on  that  subject;  I am  a first-rate 
buyer  of  stocks  or  any  thing  else,  but  I am  a mighty  j)oor  seller  ; I 
never  in  my  life  bought  a stock  to  speculate  on,  and  there  are  thousands 
of  things  that  you  see  in  the  papers  about  me  every  day  that  there 
ain’t  a word  of  truth  in ; newspaper  reporters  are  like  a great  many 
other  men,  they  are  all  very  good  men  in  their  way,  but  they  get  their 
living  by  making  up  a sensational  article,  and  they  are  pretty  good  at 
that ; they  are  good  men ; they  make  their  living  in  that  way ; every- 
body has  away  of  making  his  own  living;  I oftentimes  take  up  a 
paper  and  see  things  about  myself  that  haven’t  a word  of  truth  in 
them,  and  this  morning  in  one  of  the  papers  I picked  up,  I found 
many  things  in  it  that  there  was  no  more  truth  in  than  I tell  you. 

Q.  But  you  understand  the  system  of  dealing  in  stocks  the  way  it 
is  conducted  by  other  men,  do  you  not  ? 

A.  No;  I tell  you  what  I understand  about  it;  my  experience  in 
the  stock  business,  if  you  want  it  I will  give  it  to  you  in  a very  few 
words;  I never  bought  stock  in  my  life  that  I didn’t  have  to  put  up 
twenty  per  cent  margin  if  I didn’t  pay  for  it  altogether;  I would  have 


55G 


to  put  up  twenty  per  cent  margin ; there  are  a good  many  hundreds 
and  thousands  of  men  that  don’t  put  up  any  margin ; 1 make  up  my 
mind  that  I am  like  the  man  that  goes  to  the  tailor ; I pay  for  my 
clothes,  or  pay  for  those  that  do  not  pay;  we  are  all  alike  about  that; 
you  are  just  as  likely  to  do  it  as  I am,  but  they  think  it  is  just  as  well 
for  me  to  put  up  twenty  per  cent  margin  as  any  other  one,  and  I put 
it  up  and  pay  it. 

Q.  They  sell  stocks  for  future  delivery,  do  they  not  ? 

A.  They  sell  stocks  short ; I never  sold  a share  of  stock  short  in  my 
life  ; never  sold  what  I didn’t  have  to  sell. 

Q.  I am  not  referring  directly  to  yourself? 

A.  I believe  they  do;  yes,  sir;  they  depreciate  property  in  all  sorts 
of  ways  ; there  are  all  kinds  of  ways  of  getting  a living,  and  all  kinds 
of  people  to  follow  them. 

Q.  The  stock  of  your  own  railroads,  the  railroad  of  which  you  are 
president,  is  subject  to  this  same  sort  of  dealing,  is  it  not  ? 

A.  Certainly;  I remarked  to  a man  day  before  yesterday — he  said 
so  and  so  was  going  down.  Said  I,  “ there  ain’t  but  one  thing  to 
make  it  go  down.”  Said  I,  ^‘1  suppose  it  is  going  down  on  that;” 
he  asked  “what  I thought;  ” I said  ^^it  is  its  great  prosperity  ; that 
is  the  only  thing  to  make  a thing  go  down  in  Wall  street  for  it  to  be 
prosperous;  it  is  more  prosperous  now  than  it  ever  has  been,  and  I 
suppose  that  will  make  it  go  down.” 

Q.  I want  to  get  at  your  opinion  concerning  the  system  of  dealing 
in  futures,  and  your  experience  of  that  system  as  conducted  in  dealing 
in  stocks ; morally  speaking  they  are  about  the  same  thing  ? 

A.  I admit  that  I am  very  much  prejudiced  and  I don’t  know  that 
my  opinion  is  a fair  opinion  to  give.  I admit  that  I am  very  much 
prejudiced  against  a bear  of  any  kind.  I go  for  upholding  properties 
and  sustaining  them.  Every  man  that  invests  $100  in  any  thing,  no 
matter  what  it  is,  is  looking  for  a fair  return  from  it,  either  from  the 
comfort  he  derives  from  it  or  from  something  else,  and  I believe  he 
should  have  it,  and  I am  down  on  any  man  that  undertakes  to  depre- 
ciate property.  I don’t  think  I am  a competent  judge  to  say  any 
thing  about  it,  because  so  many  people  think  differently. 

Q.  From  your  opinion  and  from  your  knowledge  of  this  system  of 
dealing  you  tliink  it  is  wrong  and  immoral  ? 

A.  I do.  I think  it  has  a bad  effect.  I think  it  has  a bad  tendency. 
I think  it  has  a bad  tendency  upon  all  the  young  men  and  there  is  not 
any  thing  we  are  all  more  or  less  interested  in  tlian  that.  I think  it 
has  a bad  moral  effect  because  it  tends  to  idleness  and  it  tends  to  peo- 
ple getting  money  very  easily,  all  this  kind  of  speculation.  They 
shnuldn’t  do  it.  Some  how  or  other  in  the  end  it  is  different.  You 


557 


yery  seldom  see  one  man  in  ten  that  goes  in  Wall  street  or  into  any 
business  of  that  kind,  but  what  he  comes  out  the  loser  in  the  end. 
He  can’t  be  successful  long. 

Q.  What  effect  has  it  upon  commerce,  upon  trade  ? 

A.  It  has  a bad  effect,  for  this  reason,  I have  known  ships  to  come 
in  here  and  go  out  with  nothing — take  ballast  to  go  home  with  and 
three  months  afterward  we  would  have  20,000  or  30,000  tons  of 
freight  going  to  that  very  place  to  which  that  ship  went  that  can’t 
be  curried  at  all  they  will  be  so  full,  and  yet  they  would  run  three 
months  empty.  If  that  was  divided  he  could  afford  to  carry  for  less 
and  we  could  afford  to  bring  it  for  less.  It  has  a bad  effect  upon  com- 
merce. If  we  had  business  twelve  months  in  the  year  we  could  calcu- 
late how  to  conduct  our  business,  how  much  rolling  stock,  engines, 
etc.,  we  needed.  New  on  the  New  York  Central  road  we  thought  we 
had  all  the  engines  we  wanted  for  the  coming  year.  I bought  50 
engines  this  year.  The  other  day  a snow  storm  came  and  we  thought 
we  were  pretty  well  fortified,  but  we  had  to  go  and  buy  twenty-five 
more  engines.  Every  thing  had  been  all  thrown  into  chaos  by  this 
delay  or  we  would  have  had  plenty  of  engines.  They  have  out  West 
their  ship  rates  and  everything  of  that  kind  coming  into  the  terminus 
of  our  line,  and  every  thing  falling  on  to  our  hands  suddenly 
for  transportation  to  Europe.  Every  thing  has  gone  up  and  every- 
body wants  his  freight  here  at  once  or  we  would  have  had  engines 
enough  and  we  would  have  had  plenty  of  rolling  stock  and  every  thing 
we  wanted. 

Q.  Are  you  familiar  with  the  system  of  speculating  in  meat  and 
cattle  which  has  been  inaugurated  recently  ? 

A.  Only  from  hearing  the  people  of  one  side  talk  as  against  the 
people  of  the  other.  The  shippers  on  our  line  are  generally 
shippers  of  live  stock  on  foot,  while  we  have  shippers  of 
•beef  as  well  — dead  beef.  Shippers  of  live  stock  make 

a.  demand  upon  us  that  we  are  ruining  our  business  inas- 
much as  if  we  carry  twenty-five,  or  eighteen  or  twenty  head 
cattle  in  a car,  we  are  carrying  and  getting  paid  for  all  offal  that  those 
cattle  have  in  thepi,  and  the  same  was  with  hogs  and  sheep,  and  we 
are  getting  paid  so  much  a hundred  pounds  for  that ; whereas  if  we 
cany  the  dressed  beef,  it  is  all  dressed  and  the  offal  left  behind,  and 
we  are  carrying  it  in  the  shape  of  refrigerator-cars,  which  weigh  about 
double  what  the  other  cars  do ; and  in  the  shape  of  ice,  three  or  four 
tons  to  a car,  for  which  we  do  not  get  any  thing,  and  that  is  the  differ- 
ence. Some  roads  consider  it  to  their  interest,  and  probably  some  of 
the  employees  of  those  roads  are  interested  in  the  ice  and  in  the  cars. 


558 


They  consider  it,  any  how,  for  their  interest  to  carry  the  beef  in  the 
cars  in  that  way.  We  do  not,  unless  they  pay  us  for  the  ice  and  for 
the  cars.  We  believe  in  carrying  every  thing  by  weight,  to  i)ut  every 
thing  on  an  equality.  If  one  man  gets  his  dressed  beef  carried  for 
half  what  the  other  does,  and  gets  his  ice  carried,  he  certainly  lias 
an  advantage  over  the  other.  They  have  had  me  interested  in  ranches 
and  cattle,  and  all  such  things.  I never  owned  a ranch  nor  a hoof  of 
cattle  since  I was  a farmer  — since  I have  been  in  the  railroad  business, 
nor  I have  not  been  interested  in  any  thing  of  the  kind  in  any  way, 
shape  or  manner,  and  never  expect  to  be. 

Q.  I see  it  has  been  stated  that  certain  railroad  officials  were  inter- 
ested in  the  beef  business,  and  that  was  one  of  the  causes  of  this 
present  war  and  the  increase  of  prices ; what  do  you  say  as  to  that  ? 

A.  As  far  as  I am  individually  concerned  I have  no  interest  what- 
ever in  any  thing  of  the  kind  pertaining  to  beef.  That  all  railroads 
are  so  I can’t  say  any  thing  about.  I don’t  believe  they  are,  for  the 
simple  reason  that  cars  of  that  character,  with  ice  and  every  thing  of 
that  kind  — it  can’t  be  supposed  that  a man  that  has  not  got  any  in- 
dividual interest  in  it  himself  is  going  to  allow  his  railroad  to  carry 
three,  or  four,  or  five  tons  to  a car  of  stuff,  for  which  he  docs  not  get 
any  thing,  if  he  can  get  paid  in  another  shape.  I don’t  believe  it  is 
so  with  the  president,  but  there  are  a great  many  things  done  on  a 
railroad  that  a president  don’t  know  any  thing  about,  and  he  may  find 
a great  many  rings,  as  I suppose  he  always  does  find;  but  at  the  same 
time  he  has  got  to  be  looking  around  him  every  day  and  every  night, 
if  he  finds  them  all. 

Q.  You  stated  something  in  relation  to  certain  lines  — Red  lines  and 
White  lines  ; do  those  lines  belong  to  the  railroad  company  ? 

A.  Entirely,  sir;  I have  no  individual  interest  in  them  at  all. 

Q.  Are  there  not  some  lines  which  run  over  your  roads  and  other 
roads  that  belong  to  private  corporations  ? 

A.  Not  that  I know  of,  except  the  sleeping-car  line  ; none  that  I 
know  of. 

Q.  It  has  been  stated  that  the  Blue  line  and  the  Red  line,  and  such 
other  lines  as  those,  belong  to  a corporation  separate  from  the  railroad 
corporation  ? ' 

A.  That  may  be  in  some  cases;  there’ may  be  cases  where  they  run 
over  a certain  distance  and  the  railroads  themselves  have  not  the 
money  to  pay  for  those  lines  of  cars,  and  they  give  the  right  for  them 
to  Rubscril)e  ; they  have  got  the  right  to  subscribe  according  to  their 
mileage,  and  they  give  that  right  to  subscribe  to  some  of  the  large 
8hip])ers,  and  it  is  to  the  interest  of  those  large  shippers  to  take  that; 


559 


that  may  be  so  ; it  is  not  so  with  us;  we  have  not  had  a case  of  that 
kind  on  any  of  the  railroads  in  which  I am  interested  that  I know  of. 

Q.  What  necessity  is  there  for  having  a fiystem  of  cars  known  as 
Bed  line  and  White  line  apart  from  the  New  York  Central  and  Hud- 
son River  railroad  ? 

A.  Oh,  they  run  over  different  sections  of  country. 

Q.  That  is  on  account  of  their  rnnning  through  with  the  freight  ? 

A,  Yes,  sir ; there  is  a division  of  territory  on  all  these  lines,  most 
of  them,  although  some  territories  have  dilferent  freight  for  different 
kinds  of  lines  that  they  run  over  parts  of  the  same  territory,  but  as  a 
general  rule  there  is  a division  of  territory;  the  Blue  line  runs  along 
the  north  shore  of  the  lake  and  the  White  line  along  the  south  shore  ; 
the  White  line  runs  over  the  south  shore  of  the  lake  at  Cleveland,  and 
I believe  goes  as  far  as  Toledo  and  Wabash. 

Q.  How  are  those  lines  made  up  as  to  the  cars  of  the  various  rail- 
roads ? 

A.  According  to  mileage  and  according  to  the  business  done  — more 
lately  according  to  the  business  done  than  according  to  mileage.  For 
instance,  the  New  York  Central  does  an  amount  of  business  amount- 
ing to  so  much,  which  will  be  twice  as  much  as  a road  West  occupying 
more  mileage,  and  of  course  you  would  be  entitled  to  put  in  twice  the 
number-of  cars;  I think  tve  have  12,000  or  14,000  cars  in  those  sys- 
tems of  lines,  and  each  of  those  lines  has  a general  manager  whose 
business  it  is  to  look  after  them. 

Q.  Are  shippers  charged  in  addition  to  the  regular  freight  for 
the  accommodation  afforded  for  all  these  extra  cars  ? 

A.  No,  sir;  I think  not.  For  instance,  a man  that  comes  to  our 
freight  agent  at  any  place  on  our  line  of  road  and  says,  ^‘1  have  got  a 
hundred  or  two  hundred  bushels  of  apples  that  I would  like  to  ship 
to  New  York  as  soon  as  1 can ; ” apples  we  call  perishable  freight  ; it 
generally  takes  preference  over  freight  that  won’t  be  hurt  by  delay  ; all 
perishable  things  take  preference  over  others.  The  agent  of  that 
place  tells  him  when  he  can  have  a car  to  ship  them  and  he  will  get 
the  preference  over  a lot  of  pork  or  beef  or  any  thing  of  that  kind 
that  is  not  perishable. 

Q.  Can  you  recollect  any  notable  instance  wherein  corners  have  been 
made  in  grain  ^ 

A.  I have  not  any  recollection  ; if  you  recall  it  to  my  mind  I might 
remember  it. 

Q.  Do  you  remember  a corner  known  as  the  Keene  corner  ? 

A.  I have  never  given  that  matter  much  attention  ; I have  no  doubt 
our  general  freight  agent,  Mr.  Enter,  who  is  now  third  vice-president, 
could  tell  all  about  it. 


560 


Q.  Do  you  recollect  any  notable  instance  of  corners  in  railroad 
stocks  ? 

A.  Yes,  I do.  I recollect  there  was  a corner  in  North-west  stock  ten 
years  ago.  I don’t  think  that  there  have  been  any  corners  lately 
except  the  Hannibal  and  St.  Joe,  and  I think  those  X)eople  that  have 
generally  been  engaged  in  corners  have  got  their  fingers  burnt  so  badly 
that  they  will  let  them  alone.  At  least  so  I have  always  heard. 

Q.  How  was  the  Hannibal  and  St.  Joe  corner  originated  ? 

A.  I understand  a man  by  the  name  of  Duff  liad  the  principal  ])art 
of  it.  His  father  died  about  three  or  four  years  ago,  and  left  him  $3,- 
000,000  and  I guess  to-day  he  has  nothing.  That  is  the  gein.Tal  prin- 
ciple. 

Q.  And  what  effect  have  these  corners  of  railroad  stocks  upon  corners? 

A.  I don’t  think  any,jbecause  the  corners  are  generally  gotten  up  by 
people  who  have  nothing  to  do  with  the  road,  that  is  I mean  the 
practical  running  of  the  road. 

Q,.  Is  there  any  thing  you  would  like  to  state  to  the  committee  ? 

A.  No,  sir,  what  I have  stated  has  all  been  off-hand.  I hadn’t  any 
idea  of  stating  any  thing  when  I came  here. 

Q.  Do  you  think  it  is  the  duty  of  the  people  through  their  Legislature 
to  attempt  to  put  a stop  to  the  system  of  making  corners  and  this 
illegitimate  dealing  in  the  futures  ? 

A.  That  is  a matter  that  you  would  be  a better  judge  of  than  I. 
A"ou  gentlemen  have  ten  times  the  opportunity  that  I have  to  judge  of 
those  things.  I can’t  say.  It  is  dangerous  on  both  sides.  It  is 
dangerous  not  to  approach  it  and  dangerous  to  approach  it.  It  is 
very  unfortunate  I think  that  it  exists.  At  the  same  time  there  are 
a great  many  evils  of  that  kind  that  you  can’t  so  readily  get  rid  of  as 
you  would  like  to,  and  it  has  got  to  be  left  to  the  experience  of  men 
that  know  more  about  it  than  I do.  Railroads  could  well  afford  to  do 
what  it  is  impossible  to  have  done,  that  is  to  divide  regularly  their 
business  through  the  entire  year.  But  they  can’t  do  it.  That  would 
greatly  help  the  difficulty.  Whether  it  would  entirely  obviate  all  the 
difficulties  it  can  hardly  be  supposed.  It  is  impossible  for  us  to  gov- 
ern the  acts  of  men.  Everybody  now-a-days  does  as  he  pleases,  and  there 
are  many  modes  of  getting  a living,  and  it  is  a matter  that  it  is  diffi- 
cult for  us  to  undertake  to  influence  as  long  as  they  db  it  and  it  does 
not  interfere  with  the  public  good.  There  is  a good  deal  to  be  said  on 
both  sides  of  that  question.  There  is  a good  deal  to  be  said  about  this 
cornering  business. 

Q.  It  is  just  by  getting  the  opinions  ot  gentlemen  of  your  experi- 
ence that  we  have  to  be  guided,  and  therefore  we  ask  your  opinion  as 
we  considei'  it  very  valuable  ? 


5Gi 


A.  I don’t  think  I am  competent  to  judge,  I don’t  think  I have  had 
experience  enough.*  1 am  only  competent* to  judge  as  far  as  it  affects 
me  and  the  roads  with  which  I am  connected.  Last  year  and  year 
before  last  I think  it  was  a very  serious  trouble  to  the  country  at  large. 
J think  we  would  have  had  no  trouble  at  all  in  getting  rid  of  all  of 
our  bread-stuff  if  the  price  had  been  such  as  to  allow  foreign  countries 
to  take  it.  When  it  was  forced  up  here  it  was  forced  up  on  the  other 
side  and  that  is  a very  serious  thing. 

Q.  What  occasion  is  that  you  refer  to  ? 

A.  I mean  when  our  bread-stuffs  were  as  high  in  Chicago  as  they 
were  in  New  York,  as  high  in  Chicago  as  in  England,  and  all  the  for- 
eign nations  of  the  world  were  supplying  Europe  with  bread-stuffs, 
when  we  had  plenty  here  to  spare  and  speculation  kept  it  locked  up.  It 
was  very  serious.  It  did  us  harm,  it  will  take  us  years  to  get  over  it  in 
my  judgment,  and  that  appeared  to  be  the  judgment  of  others  than 
myself,  that  I have  talked  with.  Probably  I have  not  had  the  same 
opportunities  as  other  gentlemen.  People  generally  talk  to  those 
people  that  think  as  they  do. 

Q.  That  exorbitant  price  was  caused  by  illegitimate  speculation  ? 

A.  Why,  certainly.  You  don’t  suppose  for  a moment  that  the 
farmer  got  that.  The  railroads  didn’t  got  it.  They  didn’t  alter  the 
prices.  The  speculator  got  it.  One  man  lost  it  and  another  got  it. 

Q.  And  then  the  burden  fell  upon  whom  ? 

A.  The  country  lost  it,  the  commerce  of  the  country.  Probably  it 
was  enhanced  to  some  extent.  At  the  same  time  that  commerce  we 
are  depending  upon,  and  the  railroads  and  every  thing  of  that  kind 
all  lost  it.  Suppose  there  had  been  an  abundant  crop  — it  is  pretty 
abundant  — we  would  make  more  money  to  have  grain  and  things  of 
that  kind  cheap  than  we  would  to  have  a high  price.  They  all  go  for 
the  railroads  on  transportation  and  do  not  think  about  what  they  get 
themselves.  You  never  heard  of  a merchant  in  New  York  in  your 
life  lowering  his  commission  or  any  thing  of  the  kind  because  trans- 
portation went  down.  I defy  anybody  to  bring  a man  that  ever  low- 
ered his  commission  upon  any  goods  because  the  transportation  was 
lowered.  It  is  all  good  if  I hit  you,  but  I don’t  want  you  to  hit  me 
back  again. 


Thursday  Afterhooh,  December  14,  1882. 

Rufus  Hatch  was  then  sworn,  and  being  interrogated  testified  as  fol- 
lows : 

By  Senator  Boyd  : 

Q.  What  is  your  name  ? 

A.  Ivufns  Hatch. 


562 


Q.  Where  do  you  reside,  sir  ? 

A.  In  New  York,  42  Park  avenue. 

Q.  What  is  your  business? 

A.  That  is  a pretty  difficult  question.  I am  in  the  cattle  business. 

Q.  That  is,  you  are  a dealer  in  cattle  ? 

A.  Yes,  sir. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  About  two  years  — three  years. 

Q.  Are  you  familiar  with  the  grain  and  produce  business  ? 

A.  To  a certain  extent. 

Q.  To  what  extent? 

A.  Well,  I have  bought  and  sold  grain  for  the  last  thirty  years. 

Q.  Are  you  also  familiar  with  the  stock  business  ? 

A.  Yes,  sir,  somewhat;  1 have  had  a little  experience  in  it. 

Q.  How  long  have  you  been  engaged  in  that  business  ? 

A.  About  twenty  years. 

Q.  Are  you  familiar  with  the  system  of  making  corners  in  grain, 
stock  and  other  commodities  ? 

A.  I have  heard  people  speak  of  corners. 

Q.  Have  you  had  any  practical  experience  ? 

A.  I never  made  a corner. 

Q.  Have  you  been  engaged  with  any  persons  that  did  make  corners? 

A.  Well,  I don’t  know  other  people’s  business. 

Q.  Will  you  please  explain  to  the  committee  what  a corner  means  ? 

A.  Well,  that  is  a pretty  big  question.  I should  understand  it  to 
mean  that  it  was  buying  more  than  there  was  any  existence  of  some 
certain  commodity — stocks,  bonds,  corn,  wheat,  oats,  rye,  barley  or 
cabbage  heads. 

C^.  For  what  purpose  ? 

A.  Well,  for  home  consumption  ; from  the  fact  that  you  can  sell  it 
out  to  somebody  else  at  a profit,  or  sell  it  to  the  man  that  had  sold 
what  he  did  not  have  to  you.  I don’t  mean  that  you  (Senator  Boyd) 
have  ever  been  engaged  in  commerce  by  making  that  remark  ; I mean 
the  man  that  made  the  corner. 

Q.  Do  you  know  of  any  transactions  that  have  occurred  similar  to 
that  in  this  country  ? 

A.  Well  they  had  Hannibal  and  St.  Joe  pretty  tight  last  year. 

Q.  Are  you  familiar  with  the  making  of  that  corner  ? 

A.  Xo,  sir,  I had  no  interest  in  it;  I was  neither  short  nor  long. 

Q.  Do  you  know  of  any  corners  being  made  in  grain  ? 

A.  I do  not.  They  say  tliat  here  a few  weeks  ago  — while  I was  out 
West  I think  — some  parties  owned  a great  deal  more  grain  than  there 


563 


was  here  ; but  that  is  the  misfortune  of  the  man  that  sold  what  he 
didn’t  have. 

Q.  What  is  your  opinion  of  the  effect  of  making  corners  as  you  have 
described  upon  commerce  and  the  public  welfare  generally  ? 

A.  I think  it  is  very  detrimental.  That  has  been  my  experience, 
looking  at  what  other  people  have  done.  I never  have  known  of  but 
one  corner  that  was  a success,  and  that  was  the  Harlem  corner  by  Van- 
derbilt. That  was  a success  because  he  had  the  money  to  carry  it 
through. 

Q.  Are  you  familiar  with  the  details  of  that  corner  ? 

A.  Oh,  that  is  a long  time  ago  — 1863  or  ’4  you  know. 

Q,  Do  you  remember  any  of  the  details  now  ? 

A.  I do  not  remember  any  more  than  — 

Q.  Can  you  give  a general  outline  of  the  transaction  ? 

A.  It  is  a matter  of  memory ; I could  not  be  reliable ; it  seems  to 
me  that  there  was  some  legislation  at  Albany  and  it  was  adverse  to 
the  property,  and  the  Albany  legislators  and  senators  and  governors 
and  all  the  followers  and  all  the  Wall  street  men  sold  the  stock  and 
he  bought  it  two  or  three  times  over,  and  he  made  them  settle  at  285  ; 
that  is  as  I remember  it ; I was  a member  of  the  Exchange  at  that 
time. 

Q.  What  effect  had  that  upon  the  railroad  interests  ? 

A.  Well  it  was  disastrous  ; there  was  a great  panic  took  place  right 
after  that. 

Q.  And  who  suffered  chiefly  ? 

A.  Those  that  sold  what  they  did  not  have. 

Q.  You  mean  on  speculation? 

A.  I mean  on  speculation  ; and  then,  of  course,  when  he  got  con- 
trol of  the  property  he  advanced  rates  200  or  300  per  cent,  and  he  has 
made  the  road  pay  since  on  assessing  the  community. 

Q.  In  the  original  part  of  the  transaction  did  the  stockholders  suffer  ? 

A.  No,  I should  say  not.  They  suffered  afterward. 

Q.  I presume  those  who  were  compelled  to  sell  — 

A.  Suffered.  The  men  that  held  on  and  got  285  of  course  made 
money. 

Q.  Do  you  understand  the  system  of  dealing  in  futures  ? 

A.  To  a certain  extent. 

Q.  Please  explain  what  it  means  ? 

A.  Well,  here  or  in  Chicago  ? 

Q.  Anywhere.  You  are  familiar  with  the  business  all  over  the 
country,  I take  it,  and  of  course  we  want  your  judgment  about  the 
matter  ? 


5G4 


A.  Well,  we  will  suppose  a man  goes  down  on  ’Change  and  buys  ten 
or  twenty  or  fifty  boat- loads  of  corn  for  delivery  next  May.  He  may 
be  buying  of  a man  who  has  got  it  to  deliver  to  him  or  he  may  be 
buying  it  of  a man  who  is  selling  what  he  has  not  got.  It  is  a straight- 
out  gamble  on  whether  corn  is  higher  or  lower  when  the  contract  ma- 
tures. 

Q.  Are  such  transactions  of  frequent  occurrence  in  the  city  of  New 
York  ? 

A.  Very. 

Q.  And  elsewhere  — in  other  cities  ? 

A.  Elsewhere,  yes,  sir. 

Q.  What  is  your  opinion  of  the  effect  of  such  transactions  upon  our 
commerce  ? 

A.  Well,  I don’t  know  that  I could  express  an  intelligent  opinion 
on  that  — effect  on  commerce.  I will  only  express  it  in  this  way  : that 
had  we  shipped  25,000,000  bushels  more  of  wheat  in  the  fall  of  1880 
we  would  have  seen  wheat  sell  for  $2.50  in  this  country  for  home  con- 
sumption. They  brought  wheat  from  San  Francisco  and  shipi)ed  it 
to  Minneapolis  to  supply  the  mills  there.  They  took  wheat  from 
Chicago  and  from  St.  Paul  back  to  Minneapolis  to  supply  their  mills 
there,  simply  from  the  fact  of  a short  crop.  Had  we  shipped  50,000,- 
000  more  corn,  corn  would  have  sold  at  $1.50  a bushel.  There  is  a 
great  deal  of  cant  about  putting  up  the  price  of  grain  and  stopping 
exports.  Had  those  things  happened  — had  grain  been  low  and  had 
there  been  no  speculators  buying  for  a higher  market  and  holding  this 
property  here,  we  would  have  brought  grain  from  Europe  here,  as  we 
did  bring  potatoes.  So  it  is  a pretty  hard  question  to  answer  and  a- 
big  problem  to  solve  — what  the  effect  on  commerce  is  of  dealing  in 
futures. 

Q.  I just  want  the  benefit  of  your  experience  ? 

A.  Well,  still  further  then,  I owned,  last  June,  a year  ago,  three 
times  as  much  corn  as  there  was  in  the  city  of  Chicago ; I bought  it 
on  the  imagination  or  idea  of  other  people  that  corn  was  going  to 
decline  ; well,  I made  no  corner  in  it;  when  it  was  at  a satisfactory 
price  1 sold  it ; had  I held  it  thirty  days  longer,  I would  have  made 
$600,000  more ; I didn’t  tell  anybody  that  I bought  it,  and  I didn’t 
tell  anybody  when  I sold  it ; that  is  one  experience  that  I can  show  by 
my  books. 

il.  fi’hat  we  have  no  doubt  was  perfectly  legitimate  ; we  want  to  get 
at  the  illegitimate  features  of  this  transaction  ? 

A.  Well,  that  was  as  illegitimate  as  any  thing  could  be ; I bought 
f what  I didn’t  want,  and  the  other  man  sold  me  what  he  didn’t  have. 

(2.  Then  you  did  not  have  that  actual  amount  of  corn? 


565 


A.  No,  I didn’t  have  any  ; I only  had  their  contracts  for  futures; 
they  could  not  have  delivered  it  to  me  had  I asked  them  to,  and  I 
didn’t  expect  to  have  them  deliver  it;  I didn’t  liave  the  money  to  pay 
for  it. 

Q.  Suppose  you  had  been  called  on  to  pay  for  it,  what  would  have 
been  the  result  ? 

A.  I should  have  had  to  pay  for  it,  or  sold  it  out  for  what  it  would 
have  brought. 

Q.  Of  course  at  a terrible  sacrifice  ? 

A.  No,  it  was  not  a sacrifice  as  it  happened  ; it  went  up  about  thirty 
points;  it  was  a sacrifice  on  the  other  side. 

X^.  The  dealing  in  futures  has  been  characterized  by  some  of  the 
witnesses  who  have  appeared  before  this  committee  as  a system  of 
gambling;  what  is  your  opinion  about  that? 

A.  Well,  I think  that  a man  who  sells  what  he  has  not  got  ought  to 
be  made  to  deliver  it  or  go  to  prison ; a man  that  buys  what  he  don’t 
want  ought  to  be  made  to  pay  for  it;  but  you  might  just  as  well  try 
to  make  the  Mississippi  river  run  up  to  Minneapolis  over  the  falls,  as 
to  prevent  men  from  buying  and  selling  on  that  basis,  grain,  coffee,  tea, 
dry  goods  or  any  thing  else  ; it  is  history  from  the  time  of  Adam  and 
going  back  to  the  Mosaic  theology. 

Q.  Are  you  familiar  with  any  corners  that  have  occurred  in  stocks  ? 

A.  I only  know  from  hearsay;  I never  have  been  in  a corner  in  stocks  ; 
1 have  owned  a good  many  more  stocks  than  there  was  in  a good  many 
pieces  of  property ; I mean  myself  and  associates  ; I have  had  some- 
thing to  do  with  it;  take  North-western  in  1867  and  ’68,  when  Henry 
Keep  was  president  of  it ; you  remember  him  ; we  owned  a great  deal 
more  stock  than  there  was,  but  we  never  cornered  it;  we  always  loaned 
it  to  anybody  that  wanted  it,  and  when  it  got  up  high  enough,  we 
settled  with  the  boys  and  took  their  checks. 

Q.  IIow  many  shares  did  you  own  ? 

A.  W^e  owned  24,000  more  shares  than  there  was  of  the  stock. 

Q.  What  stock  was  that  ? 

A.  North-western. 

Q.  How  did  it  happen  that  so  much  stock  had  been  issued  ? 

A.  There  wasn’t  any  issued  ; we  owned  contracts;  the  other  gentle- 
man sold  what  he  didn’t  have,  and  we  bought  it. 

Q.  Do  you  think  the  system  of  speculating,  such  as  you  have  been 
describing,  is  beneficial  to  the  country,  or  otherwise  ? 

A.  I don’t  think  it  is;  it  is  beneficial  to  a very  few  individuals;  the 
others  we  can  call  ‘‘  lambs,”  and  we  fleece  them  when  they  come  down 
to  Wall  street. 

Q.  Do  you  know  of  failures  resulting  from  such  speculation  ? 


5GG 


A.  Oh,  yes,  lots  of  them  ; they  are  as  thick  as  the  sands  on  the  sea- 
shore. 

Q.  About  how  many,  to  your  knowledge,  have  occurred  within  the 
last  year  ? 

A.  That  I could  not  tell ; I don’t  remember;  I don’t  keep  track  of 
those  things;  it  would  require  a double  entry  book-keeper  to  do  that 
on  both  sides  of  the  ledger  — those  that  sell  short  and  those  that  buy 
long. 

Q.  What  effect  have  all  these  transactions  in  bread-stuffs  upon  the 
prices  to  the  consumer  ? 

A Well,  on  a short  crop  ho  has  to  pay  more  ; on  a big  crop  he  gets 
them  less,  because  the  gambler  on  a big  crop  is  pretty  certain  to  be  en 
the  short  side  and  he  sells  what  he  has  not  got  — sells  the  crops  of  the 
farmers  before  they  come  to  market ; on  the  other  hand,  when  you 
have  a short  crop  the  speculator  usually  knows  it  before  the  consumer 
does,  and  he  lays  in  his  store  — fills  his  larder  and  puts  up  the  price. 

Q.  Is  the  producer  benefited  in  any  way  by  stock  speculations  ? 

A.  He  is  benefited  on  a short  crop  — he  gets  a higher  price  for  it  on 
large  crop,  I should  say  he  would  get  a lower  price.  ' 

Q.  What  ought  to  regulate  the  price  of  bread-stuffs  to  the  consumers  ? 

A.  Supply  and  demand  ; the  freights  that  you  pay  for  transporta- 
tion from  city  to  city.  State  to  State,  and  from  the  United  States  to 
Europe. 

Q.  And  expenses  of  handling  ? 

A.  Of  course  that  is  added. 

Q.  Those  are  legitimate  expenses? 

A.  Those  are  legitimate  expenses. 

Q.  The  speculator  comes  in  — 

A.  And  puts  up  the  market  or  puts  it  down  — as  I have  always  tried 
to  do  when  I have  been  speculating, 

Q.  How  often  have  you  succeeded  ? 

A.  Well,  I have  succeeded  in  paying  my  debts. 

Q.  How  often  have  you  succeeded  in  changing  the  market  ? 

A.  Well,  I seldom  make  a failure. 

Q.  That  is  not  a categorical  answer  to  the  question  ; about  how 
often  ? 

A.  Well,  I can’t  tell  you  that,  because  I don’t  remember  ; when  I 
am  on  the  bull  side  I write  on  that  side,  get  every  statistic  and  figure 
to  show  that  that  is  the  side  to  be  on,  and  I convert  a great  many  peo- 
ple ; wiien  I am  on  the  bear  side  I show  the  other  side  of  the  question 
and  I get  a great  many  peojfie  to  believe  that  that  is  true,  too. 

(2.  And  f)y  that  means  the  market  is  fixed  ? 


567 


A.  Ko;  it  is  not  fixed  only  in  people’s  minds  or  imagination  on 
either  side. 

Q.  Bnt  it  has  a great  tendency  to  fix  it,  hasn’t  it  ? 

A.  Well,  that  is  according  to  how  many  newspapers  you  can  get 
yonr  effusions  in  and  how  much  they  copy,  how  many  dispatches  .are 
copied,  and  what  you  say  upon  the  subject ; I try  to  never  tell  a lie, 
but  then  I know  of  people  who  do  tell  lies,  because  they  have  told  me 
lies ; but  the  majority  of  the  human  race  is  on  the  bull  side,  and  that 
is  why  you  see  stock  lithographs,  and  chromos,  and  undiscovered  rail- 
roads, and  gift  enterprises  selling  at  the  price  they  are  on  Wall  street 
to-day. 

Q.  How  are  the  prices  to-day,  the  actual  prices,  as  compared  with 
what  the  natural  price  ought  to  be  ? 

A.  On  what  commodity? 

Q.  Well,  say  stocks  ? 

A.  Fifty  per  cent  too  high. 

Q.  Are  bread-stuffs  ? 

A.  I have  not  paid  much  attention  to  it  this  fall,  but  my  impres- 
sions are  there  are  pretty  good  crops  in  Europe  and  our  demand  from 
Europe  will  be  for  a moderate  quantity  at  moderate  prices  ; they  know 
that  we  have  got  good  crops  here,  and  they  can  buy  a cargo  of  grain 
in  London,  or  Liverpool,  or  Chicago  and  have  it  delivered  to  them  in 
thirty  days ; they  can  telegraph  over,  and  every  thing  is  graded  there 
the  same  as  it  is  here. 

Q.  Do  we  sometimes  export  wheat  and  at  the  same  time  make  im- 
ports of  wheat  ? 

A.  No  ; I think  not ; I have  not  known  of  any  imports  of  wheat 
for  a good  many  years. 

Q.  When  we  have  a sufficient  supply  at  home  we  do  not  require  to 
import  any  thing  ? 

Ac  No,  sir  ; we  have  always  had  it,  I believe,  with  one  or  two  ex- 
ceptions since  the  country  was  founded;  I cannot  remember  the  dates 
when  we  imported  grain  ; I can  give  it  at  my  office. 

Q.  And  where  are  our  exports  chiefly  consumed  ? 

0 wheat  ? 

Q.  Yes  ? 

A.  In  England  and  France. 

Q.  And  the  exports  of  the  grocery  men  in  the  same  places  ? 

A.  The  same ; considerable  went  to  Germany  two  or  three  years 
ago,  in  1878  or  ’79  I think  it  was,  and  we  exported  to  Spain  and  Italy 
when  they  had  a short  crop  all  over  Europe  ; our  exports  are  pretty 
well  scattered. 

Q.  What  are  our  chief  exports  in  the  wav  of  produce  ? 


508 


A.  Well,  corn,  provisions  and  wheat  and  hog  and  cattle  })roducts  ; 
corn  was  95,000,000  I think  last  year  or  year  before  last;  it  was  much 
less  last  year,  much  loss  this  year;  I think  I have  got  my  dates  wrong. 

Q.  IIow  many  transactions  have  you  known  to  occur  in  a single 
commodity  without  actual  delivery? 

A.  AYoll,  I could  4iot  tell  you  ; I have  known  nineteen  hundred 
thousand  bushels  that  I have  sold  in  fifteen  minutes;  in  two  hours  I 
got  my  reports  back  from  Chicago. 

Q.  And  was  that  delivered  ? 

A.  I suppose  it  was  delivered.  There  wasn’t  any  of  it  delivered  to 
me'’;  I had  the  grain  bought  and  I sold  it  to  some  other  fellow  ; but  it 
is  no  uncommon  thing  to  have  5,000,000  of  bushels  of  grain  change 
hands  in  Wall  street  in  the  Chicago  markets  in  a day.  I think  there 
is  one  house  that  has  done  that  in  a day. 

Q.  5,000,000  ? 

A.  Yes;  just  marginal  checks  that  passed  back  and  forth.  One 
man  bought  what  he  didn’t  want  and  the  other  man  sold  what  he 
hadn’t  got. 

Q.  That  was  purely  a speculation? 

A.  That  was  purely  a speculation. 

Q.  And  what  do  you  designate  such  a speculation? 

A.  Well,  I should  designate  it  as  purely  a speculation. 

Q.  Gambling? 

A.  Well,  I don’t  know;  the  word  ‘^gambling”  has  a very  wide 
definition  to  it;  it  would  take  the  whole  dictionary  to  fill  that  up. 

Q.  Suppose  you  give  us  your  definition? 

A.  Well,  my  definition  is  what  I said  before  — that  people  buy 
what  they  do  not  want,  and  sell  what  they  have  not  got  — call  it 
gambling  or  speculation. 

Q.  In  what  cities  of  the  United  States  are  such  speculations  as  you 
have  described  carried  on  chiefly? 

A.  Do  von  mean  large  cities  ? 

Q.  Yes> 

A.  Well,  Chicago  is  the  head-quarters;  St.  Louis,  Toledo,  Detroit 
and  Milwaukee;  those  are  the  four  or  five  large  cities  in  the  West, 
^hiey  have  changed  their  rules  at  Chicago  and  played  heads  I win, 
and  tails  you  lose”  — I mean  outsiders  lose  so  often  there  that  their 
speculation  is  very  much  less  than  it  was  a year  and  a half  ago.  People 
are  afraid  that  they  will  revamp  the  rules  again  if  they  have  a contract 
coming  due,  so  that  if  they  are  one  side  or  the  other  side,  it  lets  them 
or  ilicir  friends  out.  T think  I wrote  two  or  three  papers  on  that  last 


year. 


569 


Q.  What  effect  has  tlie  legislation  which  has  taken  place  in  the 
iState  of  Illinois  in  regard  to  these  speculations  had  upon  them? 

A.  It  has  not  had  any  — not  a drop  in  the  bucket,  or  in  the  ocean  ; 
not  a particle. 

Q.  There  have  been  some  judicial  decisions  also;  what  effect  have 
they  had  ? 

A,  They  have  had  none  ; the  only  effect  that  they  have  had  is  that 
the  governors,  or  trustees,  or  whatever  they  are  designated,  have 
changed  the  rules,  and  by  those  rules  after  a contract  is  made  they 
have  varied  it.  For  instance,  a large  amount  of  No.  2 spring  wheat 
was  sold,  and  the  officers  of  the  board  and  their  associates  were  all 
short  of  it;  so  they  passed  a resolution,  or  rule,  or  by-law,  that  No. 
2 red  winter  wheat  should  be  delivered  on  that  spring  wheat.  Well, 
in  equity  of  course  a man  was  not  losing  any  thing,  because  he  was 
getting  a better  grade  of  wheat  for  the  same  amount  of  money,  but 
that  broke  the  corner  and  wheat  declined  from  $1.35  down  to  $1,  a, 
the  winter  wheat  comes  in  about  four  weeks  earlier  than  the  spring 
wheat;  but  they  had  sold  the  whole  crop  of  spring  wheat  short,  and 
the  farmers  got  no  benefit  from  it. 

Q.  What  cities  in  the  East  are  chiefly  engaged  in  this  business  ? 

A.  Oh,  all  of  us  here  — Baltimore,  Philadelphia,  New  York  and 
Boston,  but  principally  in  New  York.  Baltimore  does  a large  grain 
business,  but  futures  are  more  dealt  in  here  and  in  Chicago  ; they  are 
the  two  speculative  points. 

Q.  What  proportion  does  the  city  of  New  York  bear  to  Chicago  in 
these  transactions  ? 

A.  Very  small. 

Q.  As  compared  with  Chicago  ? 

A.  Yes,  sir ; Chicago  is'  the  greatest  primary  receiving  port  for 
grain,  cattle,  hogs  and  lumber  of  any  in  the  world ; there  is  no  city  in 
the  world  that  compares  with  Chicago.  Being  at  the  head  of  naviga- 
tion, you  see  it  has  the  advantage  of  that  vast  territory  there,  stretch- 
ing nearly  a thousand  miles  each  way.  The  annual  report  of  the  Chi- 
cago Board  of  Trade  would  be  worth  your  looking  over.  It  shows  the 
receipt  of  ever}-  commodity  there  since  1831 — no,  not  since ’31  but 
long  back  — the  gradual  increase  every  year.  It  dates  back  from  the 
earlier  days.  I went  to  Chicago  in  1850;  there  was  no  record  kept 
until  later  than  that;  it  shows  the  population  from  1850  every  year, 

Q.  How  are  the  ordinary  dealers  in  grain  affected  by  the  operations 
of  the  speculative  dealers ; I mean  by  ordinary  dealers  what  we  would 
call  legitimate  dealers  ? 

A.  Well,  I don’t  think  there  are  any  legitimate  dealers;  I never 
heard  of  one  vet,  if  you  mean  commission  houses. 

72 


570 


Q.-  I mean  the  merchant  who  goes  into  this  business  and  sells  it  in 
accordance  with  the  law  of  supply  and  demand? 

A.  Oh,  he  don’t  exist;  there  isn’t  any  such  merchant. 

Q.  Tliere  is  not  ? 

A.  Oh,  no  ; he  is  of  the  last  generation ; he  hasn’t  been  here  for  the 
last  generation. 

Q.  Then  you  think  they  all  speculate  in  this  way  ? 

A.  Oh,  yes,  with  no  exception. 

Q.  Such  a system  of  speculation  is  not  necessary,  is  it,  to  carry  on 
the  business  of  the  country  ? 

A.  No,  sir. 

Q.  You  are  not  in  favor  of  it  ? 

A.  Only  so  far  as  it  is  for  my  interest. 

Q.  I now  speak,  taking  the  moral  view  of  the  question  ? 

A.  Well,  -financial  morals  are  at  a yretty  hig  discount  f 

Q.  As  a matter  of  political  economy  what  is  your  opinion  about  it  ? 

A.  Well,  I think  if  there  were  more  ^^roducers  and  less  speculators, 
it  icould  he  letter  for  the  country. 

Q.  In  what  way  better  ? 

A.  Well,  there  would  be  more  produced  and  less  consumed,  and  we 
would  have  more  to  export, 

Q.  Do  you  mean  by  that  to  imply  that  the  speculators  consum 
more  ? 

A.  And  produce  nothiny.  If  they  tcill  all  go  to  producing,  they  will 
produce  all  that  they  leant  themselves  and  have  a surplus. 

Q.  Can  you  suggest  any  remedy  for  the  evils  which  you  have  been 
describing  ? 

A.  No,  I don’t  think  it  is  a possible  thing. 

Q.  Why? 

A.  Because  I don’t  think  there  is  any  man  or  any  set  of  men  who 
can  cope  with  the  idea  of  other  people’s  minds,  when  it  amounts  to 
a nation  of  speculators.  I don’t  think  you  can  legislate  on  it  to  d^ 
any  good. 

Q.  Don’t  you  think  it  is  within  'the  power  of  the  people  to  redress 
any  wrong  which  may  have  been  committed  and  provide  laws  by 
which  wrongs  may  be  redressed  ? 

A.  I do,  but  legislators  don’t  do  it. 

Q,  Then  you  consider  that  it  is  their  duty  to  db  it  if  they  will  ? 

A.  It  is  their  duty  if  they  can  find  a way  to  do  it. 

Q,  Now  you  have  had  great  deal  of  experience  in  this,  and  the 
committee  would  gladly  receive  any  suggestion  from  you  in  regard  ta 
liow  this  might  be  remedied  ? 

A.  Well  as  I said  before,  I don’t  think  it  is  a possible  thing.  I am 


not  far  enough  up  on  the  other  side  of  the  morals  to  make  a sugges- 
tion to  you.  I have  been  a speculator  for  thirty  years  ; I am  now;  I 
expect  to  continue  until  my  to-morrow  comes;  I don’t  know  when  it 
will  be.  And  as  a nation  lue  are  a nation  of  speculators  — that  you 
will  admit  — and  I,  for  the  life  of  me,  cannot  see  how  you  are  going  to 
make  any  legislation  that  is  going  to  prevent  it. 

Q.  Can  you  tell  us  where  we  are  going  to  end  if  we  continue  to  in- 
dulge in  our  speculative  prospensities  ? 

A.  Well,  every  few  years  we  will  have  a smash  down,  as  we  did  in  ’73 
— black  Fridays,”  and  every  thing  of  that  sort.  You  must  remem- 
ber that  this  country  has  got  great  recuperative  power  and  we  can  get 
on  our  feet  very  quick  again. 

Q.  Do  the  speculative  interests  of  the  country  in  any  way  antagonize 
the  industrial  interest  ? 

A.  Well,  explain  the  word  “ antagonize.” 

Q.  Well,  that  is  act  in  opposition  to  them  ? 

A.  Always. 

Q.  Please  explain  how  ? 

A.  Well  the  speculative  man  is  a minority.  He  has  got  to  control 
all  the  legislative  acts  to  continue  his  speculation.  I am  speaking 
more  of  Wall  street  — of  issuing  stocks  and  bonds,  three,  four  or  five 
for  one  — watering  every  thing.  He  has  always  succeeded  so  far,  not 
only  in  every  State  and  Territory,  but  in  Congress. 

Q.  How  does  that  antagonize  the  industrial  interest  ? 

A.  Well,  it  makes  him  pay  three  or  four  times  as  much  for  the 
transportation  of  Western  produce  to  the  Eastern  sea-board  than  if  the 
thing  was  done  on  a square  deal. 

Q.  That,  then,  results  from  the  stock  watering  operation  ? 

A.  From  the  stock  watering  operation.  That  is  what  I stated  in 
the  first  place. 

Q,  Please  explain  the  system  of  stock  watering  ? 

A.  Well,  you  are  quite  as  familiar  as  I am  with  Vanderbilt’s  water- 
ing Hew  York  Central.  He  declared  an  eighty-five  per  cent  script 
dividend  one  day  when  he  knew  it  was  illegal.  Then  he  attached  that 
certificate  to  the  original  Hew  York  Central, and  went  to  the  next  session 
of  the  Legislature  and  got  that  legalized.  It  was  a very  simple  affair ; 
ask  Chauncey  Depew  about  it ; he  can  tell  you  all  about  it,  I guess. 

Q.  That  is,  legalized  what  you  say  was  eighty-five  per  cent  profit  ? 

A.  Eighty-five  per  cent  profit. 

Q.  Upon  the  gross  earnings  ? 

A.  Ho,  no ; he  put  that  much  water  under  every  tie;  now  Mr 
William  H.  Vanderbilt  has  got  to  charge  just  that  much  more  and 


572 


give  that  just  that  much  poorer  accommodation  in  his  cars;  he  has  to 
take  that  off  from  his  employees  — hire  boys  to  do  men’s  work,  so  that 
he  can  pay  a dividend  on  this  trash.  * 

Q.  And  who  holds  that  trash  ? 

A.  A,  13,  0 and  D,  all  over  the  country  and  in  Europe  ; it  is  merged 
by  act  of  the  Legislature  into  New  York  Central  stock. 

Q.  Added  to  the  original  cost  of  the  construction  ? 

A.  Added  to  the  original  cost  of  transportation ; they  have  got  to 
pay  just  85  per  cent  more  for  freight  transportation  than  they  would 
if  that  did  not  exist. 

Q,  From  the  fact  of  that  stock  watering  operation,  you  say  that 
transporters  and  travelers  have  to  pay  85  per  cent  more  for  services 
received  from  the  road  ? 

A.  Yes,  sir. 

Q.  Than  they  would  have  to  pay  if  it  had  been  left  in  its  original 
condition  ? 

A.  Yes ; he  makes  it  pay  85  per  cent ; if  he  cannot  get  it  in  one  way 
— in  freight  and  passengers  — he  takes  it  off  from  his  employees  ; that 
is  the  way  they  telescope  so  many  cars  arid  injure  so  many  travelers. 

Q.  Then  1 gather  from  what  you  say,  that  you  are  very  mueh  op- 
posed to  the  system  of  stock  watering  ? 

A.  I am,  unless  I am  in  it. 

Q.  Do  you  know  of  any  recent  operations  — similar  operations  in 
stock  watering  ? 

A.  Oh,  they  occur  so  often  that  I could  not  say recent ; ” they 
are  occurring  every  day. 

Q.  Is  the  system  of  stock  watering  extended  to  any  other  industry 
besides  the  railroad  industry? 

A.  Not  to  any  extent. 

Q.  To  some  extent  ? 

A.  To  some  extent. 

Q.  To  what  other  industries  does  it  extend  ? 

A.  Oh,  I don’t  know;  there  are  other  companies;  take  telegraph- 
ing, for  instance ; there  is  a little  slight-of-hand  there,  you  know. 

Q.  Do  you  understand  it  in  the  telegraph  system  — how  it  is  done? 

A.  Well,  I understand  they  issued  $15,000,000  and  j^ut  it  in  their 
pockets,  and  they  are  charging  you  for  telegraphing  upon  that  $15,- 
000,000 ; they  have  to  put  that  on  the  tariff ; that  is  to  pay  this  divi- 
dend. 

il  Everybody  does  not  know  to  what  extent  they  carry  it? 

A.  Well,  they  would  have  carried  it  further,  I suppose,  if  they  had 
liad  a little  more  time ; five  judges  out  of  six  in  the  Superior  Court 


573 


decided  that  it  was  an  illegal  issue  ; now  they  wiirgo  up  to  the  Legis- 
lature this  winter  and  get  that  stock  legalized,  probably. 

Q.  Do  you  know  of  the  system  of  cornering  as  conducted  by  the  coal 
operators  ? 

A.  Cornering  coal  ? 

Q.  Yes,  sir. 

A.  I am  not  very  familiar  with  it ; I think  they  have  one  agent  for 
doing  the  whole  thing ; they  have  a contract  among  all  the  coal  com- 
panies — a pool ; one  man  fixes  a price,  and  they  all  agree  to  it ; then 
they  divide  their  sales. 

Q.  And  do  they  regulate  the  amount  of  production  according  to  — 

A.  I only  know  from  the  newspapers. 

Q.  You  are  not  interested  in  the  coal  business  ? 

A.  Not  interested  in  coal,  only  what  I use  at  home. 

Q.  Is  there  any  other  information  you  would  like  to  give  the  com- 
mittee ? 

A.  I didn’t  like  to  give  you  this;  you  go  down  and  interview  Mr. 
Vanderbilt’s  clerk;  he  can  give  you  the  whole  thing  from  A to  Z; 
I wish  to  qualify  the  answer  I made  that  I thought  all  stocks  were  50 
per  cent  too  high,  by  saying  that  some  of  them  are. 

tJolin  B.  Simimerjielcl  was  then  sworn,  and  being  interrogated,  testi- 
fied as  follows : 

By  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  I reside  in  Brooklyn ; 223  Cumberland  street. 

Q.  What  is  your  business  ? 

A.  Dealer  in  commercial  paper  and  foreign  exchange. 

Q.  Where  is  your  place  of  business? 

A.  63  Wall  street. 

Q.  Are  you  a member  of  a firm  ? 

A.  Yes;  J.  B.  Summerfield  & Co. 

Q.  How  long  have  you  been  in  that  office  ? 

A.  Twenty  years. 

Q.  For  what  classes  of  dealers  do  you  do  business;  your  specialty? 

A.  The  grocery  trade,  principally ; coffee,  tea  and  sugar  people. 

Q.  Do  you  understand  the  system  of  making  corners  and  dealing  in 
futures  ? 

A.  I understand  it;  I presume  that  I do;  you  must  understand 
that  I am  not  a member  of  any  Exchange,  to  begin  with  — neither  the 
Produce,  Petroleum,  Stock  or  any  other  Exchange  — so  that  my 
knowledge  of  these  things  has  come  to  me,  if  I may  be  allowed  to 


574 


explain,  from  the  general  knowledge  that  I have  acquired  during  this 
last  twenty  years  in  the  street. 

Q.  You  know  numerous  persons  who  have  been  engaged  in  corners 
and  dealing  in  futures,  I suppose  ? 

A.  I presume  so. 

Q.  What  effect  has  the  fact  of  a man  being  engaged  in  dealing  in 
futures  and  making  corners  upon  his  credit  ? 

A.  It  has  a bad  effect  on  his  credit. 

Q.  In  what  way  ? 

A.  It  is  for  the  reason  that  a man  that  goes  in  to  deal  in  an  article 
to  corner  it  takes  a great  risk ; a man  going  into  a corner  takes  a risk 
of  making  a large  profit  or  a large  loss  ; it  is  not  what  we  would  call 
a legitimate  business  ; if  I may  be  allowed  to  explain,  legitimate  busi- 
ness we  consider  is  where  a man  takes  an  ordinary  risk  for  an  ordinary 
profit;  I don’t  know  as  that  would  be  clear,  but  a man  that  goes  into 
a corner  goes  in  to  make  an  exorbitant  profit,  or  he  takes  the  chances 
of  making  a large  loss. 

Q.  To  what  extent  have  you  been  influenced  in  your  business  by 
such  considerations,  in  your  dealing  with  persons  who  have  been 
engaged  in  making  corners  and  dealing  in  futures  ? 

A.  Well,  we  come  in  contact  with  very  few  of  those  people,  because 
in  our  particular  line  there  is  but  little,  in  any  way,  of  cornering. 

Q.  I know,  but  you  discount  paper,  I presume,  for  persons  who 
have  been  in  the  cornering  business? 

A.  No,  sir;  we  do  not. 

Q.  You  do  not  ? 

A.  No,  sir. 

Q.  You  would  refuse  absolutely,  I presume,  to  discount  their  paper  ? 

A.  Oh,  well,  I should  not  like  to  say  that,  because  there  are  some 
very  large  people,  you  know,  who  are  engaged  in  these  corners  that 
have  immense  wealth,  etc.,  and  I wouldn’t  like  to  say  that  we  wouldn’t 
discount  their  paper  if  it  was  offered  to  me  ; but  I will  say  that  we 
do  not  come  in  contact  with  those  people,  and  for  an  ordinary  con- 
cern that  was  engaged  in  speculation  in  that  way,  we  certainly 
wouldn’t  want  to  discount  their  paper. 

Q.  Do  you  know  of  any  failures  resulting  from  such  speculations  ? 

A.  Only  tlie  general  failures  in  Wall  street. 

Q.  Are  they  numerous  ? 

A.  At  times  ; yes,  sir. 

Q.  And  this  present  year  they  have  been  numerous  ? 

A.  No,  sir. 

Q.  Why  not  this  present  year  ? 

A.  Well,  there  has  not  been  any  corner  this  present  year,  with  the 


exception  of  perhaps  the  Hannibal  and  St.  Joe  corner  ; that  was  within 
the  last  year  or  year  and  a half ; but  wlien  you  go  back  a few  years,  to 
the  time  of  the  other  corners,  running  back  within  the  last  fifteen  or 
eighteen  years,  why  the  failures  then  were  numerous  when  a corner 
was  made. 

Q.  I have  also  reference  to  the  dealing  in  futures  ? 

A.  Do  you  mean  dealing  in  futures  on  the  Produce  Exchange,  Cot- 
ton Exchange,  etc.  ? 

Q.  Yes,  and  elsewhere. 

A.  The  failures  have  not  been  large  in  that  respect. 

Q.  What  is  your  opinion  of  the  effect  produced  by  making  corners 
and  dealing  in  futures  on  commerce  and  the  public  welfare  ? 

A.  I think  it  is  very  disastrous  and  demoralizing. 

Q.  In  what  way  ?j 

A.  In  the  first  place,  if  I may  be  allowed  to  explain,  there  are  two 
kinds  of  corners ; there  is  one  corner  which  is  produced  by  an  indi- 
vidual, or  a clique  buying  a certain  commodity  against  the  consumer 
and  against  the  exporter.  If  it,  for  instance,  is  grain,  or  wheat,  or 
corn,  or  petroleum,  or  no  matter  wdiat  nature  it  is,  that  is  grown  or 
produced  in  this  country;  if  this  corner  is  made  against  the  consumer 
and  the  exporter,  I think  it  is  very  bad  for  the  country  at  large,  from 
the  fact  that  it  makes  the  consumer  pay  a much  higher  price  than  he 
would  have  to  pay  under  ordinary  circumstances.  In  the  next  place, 
against  the  exporter  it  is  disastrous  because  it  does  away  with  his 
business  to  a great  extent,  from  the  fact  that  the  world  is  not  depend- 
ent entirely  on  the  United  States  for  any  of  these  things,  and  if  this 
clique  or  corner  is  run  by  these  people  and  the  prices  put  up  exorbi- 
tantly, the  world  will  get  its  supply  from  elsewhere,  as  we  saw  during 
1880  and  the  spring  of  1881, 1 think  it  was,  when  Mr.  Keene  ran  a corner 
in  wheat.  In  the  previous  year,  or  the  year  of  the  ‘^boom,*’  all  the 
world  came  here  with  their  ships  for  freights.  It  was  known  that  we 
had  a large  crop  and  Europe  had  a small  crop,  and  the  result  was  that 
all  the  ‘‘  ocean  tramps,^’  as  Mr.  Roach  calls  them,  came  here  for  freights 
and  our  harbor  was  filled  with  shipping  and  freights  were  reasonable. 
The  next  year,  on  account  of  there  being  rather  a small  crop,  Mr.  Keene 
ran  that  corner  in  wheat,  and  the  result  was  that  the  vessels  coming 
here  did  not  get  their  freights  and  they  had  to  leave  our  port  in  ballast, 
and  they  never  have  returned,  of  course;  they  found  their  freights 
elsewhere.  And  now,  if  you  will  notice  the  papers,  freights 
are  pretty  high.  We  are  shipping  now  quite  freely  of  cotton 
and  grain,  and  we  are  paying  six  pence  half-penny,  and  seven  pence  a 
bushel  for  freight,  which  is  a pretty  good  freight.  I contend  that 
these  vessels  were  driven  away  from  the  fact  of  Mr.  Keene’s  corner  at 


that  time ; that  the  wheat  that  is  held  by  these  people  wlien  wo  pass  a 
certain  time  — for  instance,  if  wheat  is  going  from  this  country  largely, 
say  in  October,  November,  December  and  January  - - if  the  wheat  is 
held  here  by  a clique  and  it  is  not  exported,  we  never  gain  the  amount 
that  WG  would  have  shipped  during  those  four  months,  from  the  lact 
that  the  rest  of  the  world  is  drawn  on,  the  supply  is  got  from  else- 
where, and  we,  being  a country  that  grows  this  stuff,  it  seems  to  me 
that  it  is  a great  detriment  to  us  not  to  export  it  when  we  have  it  to 
export;  therefore,  a corner  I think  is  wrong  in  that  respect.  Then 
the  next  corner  is  a corner  against  the  shorts,’’  and  I contend  that 
that  is  fraud,  from  the  fact  that  they  induce  a man  to  sell  a thing  that 
he  has  not  got,  by  making  him  believe  that  he  is  getting  a high  price 
for  it.  You  will  understand  that  a man  don’t  sell  a thing  short  in  the 
face  and  eyes  of  the  law  ; he  thinks  he  is  going  to  make  a profit,  and 
then  by  manipulating  things,  inveigle  that  man  into  selling  what  he 
has  not  got.  In  the  mean  time  they  buy  it  up  quietly,  and  then,  when 
the  corner  comes,  they  put  the  screws  on,  and  the  man  goes  to  buy  it, 
and  he  finds  that  he  has  got  to  buy  from  these  people  that  he  has  sold 
to.  ^Ye  saw  by  the  papers  that  on  the  29th  of  last  month  during  the 
corner  in  corn,  on  the  Produce  Exchange,  they  asked  $1.10  for  corn 
for  delivery  to  the  joeople  who  were  short,  to  settle  their  contracts, 
while  they  offered  to  sell  for  export  at  eighty-two  or  eighty-three  cents. 
Now,  I sa}^  gentlemen,  although,  of  course,  I haven’t  any  interest  in 
this  matter,  but,  for  the  good  of  the  whole  community,  I say  that  that 
thing  is  a fraud. 

Q.  What  is  your  opinion  in  regard  to  the  system  of  dealing  in  fu- 
tures, selling  grain  for  future  delivery  which  a man  may  not  be  pos- 
sessed of,  and  never  intends  to  deliver  ? 

A.  Well,  I don’t  think  that  it  is  of  any  benefit  to  the  community, 
'think  it  is  a detriment. 

Q.  What  is  your  opinion  of  the  effect  which  it  produces  upon  the  le- 
gitimate commercial  interests  ? 

A.  I think  that  that  is  bad. 

Q.  Could  you  suggest  any  remedy  for  the  evils  that  you  have  "been 
referring  to  ? 

A.  No,  I don’t  see  any  remedy  for  it,  unless  you  can  legislate  to  pre- 
vent a man  from  selling,  in  the  first  place,  what  he  has  not  got  ; and, 
in  the  next  place,  by  making  it  an  offense  to  run  a corner  in  the  neces- 
saries of  life.  I any  not  speaking  of  corners  on  the  Stock  Exchange, 
or  corners  in  things  that  have  no  particular  relation  to  the  community 
at  large,  and  that  only  a few  people  are  interested  in,  but,  as  we  all 
know,  if  tliese  gentlemen  make  a corner  in  an  article  which  is  one  of 
tin.*  necessaries  of  life,  it  makes  the  whole  community  pay  an  extra 
l)rice  for  that  particular  thing. 


5?7 


Q.  And  enhances  the  cost  of  living  ? 

A.  And  enhances  the  cost  of  living,  without  compensating  the  la- 
borer, or  the  artisan  or  the  mechanic,  or  whatever  he  may  be ; it  don’t 
benefit  him  in  the  least. 

Q.  Or  the  farmer  ? 

A.  Or  the  farmer ; the  farmer  may  be  benefited  in  a slight  degree, 
but  very  slight,  from  the  fact  that  they  will  not  pay  a high  price  for 
his  product ; they  want  to  bejr  it  first  and  get  it  at  a low  price,  and 
then  run  it  up  when  they  get  control  of  the  thing. 

Q.  Is  there  any  other  information  you  would  like  to  offer  to  the 
committee  ? 

A.  No,  I don’t  think  there  is,  sir. 

Adjourned  to  Friday,  December  15,  1882,  at  10  o’clock,  a.  m. 

New  York,  Friday,  December  15,  1882. 

The  Conimittee  met  at  the  Metropolitan  Hotel  in  the  city  of  New 
York,  pursuant  to  adjournment. 

Present  — Senators  Boyd  and  Browning,  of  the  Committee,  John 
W.  Corning,  Sergeant-at-Arms  of  the  Senate,  and  Daniel  A.  Cooney, 
Clerk  of  the  committee. 

Rev.  John  J.  Reed  called  and  examined  : 

By  Senator  Boyd  : 

Q.  What  is  your  occupation  ? 

A.  Clergyman. 

Q.  With  what  denomination  and’what  church  are  you  connected? 

A.  The  Methodist  Episcopabdenomination ; the  Washington  Square 
Methodist  Episcopal  Church. 

Q.  Of  the  city  of  New  York  ? 

A.  In  this  city. 

Q.  How  long  have  you  been  a clergyman  ? 

A.  Twelve  years. 

Q.  State,  if  you  please,  your  opinion  concerning  the  whole  system 
of  making  corners  and  dealing  in  futures,  with  reference  to  its  effect 
upon  commerce  and  its  infiuence  upon  the  public  welfare  ? 

A.  Well,  of  course,  being  a clergyman,  I have  no  practical  acquaint- 
ance with  the  subject ; what  knowledge  I have  is  obtained  from  my 
reading  of  the  papers,  some  acquaintance  with  the  testimony  offered 
in  this  case,  and  general  information  in  regard  to  the  whole  matter. 
Certain  principles  I believe  to  be  underlying  the  question  ; for  exam- 
ple, that  men  are  entitled  to  the  fruit  of  their  labor  and  to  interest  on 
capital,  to  benefits  accruing  from  honest  ingenuity  and  talent,  and 
honest  skill  and  superior  information ; I believe  stock  dealings  in  it- 


578 


self  considered  to  be  legitimate  ; stock  gambling,  however,  as  you  may 
define  it,  I conceive  to  be  reprehensible,  immoral  and  unscriptural  ; 
speculation  in  itself  considered,  legitimate  S])eculation,  I judge 
to  be  neither  sinful  nor  immoral  ; money  I Ijolieve  to  be  of 
a merchantable  value  and  manif  stocks  I believe  alike  to 
be  articles  of  merchandise,  commanding  their  price;  but  I believe 
the  price  of  an  article  of  commerce  sbould  be  made  to  de- 
pend as  far  as  possible  on  the  laws  of  supply  and  demand,  and  that 
other  influences  interfering  with  the  operation  of  those  laws  are  to  be 
regarded  with  suspicion,  if  not  to  be  conceived  of  as  immoral.  I 
understand  that  as  the  rapid  transfer  of  products  is  desirable,  so  is  rapid 
exchange  ; certainly  it  is  a principle  in  political  economy  that  the 
more  rapidly  exchanges  are  made  the  better.  This  principle,  I under- 
stand, is  underlying  the  existence  of  the  Stock  Exchange  and  especi- 
ally of  the  Produce  Exchange. 

Q.  That  is  according  to  the  terms  of  their  charters  ? 

A.  As  I understand  the  terms  of  those  charters,  yes,  sir.  As  a 
teacher  of  morals,  I believe  there  is  a peculiar  liability  to  fraud  where 
the  riglit  to  property  and  the  property  itself  is  transferred.  I do  not 
say  that  in  this  case  fraud  is  necessary,  but  there  is  a manifest  liability 
to  fraud.  The  business  of  stock  dealing,  while  not  in  itself  immoral, 
is  accompanied  with  so  many  temptations  and  risks  to  business  honor 
and  integrity,  that  men  may  well  avoid  this  form  of  money-making. 
I believe  that  those  who  are  engaged  in  stock  dealing  and  speculation 
in  grain  are  peculiarly  liable  to  the  reproach  of  the  scripture,  which 
says  : They  that  will  be  rich  fall  into  temptation  and  a snare.”  To 
knowingly  give  less  to  many  than^the  equivalent  of  his  money  would 
seem  to  bo  unneighborly  and  dishonest.  Each  man,  in  the  proper 
sense,  is  a protector  — a moral  policeman  over  his  brother.  The  ques- 
tion asked  ages  ago,  Am  I my  brother’s  keeper  ?”  to-day  by  every 
moral,  benevolent,  Christian  man  must  be  answered  in  the  affirmative. 
The  inquiry  raised  in  the  Old  Testament  scripture  is  answered  by  the 
lips  of  Jesus  in  the  new  : Whatsoever  ye  would  that  men  should  do 
unto  you,  do  ye  even  so  unto  them.”  Thus  to  fiibricate  a rumor  affect- 
ing the  value  of  stocks  or  grain  is  dishonest.  It  is  to  lend  onesself  to 
a lie,  and  thus  to  be  responsible  for  a theft.  To  get  up  a corner  in 
stock  or  grain,  knowing  that  the  value  put  upon  it  is  purely  fictitious, 
being  the  result  of  a combination,  this  is  manifestly  immoral.  The 
j)ossibility  of  thus  getting  up  a corner  in  corn  is  hinted  at  by  the 
preacher  in  the  book  of  Proverbs,  chapter  11,  verse  2G  : He  that 
withholdeth  corn,  the  i)eople  shall  curse  him  ; but  blessings  shall  be 
upon  the  head  of  him  that  sellcth  it.”  Then  again  in  Amos,  chapter 
8,  verse  4 : I am  here  as  a clergyman  ; I su})pose  that  is  under- 


579 


stood.  The  herdsman  prophet  says  : “Hear  this,  0 ye  that  swallow- 
up  the  needy ; even  to  make  the  poor  of  the  laud  to  fail,  saying  when 
will  the  new  moon  be  gone,  that  we  may  sell  corn,  and  the  Sabbath, 
that  we  may  set  forth  wheat,  making  the  ephah  small  and  the  sheckel 
great  and  falsifying  the  balances  of  deceit.”  As  it  occurs  to  me,  there 
is  a manifest  immorality  in  any  man’s  undertaking  to  sell  that  wdiich 
he  as  yet  does  not  possess.  It  is  liable  to  the  interdictions  of  scripture, 
and  especially  liable  to  the  interdiction  of  Methodist  discipline  — the 
taking  up  of.  goods  without  a probability  of  paying  for  them.  As  to 
how  far  these  evils  — the  evil  of  stock  gambling  and  grain  speculation 
— may  be  affected  by  legislation  is  a question.  In  my  own  judgment 
the  laws  of  trade  are  as  legally  effective  as  would  be  the  laws  of  this 
State.  Immorality  in  any  business  transaction  must  ultimately  effect 
its  own  cure  as  far  as  its  effect  upon  the  country  is  concerned.  It 
induces  a feeling  of  insecurity,  makes  men  more  cautious,  and  prevents 
the  possibility  or  likelihood  of  repetition. 

Q.  What  effect  has  thie  system  of  gambling  in  produce  and  stock 
upon  the  young  men  of  the  present  day  ? ^ 

A . I conceive  it  to  be  demoralizing  ; it  draws  young  men  from  the 
fields  of  active  productive  industry,  engenders  a spirit  of  unproductive 
speculation  and  of  gambling,  and  leads  them  in  many  cases  to  finan- 
cial ruin. 

Q.  Is  there  any  moral  difference  between  a man  who  makes  a living 
in  gambling  institutions,  such  as  faro  banks  and  places  of  that  kind, 
and  the  man  who  gambles  in  the  necessaries  of  life  ? 

A.  Emphasizing  the  word  gambling,”  giving  it  the  meaning  which 
you  give  it,  I would  say  no  essential  difference. 

Q.  Don’t  you  think  it  is  the  duty  of  the  people  of  the  State,  through 
the  law-making  power,  to  provide  remedies  for  all  public  evils  so  far 
as  it  is  possible  ? ^ 

A.  I certainly  do.  ^ 

Q.  Admitted  then,  that  grain  gambling  and  stock  gambling  is  a 
public  evil,  is  it  not  the  duty  of  the  Legislature  to  enact  laws  for  the 
; purpose  of  suppressing  these  evils  ? 

A,  That  would  be  my  judgment,  in  the  hope  that  such  legislation 
’ might  prove  to  be  practical,  or  practicable. 

Q.  Do  you  know  if  the  system  of  speculating  in  grain,  now  so  ex- 
I tensively  carried  on,  has  a tendency  to  enhance  the  cost  of  living  by 

■ increasing  the  price  of  the  necessaries  of  life  ? 

■ A.  I have  no  direct,  present  or  adequate  information,  but  I would 
~ suppose  that  certainly  would  be  the  tendency ; I believe  that  to  be  the 
! popular  conviction. 


580 


Q.  Then  you  believe  that  persons  engaged  in  a business  which  tends 
unnecessarily  to  enhance  the  cost  of  living  by  increasijig  the  prices  of 
the  necessaries  of  life,  are  public  enemies  ? 

A.  The  premises  being  proved,  that  would  be  the  logical  conclusion. 

Q.  Supposing  tlie  testimony  which  you  have  read  and  which  has 
heretofore  been  given  before  this  committee  in  regard  to  the  mode  of 
speculation  in  the  necessaries  of  life  to  be  true,  do  you  believe  tliat 
persons  thus  engaged  are  public  enemies  ? 

A.  I have  no  idea  that  they  estimate  themselves  to  be  such  ; I be- 
lieve that  very  many  of  them  need  to  have  their  conscience  enlight- 
ened; but  1 believe  that  any  man  that  willfully  oppresses  God’s  poor 
is  practically  an  enemy  of  his  kind. 

Q.  Is  there  any  thing  else  that  you  would  like  to  state  to  the  com- 
mittee ? 

A.  I might  supplement  my  testimony  by  a remark  that  I speak  only 
as  a clergyman  facing  a moral  question,  without  experience,  and  there- 
fore without  prejudice;  I have  never  bitten  •others  or  myself  been 
bitten. 

Solomon  Dreyfus  was  then  sworn,  and  being  interrogated,  testified 
as  follows  : 

By  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  In  New  York,  sir. 

Q.  What  is  your  business  ? 

A.  Grain  business  ; I export  grain. 

Q.  Are  you  a member  of  a firm  ? 

A.  S.  Dreyfus  & Both,  New  York  and  St.  Louis. 

Q.  How  long  have  yqu  been  in  that  business  ? 

A.  Well,  I have  been  in  this  country  only  three  years ; but  I have 
been  in  the  business  oft  and  on  I suppose  about  twenty-four  years. 

Q.  Please  state  your  opinion  with  reference  to  the  system  of  making 
corners  and  dealing  in  futures  with  reference  to  its  effect  upon  com- 
merce and  its  influence  upon  the  public  welfare  ? 

A.  Mr.  Chairman,  I don’t  know  much  about  it,  because  I don’t 
speculate  myself  ; I can  only  speak  from  hearsay  and  what  I have  seen  ; 
personal  knowledge  I have  not  ; I might  buy  what  I don’t  want;  but  I 
would n’£  sell  what  I have  not  got. 

il.  From  observation,  what  is  your  opinion  with  regard  to  the  sys- 
tem ? 

A.  Well,  I think  it  is  a great  detriment  to  the  United  States  in 
general — this  cornering  business — but  I think  that  exporters  are  gaining 


581 


by  it ; for  my  part,  I think  that  I am  gaining  by  corners,  as  a shipper ; 
I believe  that  I am  taking  money  away  from  this  country  as  a shipper 
that  really  does  belong  to  this  country,  because  where  corners  are  made 
it  is  generally  done  by  a certain  clique  or  certain  party  — three,  four, 
five  or  six  men  going  together  with  plenty  of  money  that  buy  up  the 
week’s  loading;  as  they  buy  it  up,  wheat  rises  ; then  a certain  time 
will  come  \\dien  the  stock  gets  too  big  — more  than  they  can  carry  on 
their  shoulders — and  those  parties  go  to  some  exporter  — Mr.  Drey- 
fus, or  any  one  of  those  exporters  — and  say,  “ here,  we  will  sell  you 
wheat  at  ten,  twelve,  fifteen  cents  below  the  market  price ; we  have 
bought  it  cheaper  than  the  regular  market  price;  ” but  I liave  got  to 
give  a guarantee  that  I will  sliip  it ; I suppose  I would  have  paid  for 
that  wheat  six  or  seven  cents  more  than  I really  did  nay  for  it  liad  not 
the  wheat  accumulated  in  the  hands  of  those  men  ; as  we  had  it,  for 
instance,  three  years  ago,  I shipped  a great  deal  of  wheat  — many 
millions  that  I bought  from  fifteen  to  twenty  cents  below  the  market 
price  ; so  that  I really  put  the  wheat  on  the  other  side  — on  the  conti- 
nent— England,  London  and  France  — cheaper  than  it  could  be 
bought  here  in  the  speculative  market. 

Q.  And  what  enabled  you  to  put  it  there  cheaper  ? 

A.  Because  I got  it  here  from  ten  to  twenty  cents  a bushel  cheaper  ; 
freight  was  very  cheap  at  that  time,  so  that  wheat  was  really  cheaper 
on  the  other  side  after  I delivered  it,  if  the  large  speculator,  that  had 
been  caught  short  of  wheat,  had  got  to  buy  it  here. 

Q.  Then,  can  you  state  directly  the  cause  of  your  getting  the  wheat 
at  fifteen  cents  a bushel  less  than  what  you  would  have  had  to  pay  for 
it  under  other  circumstances  ? 

A.  Well,  I would  have  had  to  pay  fifteen  cents  a bushel  more  if,  in 
the  regular  way,  the  wheat  had  accumulated  here  ; I know  that  cor- 
ners always  put  wheat  down  for  export,  because  when  parties  buy  it 
they  buy,  say  fifty  loads,  and  they  keep  it;  they  do  not  put  it  on  to 
the  market  again ; they  put  it  in  store  ; but  if  this  corner  lasts  too 
long,  they  might  make  a mistake  sometimes ; they  may  think  there  is 
only  about  10,000,000  bushels  of  wheat  in  the  country  and  instead  of 
10,000,000  there  may  come  in  20,000,000  ; when  we  had  the  experience 
of  last  June  we  found  out  that  every  bushel  of  wheat  that  the  clique 
was  long  on  they  had  got  to  deliver,  and  so  that  was  a failure;  three 
years  ago,  everybody  remembers  the  Keene  deal  ; people  here -lost  a 
great  deal  of  money,  and  I never  have  seen  a man  3"et  that  tried  to 
form  a ring  or  corner  on  eatables  that  made  money  out  of  it;  the  poor 
laboring  man  has  to  pay  for  it;  it  costs  him  so  much  more  than  they 
sell  it  for  on  the  other  side. 

Q.  Are  you  a member  of  the  Produce  Exchange  ? 


A.  Yes,  sir;  I am. 

Q.  Are  rings  of  frequent  occurrence  in  the  Produce  Exchange  ? 

A.  Well,  we  had  some  nonsense  last  month. 

Q.  State  what  that  one  was  ? 

A.  That  was  in  corn  ; I haven’t  done  any  thing  in  corn  lately. 

Q,  Do  you  understand  how  that  was  formed  ? 

A.  Well,  I believe  that  the  parties  that  were  short  settled  at  $1.10, 
while  I know  that  corn  was  sold  at  ninety  cents  for  consumption  ; the 
parties  were  caught  short,  and  I know  that  they  had  to  settle  at  $1.10; 
I know  there  was  a great  deal  bought  for  export  at  ninety  and  ninety- 
two  cents. 

Q.  Can  you  explain  by  what  mode  of  operation  that  firm  compelled 
consumers  in  this  country  to  pay  more  than  exporters  ? 

A.  Well,  this  last  time  it  was  not  done,  because  in  this  last  month’s 
deal,  if  a man  bought  corn,  he  gave  a guaranty  that  he  would  not 
bring  it  back  upon  the  New  York  market,  and  he  got  it  at  the  same 
price  that  the  exporters  did. 

Q.  Then  these  people  assume  the  power  and  authority  of  fixing 
prices  to  suit  themselves  ? 

A.  To  suit  themselves. 

Q.  And  the  consumers  are  compelled  to  pay  those  prices  ? 

A.  Well,  not  always;  as  I say,  sometimes  they  will  sell  the  con- 
sumer at  the  same  price  as  they  will  the  exporter. 

Q.  But  sometimes  they  do  not  ? 

A.  Sometimes  they  do  not ; well,  they  cannot  possibly  do  it  all  the 
time,  because  if  there  is  a corner  on  wheat  and  they  stack  up  six  or 
eight  millions,  they  cannot  say,  ‘^all  right,  I will  sell  15,000  or  20,000 
bushels,”  because  the  miller  might  swop  that  wheat  around  and  put  it 
on  the  market  again ; I suppose  in  a small  market  where  there  is  not 
much  wheat  on  hand,  they  can  easily  do  it. 

Q.  Is  there  what  is  known  as  a ring  ” in  the  Produce  Exchange, 
which  controls  matters  for  their  own  interest  ? 

'A.  Well,  I don’t  know  exactly  any  particular  party.  Anybody  that 
has  a mind  to  and  has  plenty  of  money  can  do  it.  There  is  nothing 
to  hinder  a man  from  making  a ring,  if  he  has  got  the  money  to  carry 
it  out. 

Q.  In  the  Produce  Exchange  ? 

A.  Yes,  sir. 

Q.  Do  you  know  of  any  such  rings  in  existence  now  ? 

A.  No. 

Q.  I >0  you  know  of  any  that  have  existed  ? 

A.  Well,  at  different  times,  yes.  I don’t  know  the  parties;  it 


583 


might  be  one  firm.  If  they  corner  their  corn,  oats,  barley,  wheat  or 
rye,  it  is  a ring.  It  might  he  one  party,  and  it  might  be  five  or  six 
going  together. 

Q.  Is  there  any  difference  in  the  application  of  the  rules  to  members 
of  such  rings  and  to  other  members  of  the  Exchange  ? 

A.  No,  sir. 

Q.  Can  you  name  any  trade  committee  that  exists  there  now? 

A.  I don’t  understand  what  you  mean;  committees  on  the  Ex- 
change ? 

Q.  Yes. 

A.  Oh,  we  have  got  many;  we  have  got  an  arbitration  committee; 
we  have  got  a grain  committee,  and  we  have  got  plenty  of  committees, 
there  is  a dozen  of  them  I think. 

Q.  What  is  your  opinion  of  the  average  of  the  decisions  given  by 
these  various  committees? 

A.  Well,  as  I am  directly  interested,  having  been  on  very  many  ar- 
bitration committees,  I would  rather  not  speak  of  it. 

Q.  We  would  like  to  have  you? 

A.  Well,  I think  they  do  the  fair  thing;  they  try  to,  any  how;  if 
they  do  not,  they  try  to  do  the  fair  thing. 

Has  the  system  of  dealing  in  grain  carried  on  in  New  York  a tend- 
ency to  drive  away  tonnage  from  this  port  ? 

A.  Yes,  sir;  it  has  lately  a great  deal;  inspection  has. 

Q.  In  w'hat  way  has  it  done  so  ? 

A.  Well,  it  has  lowered  the  grades  of  wheat  so  that  the  other  side 
will  not  take  those  qualities  any  more,  and  prefer  to  go  to  Baltimore, 
Philadelphia,  New  Orleans  and  St.  Louis.  In  former  years  I shipped 
a great  many  cargoes  every  month  from  New  York.  I have  done 
scarcely  nothing  this  year  except  on  white  wheat  that  I cannot  get 
anywhere  else. 

By  Senator  Browkiitg  : 

Q.  Who  has  lowered  the  grain  grade  ? 

A.  Well,  the  members  of  the  grain  committee.  We  have  got  this 
system  of  grading;  we  have  an  inspector  who  is  a very  reliable 
man. 

Q.  What  is  his  name? 

A.  Sterling.  He  grades  the  wheat ; that  is,  he  is  intended  to  be 
the  man  that  says  wheat  is  su  and  so;  but  of  late  I know  that  Mr. 
Sterling  has  been  subject  to  a great  deal  of  annoyance  from  the  grain 
committee;  I know  that  Mr.  Sterling  cannot  do  as  he  pleases,  and 
certainly  if  it  was  in  my  power,  I should  get  our  by-laws  so  changed 
that  we  would  not  have  any  grain  committee  at  all. 

Q.  Why? 


.1 


584 

A.  Because  tlie  grain  committee  is  formed  of  five  men  ; we  are,  on 
this  Exchange,  either  receivers  or  ship])ers,  and  if  von  put  on  three 
receivers,  you  liave  to  have  three  of  tlieni  and  two  of  the  otlier;  if  you 
put  on  three  receivers  and  two  sliippers,  the  leaning  will  be  always 
toward  the  receivers  ; if  you  put  on  three  shippers  and  two  receivers 
the  leaning  will  be  always  toward  the  shippers — the  benefit  of  the 
doubt  will  be  on  their  side  ; so  I don’t  see  what  we  want  this  grain 
committee  for  particularly,  as  the  inspector  we  have  is  as  honest  a man, 
I believe,  as  there  is  walking  under  the  sun  ; there  should  be  a law 
passed  — if  I could  have  it  done  I would  spend  a great  deal  of  money 
— that  if  there  is  a dispute  between  the  receivers  and  shippers,  the  re- 
ceivers should  choose  one  man  and  the  shippers  choose  one  man,  and 
let  those  two  gentlemen  choose  another  man  and  try  to  agree,  and  let 
that  decision  be  final  ; during  this  last  two  months  I had  a dispute 
and  I had  to  submit  to  the  decision  of  our  grain  committee  ; I fought 
them  bitterly  — I fought  them  to  the  bitter  end,  and  wlien  they  found 
out  that  I was  right,  the  grain  committee  made  the  objection  that  I 
had  a great  many  friends  among  the  receivers  that  were  satisfied  that 
I was  wrong ; and  there  is  the  grade  of  No.  1 white  wheat  I am 
speaking  of ; No.  2 red  wheat  is  in  such  a condition  that  I would  not 
touch  it";  when  I get  a cable  I either  fill  it  in  Philadelphia,  or  if  I can- 
not I don’t  fill  it  at  all. 

By  Senator  Boyd  : 

Q.  There  is  no  uniformity  in  the  mode  of  inspection,  or  the  standard 
of  the  grades,  is  there,  in  the  dift'erent  cities  of  the  State  ? 

A.  No;  there  is  no  uniformity  at  all ; that  is  what  we  have  been 
trying  to  get  ; we  want  to  get  the  same  standard  for  Baltimore,  Phila- 
delphia, Boston,  New  Orleans  and  here. 

By  Senator  Browns" ikg:  / 

Q.  Now,  is  that  possible  ? 

A.  Oh,  well,  it  might  be  done  possibly,  yes. 

Q.  How  ? 

A.  We  would  have  to  lower  the  grade  then  because  St  Louis  has 
much  better  wheat  than  we  have  — abetter  quality  of  wheat ; they 
would  have  to  ])ut  the  grade  where  the  lowest  one  arrives;  they  w'ould 
have  to  ])ut  the  grade  at  the  shipping  poi-t  where  the  lowest  grades  of 
wheat  arrive  ; it  could  possibly  be  done,  but  I suppose  it  would  not 
last  long. 

Q.  Are  you  familiar  with  the  mode  of  inspection  in  the  Chicago 
market  ? 

A.  1 am  not,  sir  ; I have  heard  it  was  done  by  State  inspection,  but 


585 


I don’t  believe  that  will  work  ; I don’t  see  how  the  State  can  nominate 
an  inspector  ; to  know  the  quality  of  wheat  takes  a longer  experience 
than  any  other  business  in  the  world  ; it  has  been  talked  over  and  I 
believe  that  the  l^ew  York  Produce  Exchange,  which  is  3,000  mem- 
bers strong,  ought  to  have  enough  sense  to  appoint  a responsible  man 
u})on  whom  they  can  depend  ; if  for  instance,  we  get  a State  inspector, 
it  is  my  belief  that  every  time  the  State  government  is  changed  on  ac- 
count of  politics,  our  inspector  would  be  changed  ; that  is  my  idea  ; I 
don’t  know  — I may  be  wrong  ; but  I believe  it  would  be  more  of  a 
political  machine  than  any  thing  else,  because  it  is  a very  good  situation; 
lots  of  parties  would  be  applying  for  it,  and  1 should  certainly  be 
strongly  against  State  inspection  ; I will  light  all  I can  to  abolish  the 
gr.iiti  committee  and  to  have  an  inspector  alone  in  place  of  the  grain 
committee;  as  I said  before,  if  the  inspector  should  make  a mistake, 
then  between  the  two  parties  let  them  choose  each  a man  and  let  those 
parties  choose  another  gentleman,  and  let  those  two  parties  be  satis- 
fied with  the  decision  of  those  three  men. 

Q.  Do  the  rules  of  the  Produce  Exchange  provide  any  remedy  against 
making  corners  ? 

A.  I guess  not;  I don’t  know;  I don’t  think  there  is  any  thing  in 
the  by-laws  about  it. 

Q.  Certain  witnesses  who  have  been  examined  before  this  committee 
have  characterized  the  system  of  making  corners  and  dealing  in 
futures  as  a system  of  gambling  ; what  is  your  opinion  about  that  ? 

A.  Well,  I think  the  whole  world  is  a gambling-house,  for  that 
matter  ; the  dry  goods  man  comes  to  New  York  and  he  buys  10,000, 
12,000  or  15,000  dollars  worth  of  dry  goods  and  takes  them  out  West, 
and  they  arrive  there  three  weeks  afterward;  well,  he  has  been 
gambling  for  three  weeks  ; they  lay  there  three  months  longer  and  he 
gambles  during  that  time. 

By  Senator  Brownikg  : 

Q.  You  think  that  is  gambling  ? 

A.  A man  has  a right  to  buy  what  he  wants  ; I have  very  often 
bought  something  I did  not  need  because  I thought  it  was  cheap ; I 
have  bought  steam  cargoes  on  the  other  side  ; I thought  I would  make 
money  on  them  ; sometimes  I did,  sometimes  I didn’t ; but  a man  that 
sells  what  he  has  not  got  I think  is  worse  than  a gambler;  there  are 
different  ways  of  buying  wheat  too  ; for  instance,  I bought  the  other 
day  from  a very  good  firm  here,  for  January  delivery — my  wheat  is 
bought  to  ship  — I bought  and  paid  then  a very  high  price  for  it;  I 
paid  a higher  price  than  wheat  will  be  worth  in  January,  but  I wanted 
my  wheat  guaranteed  at  a certain  time ; that  party  has  not  got  the 
wheat  yet ; but  I know  immediately  when  this  firm  had  that  order, 
74 


586 


they  sent  out  a man  to  commence  buying  the  wheat ; well,  I don’t  call 
this  gambling  ; I call  it  gambling  when  a man  goes  into  a ring  and 
sells  to  other  i)eople  thousands  ot  bushels  of  wheat  with  the  intention 
of  either  making  or  losing  money  by  it,  and  the  moment  he  sells  it  he 
knows  he  has  not  got  to  deliver  it. 

Q.  When  you  buy  wheat  and  expect  to  have  it  delivered,  you  do  not 
consider  that  gambling? 

A.  No,  sir. 

Q.  But  where  a dry  goods  man  buys  $3,000  worth  of  dry  goods,  you 
think  that  is  gambling  ? 

A.  More  or  less  ; I call  it  regular  gambling  when  a man  goes  into  a 
ring  and  sells  what  he  has  not  got;  it  can  be  called  nothing  else. 

Q.  Will  you  examine  this  charter  and  see  whether  the  figures  there 
are,  in  your  opinion,  correct,  and  state  the  proportion  of  shipments 
from  the  port  of  New  York,  Philadelphia  and  Baltimore  ? 

A.  I could  not  say,  sir ; if  I had  this  in  my  office  I could  do  it ; I 
could  not  possibly  say  this  is  correct  or  not  ; I should  not 
wonder  if  it  ’was  correct ; I know  that  Baltimore  has  shipped  a great 
deal  more  lately  than  they  have  from  here;  I knoAV  there  has  been  at 
Baltimore  over  fifty  steamers  and  sailing  vessels  for  January,  and  I do 
not  believe  there  has  been  five  taken  here  for  January ; this  inspection 
business  is  driving  freight  away  from  here,  as  on  the  other  side  men 
say  they  will  not  buy  in  New  York  wlieat  any  more  on  inspection  at 
all ; they  have  not  confidence  any  more,  and  they  had  rather  go  to 
Philadelphia,  Baltimore  or  St.  Louis  ; they  have  lost  faith  in  the  in- 
spection. 

Q.  Have  you  any  remedy  to  suggest  for  the  evils  of  which  you  have 
complained  and  which  might  be  effected  by  legislation  ? 

A.  On  which  complaint  ? 

Q.  With  regard  to  any  thing  that  is  a tax  or  burden  upon  the  grain 
interest  ? 

A.  Well,  gambling  is  a burden,  but  I don’t  see  how  we  can  stop  it ; 
I don’t  see  that  there  is  a law  in  the  world  that  will  touch  it ; if  men 
do  not  gamble  one  way  they  will  another ; I don’t  see  how  you  can  do 
that;  a man  goes  and  puts  out  a certificate  that  calls  for  8,000  bush- 
els of  wheat  and  attaches  a $500  margin  to  it,  and  it  is  only  $500 
really;  if  tliat  can  be  stopped,  selling  on  certificates  — 

Q.  What  is  your  opinion  with  regard  to  selling  on  certificates  ? 

A.  Well,  it  is  gambling,  tliat  is  all. 

Q.  Wdiat  effect  has  it  upon  commerce  ? 

A . More  or  less  ; sometimes  it  will  not  hurt  commerce  any  ; some- 
times, in  case  of  corners,  it  might  hurt  it  a great  deal. 


587 


Jay  Gould  was  then  sworn  and,  being  interrogated, testified  as  follows : 

By  Senator  Boyd  : 

Q.  What  is  your  name  ? 

A.  Jay  Gould. 

Q.  Where  do  you  reside  ? 

A.  New  York  city. 

Q.  What  is  your  business  ? 

A.  Manager  of  railroads.  ^ 

Q.  How  long  have  you  been  in  that  business? 

A.  Upwards  of  twenty  years,  twenty- three  years. 

Q.  Are  you  familiar  with  the  system  of  making  corners  in  stocks, 
grain  and  other  commodities  ? 

A.  I may  say  that  I am  familiar  with  stocks  ; T never  have  dealt  in 
grain,  except  what  I have  consumed  at  home. 

Q.  Are  you  familiar  with  the  system  of  making  corners  in  stocks  ? 

A.  Yes,  sir. 

Q.  Are  you  familiar  with  the  system  of  dealing  in  futures  in  stocks* 
grain  or  other  merchantable  commodities  ? ' 

A.  I am  familiar  with  stocks,  dealing  in  stocks  ; I have  never  clealt^ 
at  all  in  grain. 

Q.  You  are  familiar  with  the  system  of  dealing  in  futures  in  stocks  ? 

A.  Yes,  sir ; at  present  there  is  very  little  of  that  done. 

Q.  State,  if  you  please,  your  opinion  concerning  the  system  of  making 
corners  and  dealing  in  futures  with  reference  to  its  effect  upon  com- 
merce and  its  influence  upon  the  public  welfare. 

A.  My  impression  of  that  is  that  it  makes  a very  large  market  here ; 
that  is,  all  the  world  is  connected  by  cables  and  telegraphs,  and  the 
large  market  is  where  all  the  consumers  come  to  buy.  The  larger  you 
make  our  market  the  more  attractive  it  will  be  to  buyers  all  ove;[’  the 
world.  If  our  market  was  narrowed  down  to  so  small  a compass  that 
every  time  a large  dealer  had  to  buy  any  grain  he  had  to  go  and  hunt 
up  the  farmer  out  West  and  buy  it,  he  would  go  somewhere  else.  The 
roads  that  I am  interested  in  are  those  that  reach  the  producing  dis- 
tricts, so  that  I may  say  that  it  is  the  producers  that  I deal  with,  not 
the  consumers. 

Q.  That  is  in  reference  to  grain  ? 

A.  In  reference  to  grain. 

Q.  Through  what  sections  of  the  country  do  your  roads  run  ? 

A.  Through  Indiana,  Ohio,  Illinois,  Missouri,  Iowa,  Kansas, 
Nebraska,  Arkansas  and  Texas. 

Q.  What  effect  has  the  system  of  making  corners  in  grain  or  other 
produce  upon  the  transportation  interests  of  the  country  ? 


588 


A.  The  only  effect  that  it  has  upon  transportation  may  be  to  make 
an  uneven  transportation.  These  fictitious  transactions  the  railroads 
never  carry  ; they  are  transactions  on  paper ; they  only  carry  tlie 
actual  production  ; and  tlie  movement  of  it  may  be  facilitated  or 
retarded  according  to  the  terminal  markets. 

Q.  Do  you  recollect  any  corners  that  there  have  been  in  grain  within 
the  last  few  years  ? 

A.  Yes,  sir.  They  get  them  up  every  little  while,  of  more  or  less 
magnitude.  * 

Q.  When  was  the  last  ? 

A.  I don’t  remember. 

Q.  Does  the  system  of  making  corners  in  grain  injure  the  transpor- 
tation interests  ? 

A.  Yo,  sir,  I think  not  ; 1 think  it  rather  helps,  on  the  whole.  As 
I said  before  it  makes  a large  market,  and  on  the  whole  I tliink  it 
helps.  The  effect  of  corners  probably  is  to  give  the  producer  a better 
price,  on  the  whole.  They  make  the  money.  It  is  not  the  men  that 
make  corners  generally  ; they  lose,  because  the  farmers  hold  back 
their  produce  to  take  advantage  of  just  such  a state  of  things;  they 
pile  the  speculator  full,  and  the  producer  usually  gets  the  great  benefit 
of  it. 

Q.  What  effect  has  it  upon  the  consumer  ? 

A.  Well,  I think  the  consumer  pays  more;  though  my  observation 
has  been  that  the  loss  usually  follows  when  the  speculators  suffer. 

Q.  Can  you  give  an  instance  where  the  loss  has  fallen  upon  the 
speculator  ? 

A.  The  corner  that  was  engineered  some  two  years  ago,  I think,  by 
parties  in  Chicago  I have  no  knowledge  of  except  from  hearsay,  though 
they  were  reputed  to  have  made  a very  large  loss — millions.  The 
farmers  held  back  their  grain  and  sent  it  in  and  took  advantage  of  it. 
They  made  the  money. 

. Q.  Did  Western  railroads  reap  any  advantage  from  that  operation 
or  sustain  any  loss  ? 

A.  No,  sir,  they  did  neither,  except  as  you  may  say  a railroad  car- 
ried a little  more  to-day  and  a little  less  to-morrow  ; they  only  carry 
the  actual  wheat  or  grain;  they  do  not  carry  the  millions  and  millions 
of  fictitious  transactions  that  are  made  through  these  Produce  Ex- 
changes ; they  deal  without  any  regard  to  the  quantity  that  is  pro- 
duced, except  as  it  has  an  effect  upon  the  price  — a large  or  small  crop  ; 
the  railroads  carry  the  actual  grain  that  is  raised,  no  more  and  no  less. 

Q.  Do  you  recollect  any  recent  cornering  in  stocks  ? 


589 


A.  Yes,  sir,  the  last  corner  I think  was  in  the  Hannibal  and  St. 
Joe  stock. 

Q.  Do  you  understand  how  that  corner  resulted  ? 

A.  It  resulted  vei‘y  disastrously  to  the  man  who  made  it. 

Q.  In  what  way  ? 

A.  He  brought  the  stock  up  to  a very  high  price,  paid  more  than 
it  was  worth,  and  alter  he  got  through  with  his  corner  he  had  the 
stock  on  hand  — no  market  for  it. 

Q.  Have  you  been  interested  in  any  cornering  transactions  in  stock 
within  the  last  ten  years  ? 

A.  I was  interested  in  the  Chicago  and  North-western  corner. 

Q.  Please  explain  about  that  corner  ? 

A.  Chicago  and  North-western  stock  was  selling,  I think,  at  about 
80  — 75  or  80  ; I considered  it  cheap  at  that  price  and  commenced  buy- 
ing; there  was  a disposition  to  break  it  down;  my  brokers  had  orders 
to  buy  all  that  was  sold,  and  before  I knew  it  they  had  bought  a good 
deal  more  than  there  was  ; when  called  in  to  pay  for  it,  the  price  ran 
up ; I did  not  pay  over  80, 1 think ; I paid  what  I thought  it  was 
worth. 

Q.  How  did  that  corner  result  ? 

A.  It  resulted  in  carrying  the  price  up  very  high  ; the  stock  fell 
back  after  the  corner  to  about  80,  I think. 

Q.  How  high  did  the  stock  go  up  ? 

A.  I don’t  remember  now  ; I think  it  went  up  to  about  250  ; I think 
I was  induced  to  part  with  some  at  about  that  price. 

Q.  What  effect  had  that  corner  upon  the  commercial  interests  of  the 
country  ? 

A.  I don’t  think  it  had  the  slightest  effect  upon  the  commercial  in- 
terests. 

Q.  What  effect  had  it  upon  the  private  fortunes  of  persons  who  were 
engaged  in  it" 

A.  I don’t  know  ; I could  not  say. 

Q.  Do  you  know  of  any  bankruptcies  from  it  ? 

A.  No,  sir,  we  did  not  allow  anyone  to  fail;  if  they  coaid  not  pay 
we  let  up  on  them  ; those  that  could  not  pay  we  settled  at  a much  less 
price. 

By  Senator  Browkii^g  : 

A.  How  did  that  affect  the  road  itself? 

A.  Oh,  not  the  slightest. 


500 


By  Senator  Boyd  : 

Q,  l)o  you  know  of  any  other  corners  that  have  occurred  within 
your  time  ? 

A.  I don’t  think  of  any  at  this  moment ; the  Harlem  corner,  but 
that  was  before  my  time. 

Q.  What  effect  has  the  system  of  dealing  in  futures  in  stocks,  as  con- 
ducted in  the  city  of  New  York,  upon  the  general  welfai-e  ^of  tlie 
community  r* 

A.  There  are  very  little  futures  dealt  in  now  iiiThe  Stock  Exchange  ; 
the  rules  allow  sixty-day  options,  and  there  is  very  little  of  it  done,  in 
fact,  I don’t  think  it  has  any  effect  at  all. 

Q.  Has  it  been  done  to  a large  extent  in  by-gone  years  ? 

A.  Yes. 

Q.  Wliat  effect  had  it  then  ? 

A.  Well,  I think  that  every  thing  that  tends  to  facilitate  speculation 
really  benefits  the  country  — draws  capital  from  all  parts  of  the  world. 

Q.  In  cases  where  parties  sell  what  they  have  not  got,  and  other 
parties  purchase  what  they  never  intend  to  receive,  what  is  your  opin- 
ion with  regard  to  the  effect  of  that  mode  of  speculation  upon  the 
public  welfare  ? 

A.  I don’t  see  any  injury  that  can  come  from  it ; as  I said  before, 
you  have  got  to  throw  your  great  markets  in  stocks  and  grain  open 
and  make  them  free,  and  the  freer  you  make  them  the  better,  the  more 
it  will  attract  capital.  For  instance,  if  New  York  is  the  center,  the 
more  freedom  you  give  to  capital  and  the  more  freedom  you  give  to  all 
kinds  of  commercial  transactions,  whether  stocks,  or  grain,  or  oil,  the 
more  capital  will  flow  here  from  all  the  world.  Therefore,  I should 
be  very  careful  what  restrictions  I put  upon  transactions  either  in 
stocks  or  grain. 

Q.  Do  you  believe  that  these  speculations  conflict  in  any  w'ay  with 
the  industrial  interests  of  the  country? 

A.  No,  sir ; don’t  see  that  they  do;  the  men  that  deal  in  stocks  and 
deal  in  grain  make  that  their  business  ; they  are  not  the  men  who 
plow  the  soil  and  produce  the  grain  ; they  are  following  a legitimate 
business. 

Q.  Are  you  of  the  opinion  that  in  the  graet  division  of  labor  and 
industry  such  speculations  as  we  refer  to  are  legitimate  or  otherwise  ? 

A.  I think  they  are  legitimate. 

Q.  Some  gentlemen  who  have  been  examined  before  this  committee 
have  designated  them  as  being  gambling  operations  : what  is  your 
opinioTi  a)K)ut  that  ? 

A.  ^rhat  would  depend  upon  the  legislation  of  the  country  or  the 
Tiatif)n  ; if  the  Logisbduro  should  say  that  dealing  in  futures  was  gam- 
bling, or  the  national  Legislature  should  say  that,  it  would  be  gambling  ; 


591 


but  until  they  say  that,  it  is  not  gambling.  These  men  have  grown 
up  from  small  beginnings  to  very  large  interests,  and  it  is  just  as  legiti- 
mate as  any  other  business  until  the  Legislature  makes  it  gambling. 

Q.  What  is  the  great  regulator  of  the  prices  of  all  commodities  ? 

A.  Consumption  and  production. 

Q.  In  other  words,  supply  and  demand  ? 

A.  Well,  a little  difteren^from  supply  and  demand. 

Q.  In  what  way  ? 

A.  Supply  and  demand  embrace  all  speculative  transactions  ; in  buy- 
ing and  selling  grain,  as  you  buy  and  sell  it  as  a speculative  transaction, 
you  cannot  discriminate,  but  when  it  comes  down  to  finally  eating  up 
the  grain,  that  is  consumption  ; and  those  laws  will  always  in  the  end 
govern.  No  legislation  can  change  them  unless  you  will  legislate  that 
people  shall  eat  more  or  less. 

Q.  What  is  your  opinion  in  regard  to  any  system  of  speculation 
which  would  come  in  between  the  producer  and  the  consumer  and  tend 
to  tax  commodities  more  than  they  would  naturally  be  taxed  if  they 
came  from  the  producer  to  the  consumer  by  the  ordinary  means  of 
transportation  and  trade  ? 

A.  The  consumer  or  the  producer  must  pay  any  intermediate  charges 
— one  or  the  other  ; whatever  is  paid  to  intermediaries  comes  out  of 
the  producer  of  the  country  ; but  then  comes  the  question  whether 
these  large  speculations  that  go  on  do  not,  in  the  end,  make  up  for 
that  ? 

Q.  In  what  way  ? 

A.  By  making  larger  markets ; we  wouldn’t  produce  in  this  coun- 
try nearly  the  amount  of  wheat  we  do,  were  it  not  for  these  interme- 
diaries ; they  have  their  agents  out  all  over  the  world  ; wherever  there 
is  a market  for  consumption,  they  have  their  agents  out  there  to  sell ; 
it  is  these  intermediaries  that  create  markets. 

Q.  Then  do  you  think  that  by  the  system  of  speculation  our  exports 
are  larger  than  they  would  otherwise  be  ? 

A.  Yes,  I have  no  doubt  about  it. 

Q.  Do  you  believe  if  those  exports  are  increased  that  it  has  a tend- 
ency to  enhance  the  cost  of  living  to  our  own  people  ? 

A.  No,  sir,  I don’t  think  it  does  ; I think  that  it  promotes  emigra- 
tion to  the  country  and  increases  our  production. 

Q.  These  are  legitimate  transactions  ? 

A.  Well,  you  cannot  discriminate  between  what  is  legitimate  and 
what  is  illegitimate ; a man  who  has  an  agency  in  Europe  to  sell  grain 
he  must  know  what  the  price  is  here,  and  he  can  buy  futures  here  and 
sell  them  over  there,  and  the  buyer  sends  his  ships  to  get  it,  so  that 
you  cannot  discriminate. 


5^12 


Q.  Such  a trade  as  that  is  legitimate,  hut  there  is  a system  of  deal- 
ing in  futures  whereby  men  who  do  not  do  any  tiling  to  promote  the 
interests  of  the  country,  but  simply  remain  in  their  otiices  and  engage 
in  transactions,  in  making  contracts  and  selling  certificates  of  produce 
which  they  never  owned,  never  expect  to  own,  and  never  expect  to  de- 
liver; we  want  your  opinion  on  that  system,  if  you  please  ? 

A.  Well,  I don’t  think  my  opinion  woii^d  be  of  any  value;  I give  it 
to  you  when  I say  that  1 think  any  thing  that  tends  to  make  large 
markets  and  draw  capital  is  not  an  injury,  and  1 think  that  tiie  deal- 
ing— the  large  speculative  transactions  in  gi’ain  and  stocks  make 
great  markets  here  and  draw  capital  from  every  center  in  Europe 
here. 

Q.  Perhaps  you  don’t  know,  but  I would  suggest  that  there  is  a sys- 
tem of  dealing  in  grain  carried  on  in  places  known  vulgarly  as  ‘‘buck- 
et-shops,” where  people  are  drawn  in  to  speculate  and  spend  their 
money  and  never  receive  any  return,  and  the  profits  all  go  into  the 
pockets  of  the  persons  who  run  them ; you,  I presume,  would  desig- 
nate that  as  a public  evil? 

A.  I have  not  looked  into  the  system. 

Q.  But  suppose  such  a system  does  exist,  how  would  you  designate 
it  ? 

A.  The  public  will  speculate,  from  your  minister,  doctor  and  barber, 
down,  you  will  find  that  they  have  all  got  some  interest  in  one  way 
or  another,  and  whether  it  is  done  in  a “bucket-shop,”  or  whether  it 
is  done  in  a larger  exchange,  they  will  do  that. 

Q.  Does  not  the  fact  of  allowing  these  speculative  transactions 
rather  tend  to  promote  dealing  in  chance  ? 

A.  I, found  out  West  that  the  introduction  of  lager  beer,  taking  it  in 
train-loads,  distributing  it  through  the  country,  has  almost  destroyed 
intemperance,  and  I don’t  believe  that  there  is  the  amount  of  gam- 
bling in  this  city  that  there  was  before  speculation  was  introduced 
very  largely  in  stocks. 

Q.  Then  you  think  that  speculation  in  stocks  and  grain  has  supplied 
the  place  of  gambling  ? 

A.  I think  it  has  ; I am  sure  that  the  speculation  in  grain  benefits 
the  producer,  or  our  home  producer. 

Q.  In  what  way  ? 

A.  It  ci-eates  markets  all  over  the  world. 

A.  That  is  the  legitimate  system.  Where  do  your  agents  seek  their 
inai’kets  in  Europe  and  other  sections  of  the  world,  outside  of  this 
continent  ? 

A.  In  England,  Ireland,  Scotland,  Germany,  France. 

Q.  And  what  proportion  of  the  produce  of  the  country  is  exported 
annually? 


593 


A.  That  varies  according  to  our  own  crop  and  the  crops  abroad. 
Last  year  we  had  a short  crop,  both  of  wheat  and  corn.  I have  not 
seen  the  exhibits.  We  should  export  over  a hundred  millions  of 
bushels  of  wheat. 

Q.  Which  country  is  the  best  market  ? 

A.  England. 

Q.  You  have  said  that  the  system  of  speculation  promotes  immigra- 
tion. Please  state  in  what  way  ? 

A.  Because  the  large  market  here  induces  the  construction  of  rail- 
roads into  new  territories,  and  that  induces  the  roads  to  send  abroad, 
and  get  emigrants  to  settle  them  up.  That  adds  largely  to  the  pro- 
duction of  wheat  and  corn. 

Q.  Then  you  say  that  the  railroad  managers  exert  an  influence  in 
inducing  emigration  ? 

A.  Very  largely. 

Q.  Can  you  give  us  any  instance  ? 

A.  Yes,  sir;  I have  been  promoting  emigration,  right  along,  and 
spending  large  amounts  of  money. 

Q.  Since  how  many  years  ? 

A.  Since  I have  been  connected  with  the  western  roads,  ten  years,  I 
suppose;  first,  the  Union  Pacilic,  that  had  a large  land  grant;  the 
Chicago  & North-western  had  a land  grant. 

Q.  To  what  extent  have  you  influenced  emigration  an.nually,  on 
an  average? 

A.  Well,  that  is  impossible  to  tell.  Advertising  your  own  lines 
abroad,  emigration,  when  it  gets  over  here,  may  go  there,  and  may  go 
somewhere  else.  Railroads  have  undoubtedly  been  great  motors  in 
promoting  emigration.  I did  not  go  anywhere  I was  that  I did  not 
see  agents,  and  land  advertised ; I went  through  Germany,  Holland, 
and  other  countries,  and  I found  everywhere  our  American  roads,  with 
their  agents  promoting  emigration,  and  lands  advertised. 

Q.  Have  all  the  roads  adopted  that  system  ? 

A.  I think  the  land  grant  roads. 

Q.  Which  roads  are  they  ? 

A.  The  first  land  grant  road  was  the  Illionis  Central ; then  came 
our  system  of  other  roads  — the  Union  Pacific,  the  Central  Pacific,  the 
Atchison  and  Topeka,  the  Chicago,  Burlington  and  Quincy,  and  Ne- 
braska and  Rock  Island,  and  the  Missouri,  Kansas  and  Texas,  the 
Texas  and  Pacific,  and  numerous  other  roads  — and  vast  numbers  of 
them. 

Q.  What  means  do  the  roads  take  to  induce  emigration,  in  other 
words,  what  inducements  are  offered  to  emigrants  ? 

A.  They  have  their  lands  thoroughly  written  up,  and  then  they  put 
T5 


594 


very  low  prices  as  an  inducement  in  that  way  ; and  an  inducement  as 
to  the  method  of  payment;  tlie  payments  come  along  so  that  the  emi- 
grant sees  that  he  can  pay  for  his  farm  out  of  tlie  gradual  production 
of  it ; all  these  statistics  are  presented  to  them,  and  then  they  have,  per- 
haps, friends  that  have  preceded  them,  and  they  verify  their  statements. 

Q.  Are  extra  facilities  in  the  way  of  transportation  afforded  ? 

A.  Sometimes. 

Q.  By  ocean  steamers  and  railroads  ? 

A.  Yes,  sir  ; the  great  motor  in  securing  emigration,  of  course,  is 
to  meet  the  emigrants  at  their  own  homes  and  explain  to  them  exactly 
what  they  can  do  and  where  they  are  going,  and  what  they  can  raise 
when  they  get  there  ; all  that  information  is  a part  of  the  information 
that  goes  to  make  the  emigrant  make  up  his  mind  to  move. 

Q.  How  many  agents  have  your  roads  ? 

A.  I don’t  know  ; I think  that  we  have  a general  agent  and  then  he 
pays,  I think,  in  shape  of  commissions. 

Q.  You  have  a general  emigrant  agent  for  all  the  roads  ? 

A.  Yes,  sir,  for  all  our  system. 

Q.  And  then  he  pays  a commission  to  persons  who  induce  a certain 
number  of  emigrants  to  come  here  ? 

A.  Some  such  system  as  that. 

Q.  Upon  what  terms  do  you  dispose  of  the  lands  to  settlers  ? 

A.  Well,  usually  the  payment  of  ten  per  cent  in  cash,  and  payment 
right  along  over  a period  of  six  to  ten  years, 

Q.  Do  you  offer  them  any  assistance  in  the  way  of  providing 
accommodations  — providing  them  with  farming  implements,  with 
cattle,  or  means  of  cultivating  the  land  ? 

A.  Hot  usually  ; I have  done  this  when  they  had  a bad  crop;  I made 
it  a rule  to  support  them  until  the  next  crop  came  in  ; in  that  way  we 
often  ship  a great  deal  of  wheat  and  provisions  to  them  on  their  places 
until  the  crops  come  in  ; they  always  came  out  all  right  and  paid  us. 

Q.  On  an  average  what  did  you  sell  them  the  land  for  per  acre  ? 

A.  Well,  from  13  to  16  an  acre. 

Q,  And  in  large  tracts  on  an  average? 

A.  Some  will  buy  a section,  that  is  640  acres;  but  usually  about  160 
acres  of  land ; wc  would  rather  sell  them  in  eighties,  because  the  more 
families  we  get,  the  more  production  and  the  better  for  the  railroads. 

i}.  Now,  on  an  average,  how  many  emigrants  annually  does  your 
system  bring  to  this  country  ? 

A.  Well,  T could  not  tell  you  that ; I kuow  it  is  pretty  large.  I 
have  umhu*  my  immediate  control  10,000  miles  of  road,  and  about 
6,000  or  7,000  of  them,  perhaps  8,000,  are  where  emigration  comes  in, 
but  the  number  I don’t  know  ; it  isjlarge.  Every  time  I go  out  West 


595 


— I go  out  twice  a year  — I see  towns  that  have  sprung  up  in  the  in- 
terval. 4 

Q.  What  country  sends  the  greatest  number  ot  emigrants  under 
your  system  ? 

A.  I don’t  know ; Ireland,  Germany,  Sweden,  Norway,  France. 

Q.  Do  your  agents  go  to  all  those  countries? 

A.  Yes,  sir. 

Q.  About  how  much  of  your  lands  received  as  grants  have  been  set- 
tled upon  under  this  system  ? 

A.  Well,  I don’t  know  how  much.  The  government’s  system  of 
granting  lands  was  to  grant  the  railroads  alternate  sections,  and  they 
usually  take  those  up  first,  because  they  get  them  cheaper.  They  are 
thrown  open  to  settlement ; so  that  I could  not  tell.  We  do  not  care 
whether  they  buy  our  lands  to  take  up  government  lands,  so  long  as 
they  settle. 

Q.  How  much  cheaper  can  they  purchase  the  government  lands  ? 

A.  I think  the  government  price  to  the  actual  settler  is  $2.50  ; I 
think  that  is  the  price  for  the  land  grants. 

Q.  What  are  the  terms  of  payment  ? 

A.  They  have  to  pay  cash  to  the  government. 

Q.  Does  the  government  afford  them  any  assistance  in  the  way  of 
providing  farming  implements  or  dwellings  ? 

A.  No,  sir. 

Q.  About  how  much  of  your  lands  still  remain  unoccupied  ? 

A.  I think  we  have  on  the  Texas  Pacific  some  12,000,000  of  acres. 

Q.  Still  unoccupied  ? 

A.  Yes  ; the  Missouri,  Kansas  and  Texas  have  some  million  or  more, 
which  lies  in  the  Indian  territory.  Under  the  grant  the  Indian  title 
has  to  be  extinguished  before  it  comes  to  the  road,  so  that  that  is  not 
open  to  settlement.  The  Union  Pacific,  I think,  has  some  15,000,000 
of  acres. 

Q.  There  are  other  roads  besides  those  in  which  you  are  interested, 
are  there  not,  which  also  have  received  large  grants  ? 

A.  Oh,  yes, 

Q.  What  roads  are  those  ? 

A.  Well,  I enumerated  them  a little  while  ago. 

Q.  How  soon  after  settlement  are  the  emigrants  enabled  to  send 
crops  to  market  generally  ? 

A.  Oh,  I have  known  a great  many  cases  where  the  first  year  they 
paid  all  up  from  the  first  crop ; where  they  took  the  virgin  soil  and 
put  in  a crop  of  wheat,  the  first  crop  gave  them  a profit  that  paid  for 
their  land.  Usually  they  take  that  money  and  put  it  into  improve- 
ments, and  go  on  and  pay  more  gradually.  We  have  never  lost  any* 


596 


by  our  sales.  We  have  had  cases  where  lands  came  back  to  us,  but 
we  have  in  all  instances  sold  it  for  more.  • 

Q.  From  the  improvements  ? 

A.  The  improvements  from  the  growth  of  the  country.  When  I 
first  went  on  the  Union  Pacific  road  it  was  almost  a wild  country,  and 
they  said  that  the  limit  of  raising  wheat  was  one  hundred  miles  west 
of  Omaha.  Sure  enough  when  I got  out  there,  there  was  not  any  we^t 
of  what  is  called  the  Great  Desert.  There  was  no  rain  west  of  this  ; 
that  was  the  reason.  We  found  that  the  region  of  rain  moved  west 
about  twenty  miles  a year  and  that  would  bring  in  this  strip.  Now  if 
you  go  out  on  the  Union  Pacific  you  will  find  wheat  out  as  far  as 
North  Platte,  about  two  hundred  and  ninety  miles  west  of  Omaha 
The  region  of  rain  in  that  great  belt  of  country  has  gradually  moved 
west  in  ten  years  so  that  now  they  raise  the  finer  wheat  there. 

Q.  And  has  that  chiefly  been  settled  by  emigrants  ? 

A.  Oh,  yes. 

Q.  Induced  to  come  as  you  have  described  ? 

A.  Yes,  almost  entirely  so.  There  are  a great  many  people  who 
have  got  pretty  well  off  in  the  Eastern  and  Middle  States  and  have  sold 
out  their  farms  and  gone  West.  That  is  one  of  the  elements  of  this 
emigration. 

Q.  And  this  increase  in  population  is  adding  to  the  volume  of  our 
products  every  year? 

A.  Yes;  when  I first  went  out  I think  that  the  product  of  Nebraska 
was  not  over  1,000,000  bushels  of  wheat  and  there  was  no  corn.  This 
year  there  will  be  20,000,000  bushels  of  wheat,  and  100,000,000  bushels 
of  corn.  Kansas  at  that  time  produced  only  2,000,000  bushels  of 
wheat,  and  this  year  it  will  be  85,000,000  bushels  of  wheat  and 
150,000,000  bushels  of  corn. 

Q.  Do  you  know  what  price  the  Western  producers  receive  for  their 
wheat  at  their  local  markets? 

A.  That  varies  according  to  the  prices  in  Chicago  and  St.  Louis 
It  comes  pretty  close  up  to  the  prices  that  are  made  there,  less  the 
transportation. 

Q.  About  what  on  an  average  is  the  price  which  they  receive? 

A.  Well,  there  are  pretty  wide  fluctuations.  They  want  to  get  a 
dollar  a bushel  for  wheat;  they  are  not  satisfied  with  less. 

Q.  I recollect  being  in  Iowa  in  1804,  I think,  and  I remember  that 
the  farmers  sold  their  wheat  at  Cedar  Falls  at  fifty  cents  a bushel, 
and  some  of  them  had  to  drive  into  Chicago,  thirty  miles,  to  get 
across  the  prairie.  It  did  not  strike  me  as  being  very  profitable ; and  I 
wanted  to  know  whether  the  prices  continued  the  same  as  thev  were 
^ then  ? 


597 


A.  Oh,  no ; prices  are  higher  now ; I think  they  pay  about  seventy 
cents  for  wheat  in  Iowa. 

Q.  How  far  is  the  country  settled  on  each  side  of  the  Union  Pacific 
railway  ; what  distance  from  the  railway? 

A.  Well  as  you  go  west  the  distance  increases;  emigration  is  spread- 
ing out.  When  you  get  out,  say  at  Columbus,  which  is  one  hundred 
miles  west,  it  is  settled  up  for  fifty  or  sixty  miles  each  side  now;  in 
fact  south  of  there  it  is  an  unbroken  settlement  all  the  way’  through 
to  the  Southern  Kansas  line 

Q.  Have  they  branch  roads  at  frequent  intervals  ? 

A.  Oh,  yes.  The  Union  Pacific  have  built  a system  of  them,  and 
the  Burlington  and  Quincy  and  Chicago  and  North  western  are  well 
supplied  with  roads. 

Q.  Have  instances  occurred  in  which  corners  have  been  made  in  the 
money  market  ? 

A.  Yes,  I think  so. 

Q.  Do  you  recollect  any  ? 

A.  Most  every  fall  there  is  more  or  less  speculative  movement  in 
'money. 

Q.  What  is  the  effect  upon  the  commercial  interest  of  the  State,  of 
the  city  and  the  country  of  such  corners  in  money  ? 

A.  Well,  it  makes  a temporary  depression,  but  it  draws  capital  here 
from  all  other  centers,  and  it  very  soon  regulates  itself.  If  they  have 
a high  rate  for  money  here,  you  find  cables  coming  from  Canada  and 
Europe,  and  money  in  a day  or  two  will  be  less. 

Q.  Do  you  think  the  effects  are  ultimately  injurious  to  the  trade  of 
the  country. 

A,  I don’t  know  about  that.  It  has  its  good  side  and  its  bad  side. 
The  fact  that  those  things  come  to  make  business  men  a little  more 
circumspect  and  careful  than  they  would  otherwise-be  in  their  tran- 
sactions, in  that  aspect  it  is  a good  thing.  Where  it  creates  panics,  it 
is  injurious. 

Q.  What  was  the  last  great  corner  in  the  money  market  of  which 
you  have  a recollection  ? 

A.  They  had  money  very  tight  here  a month  ago. 

Q.  How  was  that  tightness  reached  ? 

A.  I suppose  that  they  reduced  the  gold  certificates.  When  they 
had  to  take  the  actual  gold,  it  was  so  weighty  they  could  not  do  it ; 
now  the  government  issues  gold  certificates,  and  that  gives  the  facility 
to  any  one  that  has  money  to  lock  it  up. 

Q.  Are  corners  in  the  money  market  produced  by  capitalists  locking 
up  the  money  ? 

A.  No,  sir,  not  always.  They  make  it  worse.  There  is  a greater 


508 


clemand  in  the  fall  of  the  year  for  money.  In  the  first  place,  there  is 
the  wheat  crop,  the  hog  crop,  and  the  cotton  crop  that  has  to  be 
moved.  It  takes  an  enormous  amount  of  money  that  lies  idle  here  in 
the  summer.  Then  the  use  of  that  money  leaves  less  here. 

Q.  How  do  corners  affect  merchants  in  their  pecuniary  transac- 
tions ? 

A.  I don’t  know.  I will  have  to  refer  you  to  the  merchants  them- 
selves. 

Q.  I want  your  experience  ; from  your  own  experience  how  do  they  ? 

A.  If  they  have  made  money  for  one  set  of  men,  it  would  benefit 
them  ; if  they  have  injured  another  set,  it  would  he  the  reverse. 

Q.  Are  you  familiar  with  any  corners  that  have  been  made  in  the 
oil  crop  ? 

A.  Only  by  reputation. 

Q.  Or  in  the  cotton  crop  ? 

A.  No,  sir. 

Q.  You  are  interested  in  the  banking  business,  are  you  not? 

A.  No,  sir. 

Q.  We  hear  of  panics  in  the  money  market  and  on  the  street  fre- 
quently. What  is  meant  by  that  ; does  it  mean  a corner  having  been 
made  ? 

A.  A panic  is  where  men  lose  their  balance — their  reason — and  rush 
pellmell. 

Q.  Is  that  generally  preceded  by  a corner  in  some  commodity  ? 

A.  A corner  in  money  might  be  produced  by  any  thing  else  which 
created  a general  distrust  in  the  public  mind  ; some  great  fraud  or 
over-issue  of  stock,  or  discovery  of  a large  amount  of  forged  bonds  or 
stocks  of  any  kind,  doubt  of  some  great  financial  institution  which 
was  firmly  seated  in  the  public  mind  and  had  the  confidence  of  every- 
body. One  or  alLof  these  might  produce  it.  A panic  is  where  peo- 
ple lose  their  reason  for  the  time  being  and  rush  to  sell. 

Q.  Are  these  of  frequent  occurrence  in  the  circles  in  which  you  are 
acquainted  ? 

A.  I have  been  through  three  or  four  of  them  in  my  business 
experience. 

Q.  Will  you  state  each  of  those  occasions  ? 

A.  Personally  the  first  one  was  the  panic  of  1857. 

Q.  What  did  that  consist  of ; how  was  it  caused? 

A.  It  was  perhaps  caused  by  what  was  called  the  Schuyler  frauds  ; 
they  gave  the  first  incentive  to  that.  It  is  a long  time  ago  and  I can 
only  speak  from  general  impression,  but  the  discovery  was  made  that 
there  had  been  a large  over-issue  of  New  Haven  stock.  People  had 
been  8j)eculating  very  heavily. 


599 


Q.  That  panic  was  a panic  of  the  money  market  ? 

A.  You  cannot  have  any  trouble  in  Wall  street — that  is  the 
heart  of  the  country,  and  you  cannot  have  trouble  there  that  is  not 
felt  wherever  money  has  its  effect  in  a greater  or  less  degree,  so  that  a 
money  panic  in  AVall  street  is  sure  to  have  its  effect  on  almost  all 
kinds  of  business.  It  may  come  afterward  but  it  is  sure  to  be  felt. 

Q.  What  effect  had  that  panic  upon  the  public  generally  and  upon 
the  commercial  interests  of  the  country  ? 

A.  Well,  those  have  their  good  effect  as  well  as  their  bad.  I don’t 
know  but  what  they  are  a kind  of  necessary  check  on  extravagance 
and  speculation.  It  makes  people  more  conservative  in  the  future. 

Q.  What  was  the  next  panic  ? 

A.  Well  then  there  was  a panic  at  the  time  the  civil  war  broke  out. 

Q.  That  was  caused  by  the  breaking  out  of  the  war  I suppose,  was 
it  ? 

A.  Yes,  sir,  largely  by  that;  then  there  was  one  in ’69  ; but  the 
greatest  one  probably  was  in  ’73. 

Q.  Was  that  the  panic  usually  known  as  the  ‘‘  Black  Friday  ? ” 

A.  ]^o,  the  ‘‘  Black  Friday”  was  in  ’G9.  That  was  very  limited. 

Q.  How  was  that  brought  about — the  panic  of  ’69  ; was  that  pro- 
duced by  cornering  the  money  market  ? 

A.  The  war  led  to  large  fluctuations  in  gold  and  commodities — over- 
trading ; that  was  the  real  cause.  In  1873  there  had  been  a general 
over-trading  again,  an  over-extension  of  railroads  on  credit  largely 
The  panic  or  revulsion  came  as  a necessary  result. 

Q,  In  the  panic  of  ’69  — you  say  that  you  were  interested  in  all  these 
yourself  more  or  less  ? 

A.  Yes,  more  or  less. 

Q.  What  was  the  effect  of  the  panic  of  ’69  upon  our  commercial 
interests  and  upon  the  public  generally? 

A.  I think  the  effect  was  not  very  long  felt  after  ’69. 

Q.  Was  it  disastrous  to  any  great  extent  ? 

A.  No  ; the  panic  of  ’73  w^as  the  culmination. 

Q.  How  was  that  brought  about  ? 

A.  Well,  that  was  brought  about  by  general  over-trading  and  the 
construction  of  railroads  on  credit  largely ; a great  many  enterprises 
were  put  out  that  did  not  pay  any  way  for  years;  the  public  got  full 
of  that  kind  of  securities  and  they  began  to  go  down,  and  everybody 
wanted  to  sell  and  nobody  to  buy. 

Q.  And  what  was  the  effect  of  that  ? 

A.  Some  large  houses  failed  and  that  frightened  capitalists;  they 
wanted  to  gel  their  money  called  in  on  their  loans,  and  that  broke  up 


GOO 


large  moneyed  institutions  and  large  houses ; there  was  general 
distress. 

Q.  And  that  was  the  last  panic  that  you  are  familiar  with  ? 

A.  That  is  the  last  — ’73. 

Q.  AVere  the  general  interests  of  the  country  affected  by  that  ? 

A.  Yes,  sir;  it  stopped  railroad  construction  largely,  and  retarded 
the  development  of  the  country. 

Q.  Did  the  panic  of  ’G9  have  a similar  tendency  ? 

A,  No,  not  to  any  such  extent. 

Q.  That  I understand  was  confined  to  money  alone? 

A.  Yes,  that  was  confined  more  to  speculation  in  gold. 

Q.  And  how  did  the  speculation  in  gold  bring  that  about  ? 

A.  Well,  that  was  brought  about  by  short  and  long  sales ; it  was 
over-sold,  but  it  was  not  in  any  sense  a commercial  revulsion  ; it  was 
limited  and  did  not  last  long. 

Q.  Now  what  is  your  opinion,  generally,  as  to  the  effect  upon  com- 
merce and  upon  the  industries  of  the  country  and  the  public  welfare, 
of  these  panics  and  the  corners  which  cause  such  panics  ? 

A.  I think  that  they  have  their  evil  and  their  good.  > 

Q.  AVhat  is  the  evil  side  of  it  ? 

A.  It  is  that  men  will  fail ; men  have  over-traded  ; enterprises  that 
are  not  on  a legitimate  basis  have  to  be  wiped  out,  and  those  that  have 
gone  into  them  have  to  make  the  losses. 

Q.  Do  legitimate  dealers  not  also  suffer  ? 

A.  More  or  less,  yes. 

Q.  And  the  trade  of  the  country  is  temporarily  suspended  and 
thrown  into  a fluctuating  condition,  is  it  not? 

A.  Yes ; the  effect  of  it  is  that  people  become  more  economical  and 
restrict  their  personal  expenses  and  study  habits  of  economy,  and 
in  that  way  there  is  good  comes  out  of  it ; it  seems  to  be  a kind  of 
necessary  evil. 

Q.  Do  you  think  it  is  possible  to  remedy  these  evils  by  legislation  ? 

A.  I do  not ; I think  it  would  be  impossible  to  legislate  against  any 
of  these  great  trades  and  businesses  that  have  grown  up;  if  you  legis- 
late in  New  York  to  prevent  dealing  in  grain  they  will  make  some 
other  center  and  drive  the  capital  away. 

Q.  What  would  you  think  of  national  legislation  in  regard  to  the 
matter  ? 

A.  1 don’t  think  it  is  practicable  or  feasible;  I think  that  you  can 
])ut  some  restrictions  on  it;  in  dealing  in  grain  you  might  say  that  the 
loss  should  not  exceed  a certain  price,  or  in  dealing  in  stocks  that  the 
loss  should  not  be  ])eyond  a certain  price ; for  instance,  the  London 
Stock  Excliango  have  adopted  a similar  rule  ; I think  it  is  ten  per 
cent  til  ere. 


601 


Q.  The  loss  shall  not  exceed  that  ? 

A.  Yes ; that  prevents  failures  and  it  prevents  corners  ; there  is  no 
use  of  making  a corner  you  know,  if  you  have  got  to  settle  at  a limited 
price. 

Q.  How  could  that  be  done  to  prevent  such  corners  as  the  Keen© 
corner ; you  have  heard  of  the  Keene  corner  ? 

A.  Very  easily,  because  if  the  board  would  adopt  a regulation  that 
the  settling  ])rice  should  always  be  not  to  exceed  ten  per  cent  of  the 
selling  price,  it  would  be  easy  to  regulate  just  the  same  as  in  stocks ; 
say  that  the'settling  price  should  never  exceed  ten  per  cent  of  the  sell- 
ing price  ; that  would  cure  these  extreme  corners;  but  I am  very  clear 
that  you  shoifld  throw  the  marts  of  commerce  op'^n  to  draw  capital 
and  benefit  the  public  ; I would  make  capital  in  New  York  as  free  as 
the  wind. 

Q.  And  only  restrict  it  in  that  way? 

A.  That  the  loss  should  not  exceed  a certair  per  cent. 

Q.  Is  there  any  other  information  you  would  like  to  offer  to  the 
committee  ? 

A.  No,  sir  ; I don’t  think  I have  given  you  much. 

Timothy  C.  Eastman,  being  duly  sworn,  was  then  interrogated  and 
testified  as  follows : 

By  Senator  Boyd  : ^ 

Q.  Where  do  you  reside  ? 

A.  New  York. 

Q.  What  is  your  business  ? 

A.  Principally  beef  and  cattle. 

Q.  How  long  have  you  been  in  that  business? 

A.  Thirty  odd  years. 

Q.  Where  is  your  place  of  business  ? 

A.  Foot  of  Fifty-ninth  street.  North  river. 

Q.  Are  you  a member  of  a company  ? 

A.  No,  sir. 

Q.  State,  if  you  please,  your  opinion  in  reference  to  the  whole  sys- 
tem of  niaking  corners  and  dealing  in  futures  with  reference  to  its 
effect  upon  commerce  and  its  influence  upon  the  public  welfare  ? 

A.  That  would  be  only  on  information  ; I think  it  is  detrimental  to 
the  public  welfare  and  to  commerce. 

Q.  Why  ? 

A.  It  affects  prices  very  materially. 

Q.  In  what  way  ? 

A.  Well,  a corner  in  provisions  has  the  effect  of  raising  the  prices. 

76 


602 


Q.  What  is  yoiir  opinion  with  reference  to  the  system  of  dealing  in 
futures  ? 

A.  Where  provisions  or  grain  are  bought  up  and  cornered  and  held, 
that  is  what  I consider  a future  operation. 

Q.  Do  you  know  of  any  corners  that  have  taken  place  in  the  meat 
markets  ? 

A.  In  salt  meats  — not  in  fresh  meats. 

Q.  Can  you  state  to  us  the  cause  of  the  difficulty  between  various 
transportation  lines  concerning  the  importation  of  live  stock  and  car. 
casses  to  New  York  ? 

A.  From  the  west  to  New  York  ? 

Q.  Yes. 

A.  Well,  the  difference  has  been  heretofore  that  dressed  meats  have 
paid  a less  rate  than  live,  for  the  reason  that  they  have  been  allowed 
to  ship  and  import  whether  alive  or  not.  They  charged  exactly  what 
they  did  here ; but  I believe  that  is  nearly  remedied  now.  I think 
dressed  meats  are  paid  at  the  present  time  on  order  of  the  shipper 
Heretofore  the  time  has  been  when  they  only  paid  on  two- thirds  ; the  . 
other  third  they  would  call  a rebate  to  that  amount. 

Q.  Wliich  is  the  best  system  of  transportation  in  the  interest  of  the 
consumer  ? 

A.  I think  the  live  is. 

Q.  In  what  way  ? 

A.  Well,  I think  the  competition  in  live  — there  is  so  many  more 
men  engaged  in  it.  For  instance,  in  the  city  of  New  York  there 
would  be  more  than  100  different  men  engaged  in  the  beef  supply  of 
New  York  — that  is,  drovers  and  butchers.  If  it  would  go  into  the 
dressed  meat  system  there  would  be  but  two  or  three  firms,  or  a few 
firms,  and  there  would  be  very  likely  a monopoly,  while  competition 
keeps  it  at  the  very  lowest  possible  point  at  the  present  time. 

Q.  Have  you  any  further  suggestions  to  make  to  the  committee  on 
liis  subject  ? 

A.  No,  sir  ; I merely  came  here  to  answer  questions.  I was  not 
aware  what  I would  be  called  on  to  answer  at  all. 

Q.  Who  have  been  the  principal  promoters  in  the  contest  between 
the  importation  of  live  and  dead  carcasses  — the  railroads  ? 

A.  The  dealers. 

Q.  Do  you  know  any  instance  where  the  railroad  authorities  have 
been  interested  in  this  movement  ? 

A.  Only  by  report  ; I do  not  know  it  of  my  own  knowledge. 


603 


Leonard  Hazcltine,  being  duly  sworn,  was  then  interrogated  and. 
testified  as  follows : 

By  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  In  New  York,  sir. 

Q.  What  is  your  business  ? 

A.  G-rain,  flour  and  commission  merchant. 

Q.  Are  you  a member  of  a firm  ? 

A.  Yes,  Husted  & Hazeltine. 

Q.  Where  is  your  place  of  business  ? 

A.  15  State  street. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  I have  been  in  that  business  as  clerk  and  partner  since  1853. 
Formerly  with  the  firm  of  Jesse  Hoyt  & Co. 

Q.  What  is  your  opinion  with  reference  to  the  whole  system  of 
making  corners  and  dealing  in  futures  with  reference  to  its  effect  upon 
commerce  and  its  influence  upon  the  public  welfare  ? 

A.  That  is  a long  qaestion  ; I mean  it  is  a pretty  comprehensive 
question.  In  forming  a judgment  on  that,  perhaps  I might  be  allowed 
to  give  my  views  taking  the  whole  scope  of  the  question . 

Q.  Yes  ? 

A.  I regard  the  agricultural  interests  of  this  country  as  the  founda- 
tion of  our  prosperity  ; that  if  we  have  good  crops  and  remunerative 
prices,  prosperity,  starting  from  the  farmer,  goes  down  into  every  branch 
of  trade  and  commerce.  It  is  just  as  necessary  that  good  prices  shall 
prevail  as  good  crops,  for  if  good  prices  do  not  prevail,  and  the  CDps 
are  obliged  to  be  marketed  at  less  than  the  cost  of  production,  loss 
ensues  to  the  producer,  which  follows  down  through  all  branches  of 
trade.  When  the  crop  begins  to  be  about  ready  for  market  it  is  deter- 
mined whether  the  crop  is  a good  one  or  poor  one  by  speculators  or  by 
operators.  A certain  class  of  the  community  will  make  up  their  minds 
that  crops  are  prolific, that  the  interests  of  the  farmer  will  require  a very 
large  marketing  of  the  entire  crop  within  two  or  three  months  after  it 
has  been  produced,  and  they  take  advantage  of  the  liberal  and  free 
movement  of  the  crop  to  reduce  its  value.  That  is  done  by  offering  to 
sell,  offers  being  made  by  parties  to  sell  the  crop  for  the  next  month  on 
the  following  month,  at  prices  materially  below  the  prices  that  are  pre- 
vailing for  cash  property,  and  buying  wheat  for  their  offerings  compels 
the  marketing  of  the  goods  at  relatively  low  prices.  I might  say 
further,  that  under  all  circumstances  a very  large  proportion  of  our 
grain  and  flour  is  wanted  for  export  to  European  ports.  Even  if  they 
have  fairly  good  crops  on  the  other  side,  they  require  a very  large 


/ 


G04 


amount  of  grain  from  us,  and  they  requiring  tliat  amount,  would  be 
perfectly  willing  to  pay  a fair  ju’ice  for  it  if  the  prices  were  fairly 
maintained.  This  offering  to  sell  goods  at  the  movement  of  the  crop 
as  a rule  results  in  the  large  movement  being  marketed  at  moderately 
low  prices.  Now  then  I contend  that  when  any  man  or  body  of  men 
who  believe  that  this  property  is  being  sold  below  its  value, 
will  step  in  and  buy  all  that  they  want  to  sell  them  and  hold 
the  property  until  the  natural  demand  shall  come  in  for  it,  it  is  just 
as  legitimate  as  for  a dry  goods  man  to  buy  in  the  fall  and  stock  up 
his  store  with  goods  for  his  spring  trade,  or  the  grocery  man  or  a dealer 
in  sugar  or  teas,  or  any  other  commodity,  and  for  the  last  few  years 
this  has  been  growing;  capitalists  have  come  in  and  said,  we  believe 
that  property  is  selling  below  its  value ; the  demand  is  not  now,  but 
will  be  a month  or  two  or  three  mon  is  later,  and  we  will  buy  grain 
and  wait  for  the  demand  to  come  in.”  That  I believe  to  be  wholesome 
and  perfectly  legitimate,  and  really  a desirable  thing  for  the  country 
at  large.  What  are  nominally  termed  ‘^corners”  are,  when  the  peo- 
ple that  have  sold  this  grain  which  they  have  never  possessed  and  never 
expected  to  possess,  have  sold  more  than  the  farmers  will  deliver  to 
them;  of  late  years  the  farmers  have  become,  in  the  older  portions  of 
the  country,  men  of  fair  means  — you  might  say  liberal  means  — and 
they  are  not  obliged  to  deliver  their  grain  if  the  market  price  is  not 
satisfactory;  in  newer  portions  of  the  country  they  are  obliged  to  de- 
liver it  as  soon  as  the  crop  matures  to  pay  their  expenses  and  get  out 
of  debt  ; if  the  farmers  are  not  satisfied  with  the  price  that  these  gen- 
tlemen have  sold  grain  at,  expecting  them  to  come  to  their  help  and 
deliver  it,  those  persons  that  have  sold  grain  short,  expecting  to  get 
it  from  the  farmers,  are  obliged  to  come  to  the  man  who  has  bought 
it  and  buy  it  of  him  ; if  he  has  bought  more  than  the  farmers  will  de- 
liver, that  is  a corner.  Now  I contend  if  there  is  any  one  to  be  patted 
on  the  back  and  commended,  it  is  the  man  who  will  stand  up  and,  be- 
lieving in  the  value  of  the  goods,  make  his  obligations  to  pay  for  them, 
and  when  they  are  delivered,  actually  pay  for  them. 

Q.  Are  you  a member  of  the  Produce  Exchange  ? 

A.  I am,  sir. 

Q.  How  long  have  you  been  a member  ? 

A.  I have  been  a member  there  since  1862. 

Q.  Are  corners  ever  made  in  the  Produce  Exchange  ? 

A.  There  Inive  been  what  are  termed  corners  there  in  the  Produce 
Exchange. 

(2-  State  some  such  instances  ? 

A.  Well,  tbero  was  one  here  a few  months  ago  — in  November  — 
what  was  termed  a corner;  1 am  speaking  of  it  now  in  the  general  ac- 
ceptation of  the  word. 


605 


Q.  Was  that  known  as  the  corn  corner  ? 

A.  Yes,  sir. 

Q.  How  was  that  corner  got  up  ? 

A.  Well,  I don’t  know  as  that  is  a proper  question  to  ask  me  ; I can 
say  in  a general  way  that  that  corner,  if  it  was  a corner,  was  gotten 
up  in  the  way  that  all  corners  that  I ever  knew  any  thing  of  were  got- 
ten up  ; to  protect  property  that  had  been  bought  so  long  ago  as  Au- 
gust we  had  bought  a large  amount  of  corn  for  November  delivery,  be- 
lieving with  the  moderate  crop  of  corn  which  had  become  almost  ex- 
hausted, that  the  corn  would  enhance  in  value  as  we  approached  the  end 
of  the  crop  which  would  be  in  November  or  December.  Purchases  were 
made  by  us  to  a very  considerable  extent  for  from  eighty  to  eighty-five 
cents  as  far  back  as  in  July  and  August.  These  people  that  did  not  have 
corn  to  sell,  and  never  expected  to  have  it  or  to  receive  it,  sold  down  the 
price  of  that  corn  upon  us  to  sixty-five  and  three-quarter  cents.  They 
hammered  it  by  offering  to  sell  property  which  they  did  not  possess 
and  they  sold  down  our  goods,  which  we  had  bought,  evidently  with 
the  determination  to  compel  us  to  meet  the  market  and  sell  them  at 
the  low  prices,  and  then  they  would  make  their  profit.  Instead  of 
doing  that  we  bought  niore,  and  we  bought  so  much  that  at  the  end 
of  the  month  they  were  not  able  to  deliver  to  us,  and  they  came  and 
paid  us  the  price  that  we  asked. 

Q.  What  price  was  that  ? 

A.  One  dollar  and  ten  cents. 

Q,  To  what  extent  did  your  operations  in  that  corner  go ; that  is  to 
say,  what  quantity  of  corn  did  you  purchase  ? 

A.  Well,  I would  rather  not  state  that,  sir  ; it  was  beyond  the 
amount  that  they  delivered. 

Q.  We  would  like  to  have  that ; that  is  a matter  that  the  committee 
consider  important  ? 

A.  That  is  a matter  of  my  own  private  business.  While  I am  will- 
ing to  give  you  all  the  information  I can  consistently,  I do  not  care  to 
publish  in  the  newspapers  the  inner  secrets  of  my  office. 

Q.  You  claim  that  this  was  a legitimate  transaction,  and  if  so  there 
should  be  no  hesitation  in  answering  the  question  ? 

A.  I have  no  objection  at  all  to  give  that  information  to  the  com- 
mittee, but  I do  not  care  to  do  it  here.  I will  hand  it  to  the  chair- 
man of  the  committee  if  you  desire  me  to. 

Senator  BROWi^iNG  — I would  just  as  leave  Mr.  Hazeltine  should 
decline  to  answer  that  question  as  for  him  to  answer  it.  If  he  says  he 
declines  to  answer  the  question,  I accept  that. 


GOG 


% 

Senator  Boyd  — I think  that  the  press  have  a right  to  know  every 
thing  that  we  know  about  this  matter.  We  are  not  here  to  gratify 
ourselves. 

Senator  Browjs’ING  — My  reason  for  saying  that  I would  not  insist 
upon  his  answering  the  question  was,  if  the  gentleman  declines  to 
answer,  it  is  evidence  to  my  mind,  and  ought  to  be  to  every  man’s 
mind,  that  the  transaction  is  not  a legitimate  one,  and  not  one  that 
would  bear  the  light  of  day. 

The  Witness  — That  is  your  inference,  and  it  is  not  correct. 

Senator  BROWXii^G  — Then  you  want  to  answer  that  ? 

The  WiTi^^ESS  — I have  no  serious  objection  to  answering  about  the 
quantity;  it  was  not  a very  enormous  amount. 

By  Senator  Boyd  : 

Q.  The  committee  would  prefer  to  have  you  answer  ? 

A.  It  was  about  2,440,000,  as  near  as  I can  recollect. 

Q.  How  much  of  that  quantity  was  in  actual  grain,  and  how  much 
in  certifi(;ates  ? 

A.  How  n>uch  was  actually  delivered  to  us  ? 

Q.  Yes  ? 

A.  I should  say  about  1,600,000. 

Q.  Is  it  true  that  you  sold  for  export  corn  at  eighty-five  cents  a 
bushel  ? 

A.  Yes,  sir. 

Q.  What  quantity  did  you  sell  ? 

A.  Well,  I cannot  give  you  that;  I don’t  know  as  to  the  price  ; 
somewheres  in  the  neighborhood  of  that  j^rice  — all  the  way  from 
eighty- three  to  ninety  cents,  I should  say. 

Q.  And  for  home  consumption  you  charged  the  price  of  $1.10  ? 

A.  No,  sir;  the  same  price  for  home  consumption — anybody  that 
wanted  to  use  it  in  the  trade  ? 

Q.  Who  did  you  charge  $1.10  for  ? 

A.  That  was  to  the  gentleman  that  had  sold  it  and  hadn’t  got  ic ; 
tliat  wanted  it  to  deliver  on  the  contract.  Any  man  that  wanted  to 
buy  any  grain  to  use,  to  go  into  consumption,  that  is  to  be  fed,  he  could 
have  it  below  the  prices  that  had  been  ruling  as  an  average  price  for 
thirty  days  before. 

I5y  Senator  IBiowning  : 

(2.  What  was  that  ? 

A.  Jn  the  neighborhood  of  eighty  to  eighty-five  cents  ; that  is  for 
actual  consumption,  so  that  it  should  not  interfere  in  any  way  with 
people  Unit  wanted  to  oat  it. 


607 


By  Senator  Boyd  : 

Q.  And  your  settlements  with  persons  from  whom  you  had  pur- 
chased were  made  at  $1.10  ? 

A.  All  the  way  from  $1  to  $1.10. 

Q.  What  quantity  did  that  represent  ? 

A.  Well,  my  impression  is  something  like  600,000  bushels,  in  that 
neighborhood. 

Q.  Did  those  transactions  extend  to  many  other  persons  — firms  i 

A.  Oh,  quite  a number,  yes. 

Q.  Who  were  the  chief  ones  ? 

A.  I cannot  tell  you;  no  large  amount  to  any  one  firm;  very  con-- 
siderable  to  “ blasted  Britishers  ” that  had  been  selling  it  short. 

By  Senator  Browning  : 

Q.  To  whom  ? 

A.  People  living  on  the  other  side  of  the  water,  in  London  and 
Liverpool  and  Belgium,  I believe. 

By  Senator  Boyd  : 

Q.  Did  you  purchase  grain  on  the  other  side  ? 

A.  No,  there  has  got  to  be  a very  large  amount  of  speculation  on 
the  other  side,  sending  orders  here  to  parties ; this  I think  was  very 
largely  that  character  of  transaction. 

Q.  Have  the  difficulties  arising  from  that  corner  been  all  settled  up  ? 

A.  I think  they  have,  with  the  exception  of  one  case  which  is  now 
being  tried,  which  involves  a case  where  I claim  to  have  sold  grain  to 
go  out  of  port  and  not  come  back,  and  it  actually  did  come  back  to 
the  extent  of  140,000  bushels. 

Q.  What  effect  had  that  corner  upon  the  commerce  of  this  city  ? 

A.  It  increased  the  earnings  of  the  railroads  running  to  New  York 
very  considerable,  I should  judge.  It  brought  in  a very  large  amount 
of  corn  by  rail  that  would  not  have  come  otherwise. 

Q.  What  effect  had  it  upon  ordinary  dealers  ? 

A.  None  at  all ; I supplied  them  at  prices  lower  than  had  been  the 
average  prices  for  thirty  days  prior  ; the  poor  man  did  not  suffer. 

Q.  Are  such  transactions  frequent  in  your  business  ? 

A.  No,  sir. 

Q.  Was  there  any  other  such  conducted  by  your  firm  ? 

A.  No,  I do  not  know  of  any  of  this  exact  character. 

Q.  Are  you  familiar  with  the  Keene  corner? 

A.  Yes,  sir. 

Q.  You  were  engaged  in  it? 


008 


A.  I was  a partner  of  Jesse  Hoyt  & Co.  at  that  time  when  they  were 
doing  some  work  in  connection  with  it. 

Q.  What  effect  had  that  corner  upon  the  public  welfare  ? 

A.  Well  it  resulted  eventually  in  getting  very  cheap  bread  for  the 
general  public  at  the  end. 

Q.  But  while  the  corner  was  in  operation  what  was  the  effect  ? 

A.  Well,  prices  ruled  high  during  that  season ; but  they  ruled 
higher  the  next  season  without  any  corner. 

Q.  That  was  owing  to  the  shortness  of  the  crop,  was  it  not? 

A.  Well,  I don’t  think  the  crop  was  materially  shorter  than  the 
year  before  ; I don’t  think  there  was  much  difference  in  the  condition 
of  the  crops  in  the  two  years. 

Q.  lias  the  Produce  Exchange  any  rules  to  prevent  corners  ? 

A.  I think  not,  sir. 

Q.  About  how  frequently  within  the  past  year  have  corners  been 
made  in  the  Produce  Exchange  ? 

A.  Well,  I object  to  the  use  of  the  word  ‘‘corners,”  except  in  the 
common  acceptation  of  the  word. 

Q.  Tliat  is  what  I mean  ? 

A.  I think  that  there  was  supposed  to  be  a short  interest  in  the 
market  here  in  the  month  of  June,  which  I think  resulted  in  parties 
receiving  the  grain  that  they  bought. 

Q.  What  grain  was  that  ? 

A.  That  was  wheat.. 

Q,  Did  any  bankruptcy  result  from  that  ? 

A.  Not  that  I know  of. 

Q.  Do  you  know  of  any  bankruptcies  that  have  resulted  from  the 
recent  corn  corner  ? 

A.  No,  sir. 

Q.  Will  you  explain  to  the  committee  why  it  was  that  you  insisted 
upon  settlements  at  $1.10  when  you  sold  the  actual  grain  for  eighty- 
five  cents  ? 

A.  The  reason  was  that  I intended  to  make  a difference  between  the 
party  that  wanted  to  use  the  property  for  food,  and  the  party  that  had 
undertaken  to  sell  down  my  goods  after  1 had  bought  them  and  make 
me  take  a low  price  for  them.  I intended  to  make  them  pay  a big  price 
for  them.  ' 

Q.  Under  what  law  or  regulation  did  you  enforce  this  price  upon 
such  persons  ? 

A.  fi’here  was  no  objection  made  to  the  settlement  except  in  one 
case.  Dealing  as  men  do  liere  in  New  York,  if  a man  makes  a con- 
tract to  deliver  property,  he  must  eitlier  pay  or  deliver  it,  one  of  the 
two. 


GOO 

r 

Q.  Was  that  done  in  accordance  with  the  rules  of  the  Produce  Ex- 
change ? 

A.  The  rules  of  the  Produce  Exchange  recognize  the  fact  that  a 
man  who  sells  property  must  deliver  it.  If  he  cannot  deliver  it  by 
getting  it  from  any  one  else,  he  can  get  it  by  buying  of  the  party  that 
he  sold  to. 

Q.  Is  that  so  in  all  transactions  ? 

A.  Yes,  sir;  it  is  a recognized  fact  that  if  a man  makes  a contract 
to  deliver  property,  he  must  do  it. 

Q.  Is  the  property  on  contracts  made  in  the  Produce  Exchange  de- 
livered in  all  instances  ? 

A.  In  all  instances  delivered  ? 

Q.  Yes. 

A.  No,  sir ; I say  that  if  I have  sold  grain  to  you  and  you  buy  it  of 
me,  that  makes  a delivery. 

Q.  What  Avas  the  nature  of  that  contract  with  these  people  with 
whom  you  compelled  such  settlements  ? 

A.  The  contract  was  that  they  signed  a contract  agreeing  to  deliver 
me  so  many  bushels  of  corn  at  such  a price. 

Q.  What  price  ? 

A.  Well  at  various  prices. 

Q.  I speak  now  of  these  people  that  you  made  settle  at  $1.10  ? , 

A.  Some  of  it  was  at  prices  all  the  way  from  $1.09  1-2  down  to  below 
seventy  cents. 

Q.  Now  take  the  people  that  you  purchased  from  at  seventy  cents, 
did  you  make  them  pay  $1.10  ? 

A.  I cannot  tell  you  that  because  I do  not  look  after  the  details  ; I 
don’t  know  whether  there  were  any  contracts  at  seventy  cents  unset- 
tled ; I know  that  we  bought  corn  all  the  way  from  eighty-six  to  a 
trifle  beloAV  seventy  and  all  the  way  back  to  $1.09  ; I don’t  know  what 
actual  deliveries  were  made  or  actual  settlements. 

Q.  Take  one  of  the  persons  with  whom  you  settled  at  $1.10 ; did 
your  original  contract  with  that  person  provide  for  his  selling  you  corn 
at  $1.10  ? 

A.  Oh,  no ; that  is  not  what  I mean  to  be  understood ; they  agreed 
to  sell  all  the  Avay  down  from  July  to  November  and  into  November  — 
to  deliver  me  8,000  bushels  of  corn  at'  the  price  agreed  upon  when  the 
transaction  was  made  — various  prices  running  along. 

Q.  Take  one  person  for  instance;  pick  out  one  person  that  you 
compelled  to  settle  at  $1.10  ; give  us  an  instance  and  state  what  the 
terms  of  your  original  contract  were  with  such  persons  ? 

77 


610 


A.  I cannot  give  you  that,  because  I do  not  know  what  contracts 
were  setttled  or  on  what  contracts  they  delivered  ; I will  illustrate  it  ; 
on  the  first  day  of  August,  for  instance,  I bought  of  Joliu  Doe  8,000 
bushels  of  corn  for  delivery  at  his  option  during  themontli  of  Novem- 
ber at  eighty  cents  a bushel  ; he  not  being  able  to  get  tlie  corn  to 
deliver  buys  the  corn  of  me  at  $1.10  ; that  closes  the  transaction. 

Q.  That  is  the  way  it  is  done? 

A.  That  is  the  way  it  is  done. 

Q.  You  don’t  make  him  deliver  the  corn  ? 

A.  Oh,  no  ; 1 sell  him  the  corn  and  that  makes  a delivery  ; I sell  a 
man  on  the  first  of  August  8,000  bushels  of  corn  for  delivery  to  him 
during  the  month  of  November  at  eiglity  cents  a l^ushel ; up  to  the 
29th  of  November  he  is  unable  to  get  the  corn  to  deliver  on  his  con- 
tract; he  comes  to  me  and  says,  ‘‘lhave  not  got  tha(  load  of  corn; 
what  is  tlie  price  ? ” A dollar  and  ten  ; ” he  pays  me  the  difference 
between  eighty  cents  and  a dollar  and  ten. 

Q.  By  what  rule  is  such  a contract  as  that  enforced  ? 

A.  The  general  rule  that  if  a man  sells  property  he  shall  deliver  it ; 
if  he  buys  it  of  me  who  has  it,  then  that  makes  a delivery;  I have  got 
the  corn  ; I do  not  go  through  the  formality  of  taking  out  that  8,000 
bushels  of  corn  and  deliver  it  to  him,  and  he  deliver  it  back  to  me  ; we 
just  settle. 

Q.  Supposing  he  failed  to  deliver  the  corn  and  refused  to  buy  from 
you  at  that  price,  what  would  the  result  be  ? 

A.  Under  our  rule  the  standing  committee  on  grain  buy  in  any 
such  default  for  the  account  of  the  party  to  whom  it  was  made  — for 
my  account,  in  this  instance  — and  the  price  that  they  pay  is  the  set- 
tling price  for  all  outstanding  contracts.  That  was  done  in  the  case 
of  one  party,  and  only  one. 

By  Senator  Browning  : 

Q.  What  price  did  the  committee  buy  it  in  at  ? 

A.  They  bought  it  in  at  $1.10;  It  was  the  open  market  that  had 
been  existing  for  eight  or  ten  days.  I know  one  firm  that  sold  100,- 
000  bushels  of  corn  at  $1.08  and  $1.09.  It  was  not,  in  the  popular  ac- 
ceptation of  the  term,  a corner  ; it  was  the  open  market  ; tliere  was 
plenty  of  corn  here  ; if  I had  been  the  only  party  that  had  had  corn, 
and  nobody  could  get  any  corn  except  me,  that  would  be  what  you 
c:dl  a corner  and  a close  corner,  but  the  price  advanced  rapidly,  and 
it  brought  corn  from  all  sections  ; everybody  had  corn  here  to  sell  — 
most  of  the  receivers. 

(2-  Do  you  know  what  the  produce  of  the  country  was  during  (ho 
[)re8cnt  year,  the  amount  of  corn  produced? 


611 


A.  It  was  estimated,  I think,  at  about  twelve  hundred  millions. 

Q.  I have  forgotten  the  amount  you  said  your  purchases  amounted 
to  ? 

A.  Two  millions  and  a half. 

Q.  Tlien  your  corner  was  a corner  of  the  speculators  more  than  a 
corner  in  the  article  ? 

A.  I don’t  call  it  a corner  ; I believed  in  the  value  of  the  goods.  I 
actually  sold  all  my  corn  that  I had  bought  for  November,  at  a profit  for 
December,  so  that  the  corn  that  I had  left  over  I sold  at  a profit  for 
December  delivery  ; then,  early  in  December  I delivered  out  what  I 
had  left  over  to  the  market. 

By  Senator  Browning  : 

Q.  At  what  price  ? 

A.  All  the  way  from  81  1-2  to  85  7-8. 

Q.  Those  were  the  prices  quoted  ? 

A.  I sold  it  at  different  times  running  from  81 1-2  cents  to  about  86. 

Q,  If  these  persons  to  whom  you  sold  corn  to  enable  them  to  fulfill 
their  contracts  at  $1.10  a bushel,  had  gone  elsewhere  and  purchased 
the  corn  and  delivered  it  to  you  — 

A.  We  should  have  taken  it  and  paid  them  the  contract  price. 
There  is  no  rule  which  will  prevent  a man  that  buys  property,  believ- 
ing that  it  is  going  up,  but  it  goes  down  — when  a man  comes  and 
says,  “ here  is  your  property  that  you  bought  of  me  at  a dollar  a 
bushel,  and  I want  you  to  take  it  and  pay  for  it  ” there  is  no  law,  as 
I understand  it,  of  the  Exchange  that,  after  the  market  has  gone 
down  to  sixty  cents  a bushel,  when  he  thought  the  market  was  going 
up,  permits  him  to  say  I will  pay  you  ten  cents  a bushel ; that  is  ten 
cents  more  than  it  is  worth  now.”  They  do  not  do  that.  I contend 
that  the  man  who  will  stand  up  and  maintain  prices  and  values  when 
people  that  have  not  got  property  undertake  to  knock  down  the  value 
of  his  goods  should  have  the  sympathy  and  the  support  of  the.  public. 
In  other  words,  a man  that  sells  millions  of  wind  — millions  of  noth- 
ing— needs  a great  deal  of  courage,  because  you  Ciinnot  get  out  of 
your  contract.  ^There  is  another  question  in  regard  to  these  options 
that  I would  like  to  explain  as  one  of  the  good  features  about  it ; that 
is  the  aid  it  gives  to  all  dealers  in  grain  in  marketing  their  goods  with 
scarcely  any  risk.  You  take  the  buyers  of  grain  out  on  all  the  west- 
ern railroads  at  the  stations  — there  are  buyers  on  every  line  of  rail- 
road who  are  in  close  communications  with  the  great  markets  at  Chi- 
cago, New  York  and  Baltimore,  and  they  go  to  the  farmer  and  offer 
the  farmer  a certain  price  for  his  wheat,  corn  or  oats  ; they  have  got 


612 


a telegram  showing  that  they  can  sell  that  either  for  that  montli’s  de- 
livery or  the  next  month’s  delivery  in  the  central  market.  They  are 
able  to  say  at  once  to  the  farmer  ‘‘1  will  give  you  so  much  for  your 
goods,”  and  telegraph  on,  I have  bought  this  quantity,”  and  to  sell 
against  this  for  the  next  month.  It  enables  the  moving  of  the  pro- 
duce without  those  risks  that  used  to  bankrupt  people.  In  tliat  regard 
it  is  so  important  that  it  would  hardly  do  to  do  away  with  it.  The 
same  Is  true  in  regard  to  the  provision  trade  and  the  packers.  For 
instance  the  receipts  have  been  for  the  past  few  days  at  Chicago  in  all 
50,000  hogs  say.  There  is  no  packer  that  wants  to  take  a risk  and 
buy  hogs  unless  he  can  market  his  goods  for  some  other  time.  They 
sell  their  bacon  or  lard  or  pork  for  that  montli’s  or  the  next  month’s 
delivery  or  the  best  delivery  — the  delivery  that  will  pay  them  the 
most  money.  In  that  way  it  greatly  facilitates  legitimate  business. 

Q.  What  is  your  opinion  about  the  man  who  sells  for  future  delivery 
what  he  has  not  got  ? 

A.  Well  I think  I have  expressed  that;  that  is  if  any  enactment 
can  be  made  to  prevent  a man  from  selling  something  that  he  has  not 
got,  to  the  damage  of  people  who  have  bought  property  in  good  faith, 
believing  it  to  be  of  a certain  value  and  then  going  to  work  and  sell- 
ing that  property  down  — if  you  can  stop  that,  then  you  will  do 
some  good.  I understand  there  is  such  a law  introduced  in  Congress 
now,  attached  to  the  bankrupt  law. 

Q.  It  has  been  suggested  to  me  to  ask  you  if  it  would  do  to  make  a 
short  sale  an  act  of  gambling  ? 

A.  Well,  I confess  I do  not  see  the  question  can  be  met  by  leg- 
islation. I noticed  in  the  paper  a day  or  two  ago  that  Senator  Mor- 
gan, I think  of  Alabama,  attached  it  to  the  bankrupt  law  making  it 
an  evidence  of  involuntary  bankruptcy  for  a man  to  sell  provisions  that 
he  (lid  not  have,  or  his  agents  did  not  have.  I don’t  know  whether 
such  a law  as  that  would  be  constitutional.  It  would  certainly  strike 
at  the  root  of  the  evil.  But  it  seems  to  me  that  the  man  that  stands 
up  and  protects  his  property  against  the  assaults  of  people  that  have 
not  got  it,  knowing  that  if  they  should  by  chance  get  it,  he  has  got  to 
take  it  or  provide  money  to  pay  for  it  — he  is  the  man  who  ought  to 
be  protected.  As  I said  before,  these  future  sales  based  upon  the  value 
of  the  early  movement  of  the  crop  adds  ten  to  one  hundred  millions 
of  dollars  to  the  value  of  the  property  going  out  of  the  country. 

Q.  What  is  your  idea  in  regard  to  limiting  the  amount  of  the  loss 
to  a certain  rate  ])er  cent  in  all  such  transactions  ? 

A.  Well,  I have  very  radical  ideas  in  regard  to  a man  living  up  to 
liis  contract.  I believe  if  I sell  you  a house  and  lot  deliverable  next 
June,  that  I have  got  to  deliver  that  to  you  or  pay  the  damage.  I 


613 


believe  if  I sell  corn  or  wheat  deliverable  next  June,  I have  got  to 
deliver  it  or  pay  the  damage.  It  is  not  necessary  for  me  to  make  the 
obligation  unless  I expect  to  carry  it  out ; therefore  I hold  that  the 
man  that  makes  a contract  must  fulfill  his  contract.  There  can  never 
be  any  short  interest  to  it  unless  a man  sells  sometliing  he  has  not  got- 
If  he  does,  and  fails  to  get  it,  he  must  pay  the  damage.  My  ideas  are 
extremely  radical  on  that  point.  And  I think  that  is  the  commercial 
view  of  the  question  as  a rule  ; men  must  fulfill  their  contracts  if  they 
make  them. 

Q.  Is  there  any  other  information  you  would  like  to  give  ? 

A.  I do  not  think  of  any  thing  else.  I have  just  noted  down  three 
or  four  things  coming  up  in  the  car  — three  or  four  other  points.  I 
have  seen  in^some  of  these  proceedings  some  talk  about  high  prices 
and  all  that  sort  of  thing.  I have  a very  radical  opinion  with  regard 
to  the  question  of  prices  in  grain  as  affecting  the  community.  I don’t 
think  that  ‘‘cheap  bread,”  in  the  general  acceptation  of  the  term,  is 
necessarily  a God-send.  I believe  that  prices  which  show  liberal  and 
remunerative  profits  to  producers  will  reflect  itself  in  the  value  of 
labor,  in  the  value  of  all  manufactures,  so  that  indirectly  the  poor 
man  reaps  a very  much  greater  benefit  by  high  prices  than  he  does 
by  low.  But  there  is  such  a thing  as  producing  so  much  of  an  article 
as  to  make  it  a glut  in  the  market,  and  no  one  will  derive  any  benefit 
from  it.  I only  throw  that  out  as  meeting  that  point  that  I see  has 
been  raised  here. 

Q.  Then  you  do  not  think  that  cheap  bread  tends  to  the  benefit  of 
the  public  ? 

A.  I think  that  when  you  go  back  you  will  find  that  the  agricultural 
interests  are  the  basis  of  the  prosperity  of  the  country.  If  the  farmer 
reaps  a rich  harvest  and  good  prices,  his  money  goes  into  every  sort  of 
merchandise  in  the  country  ; his  money  is  spent,  and  it  goes  into  all 
circles,  and  it  makes  that  prosperity  which  we  have  experienced  within 
a few  years,  while  moderate  prices  would  not. 

•Q.  Taking  that  view  of  it,  do  you  not  think  that  some  compensa- 
tion in  the  way  of  extra  remuneration  should  be  given  to  people  who 
have  to  pay  increased  prices  ? Would  not  that  affect  wages  — affect 
the  value  of  labor  ? 

A.  Yes,  it  does.  When  the  prices  of  commodities  are  high  and 
business  is  prosperous,  then  labor  receives  its  share  of  the  reward  ; 
when  prices  are  low,  and  no  one  can  afford  to  employ  labor  and  manu- 
factures are  shut  down,  the  poor  man  suffers. 

Q.  In  a case  of  that  kind  cheap  bread  — 

A.  Would  be  very  desirable  of  course  ; but  I ^ speaking  on  the 


614 


general  principle  that  fair  values  for  all  articles  of  bread-stuff  mean 
general  prosperity  to  the  country.  * 

Q.  Fair  values  ? 

A.  Yes,  but  not  cheap ; not  down  to  a price  where  no  one  can  make 
any  money  out  of  it. 

Q.  How  would  what  you  call  fair  values  for  bread-stuffs  be  regulated  ? 

A.  It  is  only  within  a very  few  years  that  the  price  of  corn  — in  the 
neighborhood  of  a dollar  a bushel  for  corn  until  within  a very  few 
years  has  been  a reasonable  price  along  in  the  fall  of  the  year  ; it  is 
only  since  we  have  got  to  raising  enormous  crops  — I think  the  crops 
in  the  last  three  years  have  averaged  some  sixteen  hundred  millions  a 
year  — of  course  those  enormous  crops  made  very  cheap  corn;  but 
prior  to  those  years  when  your  crop  had  only  reached  sevep  or  eight  or 
nine  hundred  millions,  our -prices  were,  as  a rule,  very  much  higher 
than  they  have  been  for  the  last  few  years  ; this  last  year  corn  has 
ruled  very  high  by  reason  of  the  poor  crop  last  year. 

Q.  Wouldn’t  fair  prices  depend  upon  the  supply  divested  of  the 
enhanced  cost  added  to  it  by  speculation  ? 

A.  Well  fair  prices  would  mean  such  prices  as  would  pay  the  pro- 
ducer a liberal  profit  for  his  labor  and  that  would  be  regulated  by  the 
cost  of  his  labor. 

By  Senator  Browning  i 

Q.  You  refer  to  some  trouble  growing  out  of  the  price  obtained  from 
the  settlement  at  11.10  ? 

A.  There  was  with  one  party  ; under  a clause  in  our  rules  the  grain 
committee  are  directed  in  case  of  default  to  buy  in  the  grain  for  ac- 
count of  the  party  to  whom  it  is  coming  — my  account  in  this  case  — 
and  the  prices  they  should  pay  are  the  settling  prices  for  all  contracts. 

Q.  Did  that  person  then  threaten  or  has  he  since  threatened  to  go 
into  court  ? 

A.  I have  not  heard  of  it,  sir  ; there  is  a clause  in  this  rule  which 
directs  that  they  shall  not  pay  any  exorbitant  price  based  upon 
manipulation  ; this  party  who  made  the  default  claimed  that  he  was 
acting  for  a party  in  Maine,  and  he  contended  that  this  was  a manipu- 
lation of  the  market  and  the  price  was  exorbitant ; the  grain  com- 
mittee, however,  bought  it  in  notwithstanding  his  protest,  and  paid 
$1.10  for  it;  the  case  was  then  referred  to  the  grain  committee,  and 
they  again  decided, after  taking  evidence  as  to  the  market  value  of  the 
corn,  for  some  weeks  before,  that  $1 .10  was  a fair  price;  the  party 
then  appealed  to  the  board  of  managers,  and  the  board  of  managers 
eustaincd  me.  • 

Q.  What  methods  were  adopted  to  run  the  price  up  to  $1.10  ? 


615 


A.  The  demand  ; parties  came  in  and  bid  the  market  up. 

Q.  Was  that  formed  by  a pool  ? 

A.  There  was  no  pool  in  it  at  all.  ♦ 

Q.  No  pool  ? 

A.  No,  sir. 

Q.  Are  you  interested  in  the  elevator  ? 

A.  Which  elevator  ? 

Q.  Over  across  the  other  side  of  the  river? 

A.  I have  no  interest  there. 

Q.  Is  that  a brother  of  yours  ? 

A.  That  is  a brother. 

William  iS.  Miller,  being  duly  sworn,  was  then  interrogated  and  tes- 
tified as  follows : 

By  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  New  York. 

Q.  What  is  your  business  ? 

A.  Dealer  [and  broker  in  grain  futures. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  I have  been  a member  of  the  Produce  Exchange  about  thirteen 
years,  and  more  or  less  connected  with  grain  most  of  the  time,  but  I 
have  been  dealing  exclusively  in  grain  futures  about  five  years — since 
we  commenced  dealing  in  those  futures  on  our  Exchange. 

Q.  What  is  your  opinion  With  reference  to  the  whole  system  of  mak- 
ing corners  and  dealing  in  futures  with  reference  to  its  effect  upon 
commerce  and  its  influence  upon  the  public  welfare  ? 

A.  Well,  my  experience  has  generally  been  that  corners  were  pro- 
duced as  much  by  the  people  who  went  short  of  grain  as  by  those  who 
undertook  to  manipulate  the  price  to  a certain  point.  The  fact  of 
dealing  in  futures  does  not  seem  to  me  to  be  attributable  to  the  pro- 
duction of  corners,  as  corners  of  the  very  worst  kind  were  produced 
long  before  there  was  any  dealing  in  futures  on  our  Exchange.  For 
instance,  I think  that  during  or  about  the  time  of  the  breaking  out  of 
the  Russian  war,  some  five  years  ago,  when  we  had  no  dealing  in  fu- 
tures on  our  Exchange,  and  nothing  except  dealing  in  casli  grain,  the 
price  of  grain  advanced  in  a very  short  time  fifty  or  sixty  cents  a 
bushel,  and  I found  by  examined  records  of  twenty-five  or  thirty  years 
ago  — commercial  records  — the  Journal  of  Commerce  — when  we  had 
no  dealing  in  futures  anywhere  in  the  country,  that  the  advance  of 
grain  was  more  rapid,  and  worse  corners  were  produced  without  any 
dealing  in  futures  than  has  ever  been  known  since.  I think  that  the 


records  show  that  grain  sometimes  advanced  fifteen  or  twenty  cents  a 
day,  because  then  the  grain  was  only  spot  cash  grain  in  the  liauds  of 
a few  people,  andi,  consequently,  the  price  would  jump  up  five  or  ten 
cents  in  a few  minutes;  whereas,  at  the  present  time  while  we  are 
dealing  in  futures,  buyers  are  able  to  go  into  the  market  and  buy  large 
amounts  without  advancing  the  market,  according  to  the  temper  of 
the  market  at  the  time;  if  there  happens  to  be  a bearish  feeling, 
orders  for  millions  of  bushels  can  he  filled  without  jiroducing  any  rise 
in  the  market  ; this  is  by  aid  of  futures;  formerly,  when  there  were  no 
futures,  a few  hundred  bushels  could  not  be  bought  without  producing 
a marked  rise  in  the  market  and  a worse  corner  than  has  ever  been 
known  while  trading  in  futures. 

By  Senator  Browi^ij^g  : 

Q.  You  do  business ^at  17  Moore  street? 

A.  Yes,  sir. 

Q.  Are  you  a member  of  the  Produce  Exchange  ? 

A.  Y’’es,  sir. 

Q.  Do  you  do  business  on  the  floor  ? 

A.  Yes,  sir. 

Q.  A brokerage  business? 

A.  Yes,  sir. 

Q.  For  whom  ? 

A W.  S.  Miller. 

Q.  For  whom  do  you  do  business  ? 

A.  I do  business  for  customers  that  I have  who  are  trading  in  grain. 
Some  of  them  are  exporters  ; most  of  them  are  members  of  the  ex- 
change, and  are  buying  and  selling  grain  for  certain  reasons.  Some 
people  are  selling  grain  they  have  bought  in  the  West  on  this  market, 
some  people  have  got  grain  sold  to  Europe  and  they  are  buying  here 
to  cover  their  sales  in  Europe,  and  some  are  buying  on  speculation. 

Q.  Do  you  buy  and  sell  ? 

A.  Yes,  sir.  Most  of  my  customers  are  men  who  will  make  up 
their  minds  perhaps  to-day,  that  wheat  is  very  cheap  and  that  it  is 
safe  to  buy  it,  and  that  it  is  likely  to  go  up  a few  cents,  and  they  will 
give  me  orders  and  I will  go  and  buy  it.  They  deposit  with  me  a 
margin  covering  the  possible  decline,  to  make  me  safe  against  any 
decline.  I fill  their  orders.  Grain  goes  up,  and  I sell  out  what  I 
bought  for  them  on  their  orders,  pay  them  over  the  profit,  and  charge 
them  a commission  for  my  business. 

Q.  What  is  your  commission  ? 

A.  The  commission  varies.  It  is  all  the  way  from  a quarter  of  a 
cent  a bushel  for  buying  and  selling,  to  a sixteenth  for  buying  and 


I 


Gi7 

selling.  It  depends  upon  who  the  customer  is,  what  amount  of  grain 
he  is  d.ealing  in,  and  how  safe  he  is  to  deal  for. 

Q.  What  is  the  largest  lot  you  have  sold  or  bought  this  last  year  ? 

A.  Well,  our  market  is  not  a very  large  dealing  market  compared 
to  Chicago.  I think  perhaps  I have  sold  40  or  50  boat-loads  of  grain 
traded  in  them  a day. 

Q.  Do  you  sell  on  the  quotations  reported  at  the  New  York  Ex- 
change or  the  Chicago  market  ? 

A.  On  the  New  York  Exchange,  never  on  the  Chicago  market. 

Q.  What  is  the  smallest  lot  you  contract  to  buy  or  deliver  ? 

A.  3,000  bushels. 

Q.  What  is  the  smallest  margin  that  you  have  ever  accepted  for  a 
transaction  ? 

A.  Well,  it  depends  upon  the  party  for  whom  I am  trading.  There 
are  men  whose  financial  standing  is  such  that  I do  not  require  any 
margin  ; then  there  are  others  that  I would  ordinarily  want  about 
five  cents  a bushel  margin. 

Q.  Have  you  never  taken  any  thing  less  than  that? 

A.  Oh,  my,  yes.  As  T say,  there  are  people  whose  financial  stand- 
ing is  such  that  I feel  at  liberty  to  trade  for  them  without  any  mar- 
gin. Members  of  our  Exchange  come  to  me  and  say.  Sell  eight 
ten  boat-loads  of  wheat  for  me,”  and  I won’t  want  any  margin  unless 
the  market  should  go  against  me. 

Q.  I am  referring  more  particularly  now  to  people  you  have  ac- 
cepted margins  from,  I would  like  to  know  the  smallest  amount  of 
money  you  ever  accepted  as  a margin  ? 

A.  I suppose,  perhaps,  $100  on  a boat-load  of  grain  is  accepted  as  a 
margin,  with  the  understanding  that  I would  sell  the  man  out  as 
soon  as  that  $100  was  gone,  unless  he  gave  me  some  more  money. 

Q.  Have  you  never  accepted  any  thing  less  than  $100  ? 

A.  I don’t  recollect  any  thing  less  than  that.  Any  thing  less  than 
that  would  be  about  the  same  as  nothing  at  all. 

Q.  Haven’t  you  accepted  from  people  on  the  Exchange,  and  con- 
nected with  the  floor  of  the  Exchange,  as  low  as  $10  ? 

A.  No,  that  would  be  less  than  an  eighth  of,  a cent  a bushel. 

Q.  Have  you  never  accepted  a retainer  or  any  thing  you  please  to 
call  it,  as  low  as  $10  and  made  a return  on  the  same  day  or  the  next 
day  ? 

A.  I do  not  recollect  it. 

Q.  You  would  be  apt  to  if  you  had  done  it  ? 

' A.  I think  so. 

Q.  Have  you  ever  accepted  margins  from  officials  or  people  con- 
nected with  the  Exchange  employed  there  ? 

78 


1 


618 

A.  No,  I have  never  done  any  business  wirh  people  connected  or 
employed  in  the  Exchange.  My  trading  in  grain  has  always  been  for 
the  account  of  people  who  were  merchants,  dealers  and  specuialurs. 

Q.  And  you  have  never  accepted  any  retainer  or  any  amount  of 
money  from — 

A.  Not  from  officials. 

Q.  From  clerks,  messengers  or  others  connected  with  the  Exchange  ? 

A.  No.  The  dealing  in  futures  I would  like  to  say  has  been  an 
advantage  to  the  trading  in  grain  on  account  of  the  opportunity  that 
is  offered  to  grain  dealers  in  the  trade  in  the  West,  to  sell  their  sup- 
plies before  they  arrive  here.  Formerly  when  we  had  no  dealing  in 
futures,  these  men  would  consign  tlieir  property  here  when  the  market 
W'as  $1.10  for  wheat  and  when  their  grain  got  here,  it  would  sell  for 
$1.00  a bushel.  Now  a dealer  in  the  West  can  sell  liis  grain  to  arrive 
and  know  just  what  he  is  going  to  get  for  it.  In  other  words,  he 
had  to  be  a speculator  formerly  without  trading  in  futures  ; he  had  to 
be  a gambler;  he  had  to  take  the  chances  on  the  market.  Now  he 
doesn’t  have  to  take  any  such  chances.  In  the  same  way  it  is  an 
advantage  to  the  exporters.  When  they  order  their  vessels  to  this 
port  they  can  buy  grain  in  advance.  So  that  the  idea  of  people  who 
claim  that  the  cornering  grain  makes  it  difficult  for  them  to  load  their 
vessels  and  they  have  to  send  their  vessels  away  seems  to  me  hardly 
tenable.  People  that  ordered  their  vessels  here  could  have  bought 
grain  when  the  vessel  started.  There  is  much  dealing  in  futures  ol 
that  kind  for  export. 

By  Senator  Boyd  : 

Q.  Suppose  they  had  bought  something  from  people  who  had  not 
any  thing  to  sell  ? 

A.  That  would  not  make  any  difference.  Then  they  have  got  to 
settle  with  the  exporters  who  have  bought  that  grain  to  such  an  ex- 
tent as  to  pay  the  damages  for  bringing  that  vessel  here  and  sending  it 
away  in  ballast. 

Q.  Is  that  the  rule  of  the  Produce  Exchange  ? 

A.  Yes,  sir ; according  to  the  rule  they  have  got  to  pay  the  dam- 
age, as  Mr.  Ilazeltine  just  testified.  The  corner  that  Mr.  Hazeltine 
has  been  describing  to  you  was  one  that  was  produced  perhaps  by 
manipulation  somewhat  but  we  have  had  here  in  New  York  perfectly 
natural  corners  where  grain  cornered  itself — where  the  stock  of  grain 
was  small  and  a large  quantity  bought  for  export  when  the  end  of  the 
month  came — the  time  expired  for  it  to  go  into  the  vessels  for  export, 
the  grain  was  not  here,  and  without  any  manipulation  grain  has  gone 


619 


up  twenty  cents  a bushel  and  over  in  two  or  three  days  and  been  settled 
for  by  the  short  sellers  and  exporters. 

Q.  You  say  this  corner  in  corn  was  manipulated.  Do  you  under- 
stand how  it  was  done  ? 

A.  1 imagine  so. 

Q.  You  are  not  familiar  with  the  operation  ? 

A.  No,  sir;  I rather  avoided  trading  in  November  corn  on  account 
of  its  being  in  a very  critical  condition. 

Spencer  D.  C.  Van  Bockelen,  being  duly  sworn,  was  then  interrogated 
and  testified  as  follows: 

By  Senator  Boyd  ■ 

Q.  Where  do  you  reside  ? 

A.  In  the  city  of  Brooklyn. 

Q.  What  is  your  business  ? 

A.  I am  the  manager  of  the  Public  Produce  Exchange,  63  Broadway. 
Q.  How  long  have  you  been  in  that  business  ? 

A.  I have  been  in  that  business  for  the  last  six  months. 

Q.  Are  you  a member  of  any  firm  ? 

A.  Not  at  present. 

Q.  What  is  your  opinion  concerning  the  whole  system  of  making 
corners  and  dealing  in  futures  with  reference  to  its  effect  upon  com- 
merce and  upon  the  public  welfare  ? 

A.  From  what  little  experience  I have  hadfin  them,  I should  say  that 
they  were  not  prejudicial  ? 

By  Senator  Browning  : 

Q.  Have  you  a copy  of  the  circular  that  you  recently  put  on  the 
street  ? 

A.  I have  not,  sir. 

Q.  You  are  an  incorporated  institution,  are  you  not? 

A.  Yes,  sir.  ^ 

Q.  Incorporated  by  this  State  ? , 

A.  Yes,  sir  ; by  the  State  of  New  York. 

Q,  Have  you  a copy  of  your  charter  with  you  ? 

A.  I have  not,  sir. 

Q.  Who  were  the  incorporators  ? 

A.  My  impression  is  that  the  incorporators  were  J.  E.  Barrow,  J. 
E.  Barrow,  Jr.,  and  D.  P.  Garrett.  . 

Q.  Is  that  all  ? 

A.  I think  that  is  all,  sir. 

Q.  What  is  the  full  title  of  your  Exchange  ? 


/ 


620 


A.  The  Public  Produce  Exchange. 

Q.  Are  you  incorporated  under  that  name  and  title  ? 

A.  That  is  my  impression,  sir. 

Q.  Can  you  come  here  on  Monday  and  bring  the  charter  with  you  ? 

A.  I can  if  I can  obtain  it.  I don’t  know  where  it  is. 

Q.  You  can  obtain  it  from  some  one? 

A.  Yes,  I presume  so. 

Q.  And  a copy  of  the  forms  used  by  you]^  Exchange  for  the  trans- 
action of  business,  such  as  contracts  and  agreements  to  deliver  or  buy? 

A.  Yes. 

H.  F.  Flagler,  being  duly  sworn,  was  then  interrogated  and  testi- 
fied as  follows  : 

By  Senator  Boyd: 

Q.  Where  do  you  reside  ? 

A.  In  the  city. 

Q.  What  is  your  business  ? 

A.  I am  secretary  of  the  Standard  Oil  Company. 

Q.  How  long  have  you  been  such  secretary  ? 

A.  Twelve  years. 

Q.  Are  you  familiar  with  all  the  transactions  of  the  company  ? 

A.  Why,  substantially  so,  yes. 

Q.  You  have  requested  to  appear  before  the  committee  and  the  com- 
mittee don’t  know  what  you  desire  to  testify  in  relation  to,  but  in  or- 
der to  lay  the  foundation  we  will  ask  the  general  question  : What  is 
your  opinion  with  regard  to  the  whole  system  of  making  corners  and 
dealing  in  futures  with  reference  to  its  effect  upon  commerce  and  its 
influence  upon  the  public  welfare  ? 

A.  Well,  sir,  it  would  be  a very  difficult  matter  for  me  to  express  an 
intelligent  opinion,  for  the  simple  reason  that  I have  nothing  what- 
ever to  do  with  transactions  of  the  kind  ; from  observation  extending 
over  a period  of  many  years  of  commercial  crises  that  have  come  over 
our  country,  and  the  general  manner  in  which  business  is  and  has  been 
transacted,  it  leads  me  to  think  that  the  evils  so-called  of  corners  have 
been  very  greatly  magnified  ; I believe  that  no  business  of  any  magni- 
tude can  be  transacted  without  the  privilege  of  selling  for  future  de- 
livery is  involved  ; that  I learned  when  I was  a country  merchant  deal- 
ing in  grain  ; a farmer  wanting  to  sell  his  crops  of  wheat  in  the  fall  ' 
found  himself  confronted  with  the  fact  that  his  seeding  must  be 
done,  and  other  work  must  be  done,  at  the  price  jierhaps  prevailing 
at  the  time  suited  to  him,  but  he  was  not  able  to  sjiare  the  time  to 


G21 


.haul  his  grain  to  market ; he,  however,  was  willing  to  contract  his 
grain  at  the  price  then  existing,  if  he  could  get  two  or  three  or  four 
weeks  for  delivery  ; that  is  an  illustration,  in  a small  way,  of  sales  for 
future  delivery,  and  of  course,  as  transactions  are  extended  and  in- 
crease in  magnitude,  it  is  the  same  principle,  differing  only  in  degree, 
not  in  kind  ; in  the  management  of  our  business  we  find  that  an  ex- 
porter has  an  order  for  a cargo  of  oil,  but  his  vessel  is  not  here  ; for 
some  reason  or  other,  his  correspondent  on  the  other  side  does  not  want 
that  cargo  of  oil  shipped  until  next  week  or  possibly  next  month  ; he 
wants  to  buy  his  oil,  he  is  willing  to  buy  it  at  the  market  price,  and  he 
says:  “I  don’t  want  to  receive  it  until  some  period  in  the  future ; ” 
that  is  one  of  the  features  for  selling  for  future  delivery ; without 
those  provisions  it  would  be  impossible  to  transact  a large  business ; if 
I may  be  pardoned  a moment  longer,  take  our  own  business  in  illus- 
tration. It  is  a very  ugly  business,  and  while  we  have  very  great  facili- 
ties in  the  port  of  New  York,  larger  perhaps  than  are  given  to  al- 
most any  one  else,  yet  we  find  ourselves  oftentimes  embarrassed 
because  with  a change  of  wind  we  have  no  vessels  arriving  here 
at  this  port  for  two  or  three  or  four  weeks ; then,  again,  we  will  get  a 
perfect  avalanche  of  them,  and  while,  as  I say,  we  have  enormous 
warehouse  facilities,  yet  we  find  ourselves  often  times  compelled  to  pay 
demurrage  on  vessels  because  of  our  inability  to  fill  them  as  they  ar- 
rive ; we  have  to  keep  our  machinery  running,  or  it  would  not  be  pos- 
sible to  transact  business  of  that  kind ; we  make  a sale  of  oil  deliv- 
erable next  month ; we  manipulate  the  oil  or  put  it  in  barrels,  or 
hold  it  in  tanks  ready  to  go  aboard  the  ship  whenever  it  arrives. 

By  Senator  Browning  : 

Q,  This  export  trade,  then,  involves  a very  large  expense  and  a large 
degree  of  risk,  doesn’t  it  ? 

A.  Oh,  no,  sir;  you  say  very  large  expense;”  in  what  way  do 
you  mean  ? 

Q.  I mean  it  entails  additional  expense  ; the  storing  it  in  ware- 
houses, etc.,  until  the  ships  arrive  ? 

A.  Oh,  to  be  sure  ; we  find  it  necessary  to  create  a large  amount  of 
plants  — expensive  warehouses  and  docks. 

Q.  This  expense  is  caused  by  this  foreign  shipment  — waiting  for 
vessels,  that  you  have  just  complained  of? 

A.  Do  not  understand  me  as  complaining ; I speak  of  it  as  one  of 
the  necessities  — the  vicissitudes  of  trade. 

Q.  I thought  you  referred  to  it  as  involving  an  outlay  ? 

A.  We  look  upon  it  as  an  absolute  necessity  to  do  business  ; our 
average  manufactures,  if  you  please,  are  from  45,000  to  50,000  barrels 


622 


a day  ; now  no  business  can  be  so  thoronglily  regular  tliat  you  ran  do 
on  Monday,  Tuesday,  Wednesday  and  Thursday,  and  so  on  each  day, 
each  day’s  work  ; yon  cannot  do  it;  a holiday  will  intervene, or  some- 
thing or  other  will  affect  you,  and  you  must  always  be  in  a position 
to  do  two  or  three  days’  work  in  one,  if  necessary. 

By  Senator  Boyd  : 

Q.  You  have  been  reciting  the  conditions  necessary  for  the  transac- 
tion of  legitimate  business  ; what  this  committee  wants  to  get  at  is, 
the  effect  upon  commerce  of  what  is  known  as  the  illegitimate  dealing 
in  futures;  for  instance,  people  selling  what  they  have  not  got,  and 
transactions  being  conducted  through  the  medium  of  certificates 
where  no  material  is  delivered  ; we  want  to  get  your  opinion  of  that  ? 

A.  My  opinion  on  the  morality  of  the  transaction  ? 

Q.  Yes. 

A.  I just  as  leave  play  penny  poker,  or  some  other  kind  of  poker, 
as  to  do  that  thing  ; as  far  as  the^morality  of  it  is  concerned,  I do  not 
see  any  difference. 

Q.  You  desired  to  state  something  to  the  committee;  will  you  be 
kind  enough  to  do  so  ? 

A.  Well,  I will  try  and  not  worry  the  committee  in  what  I have  to 
say  ; I wrote  you  a letter  asking  permission  to  come  here  and  testify  be- 
fore your  committee,  simply  because  my  attention  was  called  to  the  fact 
that  a gentleman  at  some  recent  meeting  of  the  committee,  in  illus- 
trating his  views,  had  brought  in  the  name  of  the  Standard  Oil  Com- 
pany, and  had  made  here,  under  oath,  a certain  statement.  The  clerk  of 
the  committee  has  kindly  furnished  me  with  a copy  of  the  statement 
made  by  the  witness,  and,  with  your  permission,  as  there  are  but  two 
or  three  sentences,  I will  read  them  ; prefacing  that,  however,  I want 
to  make  this  remark:  The  Standard  Oil  Company  is  a concern  about 
which  there  has  been  a good  deal  of  talk  and  against  which  there  exists  a 
great  deal  of  ])rejudice  ; probably  it  is  true  that  the  present  condition 
of  the  public  mind,  so  far  as  it  is  given  to  the  Standard  Oil  Company, 
is  due  to  the  fact  that  we  have  paid  no  attention  to  all  these  assaults  ; 
we  have  regarded  them  as  tlie  penalties  of  success  ; w^e  have  never 
allowed  ourselves  to  be  drawn  into  any  newspaper  controversies  ; we 
have  never  answered  any  attacks  ; during  the  progress  of  the  so-called 
lle])burn  committee  we  paid  no  attention  to  them  ; I wdll  say  this, 
tiiat  when  this  came  in  this  kind  of  a way,  I thought  perhaps  it  would 
lie  just  as  well  to  come  here  and  make  a plain  statement  of  .the  fact ; 
tlic  witness  says:  “ 'I’he  Standard  Oil  Company  is  an  example  ; here 
is  a (;or[)oration  which,  according  to  the  testimony  recently  given  in 


623 


Pennsylvania,  began  in  1872  with  a $1,000,000  capital,  which  was  sub- 
sequently increased  to  $3,500,000,  and  on  this  latter  capitalization  it 
paid  dividends  in  1880  amounting  to  $10,321,812,  and  it  practically  con- 
trols and  fixes  the  value  to  the  consumer  on  a staple  ranking  third  in 
the  list  of  our  nation’s  exports;  through  its  speculative  manipulations 
it  has  within  a few  weeks  more  than  doubled  the  price  of  crude  oil, 
and  its  profits  thereby  are  variously  estimated  to  be  from  $20,000,000 
to  $40,000,000.” 

Q.  Whose  testimony  is  that  statement  taken  from? 

A.  Mr.  Thurber’s ; I want  to  say  that  with  the  exception  of  the 
statement  that  the  company  was  organized  with  $1,000,000  capital 
and  subsequently  increased  to  $3,500,000  there  is  not  one  word  of 
truth  in  the  statement ; it  is  absolutely  false. 

By  Senator  Browning  : 

Q.  What  is  the  other  statement  ? 

A.  That  we  paid  dividends  amounting  in  1880  to  $10,321,812  ; it  is 
not  only  not  true,  but  I have  no  hesitancy  in  saying  that  the  facts  in  the 
case  were,  that  it  did  pay  a dividend  that  year  of  $1,050,000,  which 
was  less  than  three  per  cent  to  the  stockholders  on  the  capital  they 
had  actually  invested, 

Q.  That  was  the  only  dividend  that  was  declared  at  that  time  ? 

A.  That  was  the  sum  total  of  the  dividends  of  1880  ; I may  state 
further,  that  I have  no  knowledge  whatever  that  any  testimony  of  this 
kind  was  ever  given  in  the  State  of  Pennsylvania  by  anybody,  and  I 
brand  it  unhesitatingly  as  a false  statement. 

Q.  Was  there  a further  issue  of  stock  or  capitalization  to  increase 
that  amount  ? 

A.  Nothing  of  the  kind  ; I make  the  statement,  fully  realizing  the 
import  of  all  I say;  nothing  of  the  kind.  There  was  no  dividend 
made  except  two  cash  dividends  which  amounted  to  $15  a share  on 
each  of  the  35,000  shares  and  amounted  to  $1,050,000,  and  instead  of 
being  what  it  purports  to  be  here,  a great  profitable  mine  to  the  own- 
ers of  it,  I say  that  that  dividend  of  $1,050,000  did  not  represent  three 
per  cent.  Now  this  oil  product — this,  however,  is  all  personal  to  the 
Standard  Oil  Company,  and  is  perhaps  of  no  special  importance  to 
the  public,  but  we  have  been  placed  in  a wrong  position,  and  I think, 
as  citizens  of  the  State  of  New  York,  that  we  are  somewhat  interested 
in  this  great  traffic  which  is  not,  as  Mr.  Thurber  states,  third,  but  I 
believe  fourth  in  value  of  our  exports.  I have  asked  Mr.  Brewster  to 
accompany  me  here,  because  he  is  more  acquainted  with  the  practical 
working  and  detail  of  the  business  of  recent  years  than  I am ; perhaps 
at  the  same  time,  I may  be  able  to  answer  any  questions  that  the  com- 
mittee see  fit  to  ask. 


624 


Q.  Are  the  brokers  of  the  company  authorized  to  deal  in  future 
transactions  ? 

A.  No,  sir. 

Q.  Do  the  company  themselves  deal  in  futures  ? 

A.  No,  sir. 

Q.  Do  you  know  of  oil  being  sold  by  certilicate  ? 

A.  Oh,  yes ; the  world  is  full  of  it ; the  woods  are  full  of  it,”  to 
use  a current  slang  phrase.  Pardon  me  — Mr.  Brewster  calls  it  to  my 
mind  — I don’t  mean  that  we  do  not  sell  futures;  I mean  that  we  sell 
for  future  delivery,  and  in  that  particular  perhaps  I may  be  pardoned 
in  calling  the  attention  of  the  committee  to  the  work  that  the  Stand- 
dard  Oil  Company  has  done,  that  which  has  been  of  very  great  value. 
When,  in  the  growth  and  prosecution  of  our  business,  we  came  by 
virtue  of  our  industry  or  whatever  means  were  employed  in  the  busi- 
ness, to  occupy  a prominent  position  in  the  trade,  we  found  that  the 
trade  was  to  quite  an  extent  demoralized  by  this  very  thing  that  I 
fancy  is  the  real  gist  of  the  subject  you  are  after — dealing  in  futures 
— selling  something  that  you  haven’t  got,  as  the  expression  is,  with- 
out any  expectation  of  delivering  the  thing  in  kind,  but  when  the 
settling  day  came  around  either  paying  or  receiving  the  difference. 
We  always  refused  to  enter  into  and  never  entered  into  any  transac- 
tions of  that  kind.  We  do  sell  for  actual  delivery,  but  never  make 
any  sales  that  we  do  not  manufacture  the  oil  for  and  expect  the  buyer 
to  take  it,  and  if  he  does  not  take  it,  we  deliver  it  to  him  in  the  ware- 
house and  make  him  pay  for  it,  and  he  can  do  whatever  he  pleases 
with  it.  I fell  into  the  error  of  thinking  that  you  meant  more  par- 
ticularly transactions  in  crude  oil.  Those  are  all  done  on  certificates; 
the  Pipe  Line  issue  certificates  to  the  producer  in  uniform  amounts  of 
1,000  barrels  each.  Now,  Mr.  Thurber  makes  the  statement  that  we 
fix  this  price.  We  are  in  the  market  daily  for  the  crude  oil  which  we, 
as  manufacturers,  need  to  secure  in  our  business;  we  buy  that  daily. 
The  price  for  that  oil,  it  may  be  for  50,000,  60,000  or  70,000  barrels  a 
day,  is  fixed  by  these'speculations  which  run  over  an  amount  of  one 
to  three,  five,  and  some  days  ten  millions  of  barrels. 

By  Senator  Boyd  : 

Q.  Will  you  be  kind  enough  to  show  me  the  amount  (referring  to 
the  amount  of  dividend  stated  by  the  witness)  ? 

A.  I thought  possibly  I could  find  an  explanation  of  those  ligures 
in  a typographical  error,  but  when  1 compare  the  figures  I cannot  fur- 
nish the  excuse  tliat  I thought  possibly  might  exist.  It  is  a misstate- 
ment. 


625 


By  Senator  Boyd  : 

Q,  Do  you  know  if  this  amount  was  published  in  any  of  the  daily 
newspapers  at  any  time  ? 

A.  No,  sir.  In  fact  I had  to  go  to  our  own  books  to  find  it ; I had 
forgotten  it.  It  is  not  a matter  of  public  notoriety  at  all.  What 
amount  do  you  refer  to  ? 

Q.  The  amount  quoted  by  Mr.  Thurber  ? 

A.  That  I don’t  know.  I thought  you  had  reference  to  the  amount 
of  dividends  I stated. 

Q.  Was  the  amount  of  dividends  that  you  state  published  in  any 
paper  ? 

A.  No,  sir, 

Q.  You  know  that  amounts  of  dividends  have  been  published  in  the 
city  newspapers  from  time  to  time,  do  you  not,  similar  to  this  referred 
to  by  Mr.  Thurber  ? 

A.  Dividends  of  the  Standard  Oil  Company  ? 

Q,  Yes. 

A.  I have  no  recollection  of  ever  seeing  any.  If  they  have  been, 
they  have  not  been  published  by  any  authority. 

Q.  Do  you  know  that  they  were  published  in  the  New  York  Star 
some  time  ago  ? 

A.  I didn't  see  it,  no,  sir. 

Q.  Now  what  position  does  petroleum  take  in  the  nation’s  exports  ? 

A.  I have  seen  it  stated  that  oil  ranks  fourth  in  value,  but  I do  not 
recall  what  the  authority  is. 

0.  Has  it  not  been  stated  frequently  that  it  ranks  third  ? 

A.  That  I am  unable  to  answer. 

Q.  You  say  that  the  company  does  not  practically  control  and  fix 
the  value  to  the  consumer  ? 

A.  Yes,  sir, 

Q.  Who  fixes  the  value  of  the  oil? 

A.  The  various  parties  who  have  it  to  sell  and  the  parties  who  have 
it  to  buy,  or  rather  who  are  buyers. 

Q,  Is  there  not  some  standard  of  value  placed  upon  it  by  the  Stand- 
ard Oil  Company,  who  are  the  original  producers  ? 

A,  The  Standard  Oil  Company  are  not  the  original  producers.  They 
fix  a price  upon  their  oil  from  day  to  day,  largely  determined  by  the 
cost  of  crude  oil,  I believe,  and  the  cost  of  manufacturing  it  and 
bringing  it  to  market,  which  varies  from  time  to  time. 

Q.  The  Standard  Oil  Company  produce  the  crude  oil,  don’t  they  ? 

A.  Not  at  all.  This  statement  of  Mr.  Welch  I read  very  hastily 
since  I have  been  in  the  room.  I think  Mr.  Welch  makes  the  state- 
79  , ■ 


620 


merit  that  tlie  Standard  Oil  Company  are  largely  intei’ested  in  the  pro- 
duction of  oil.  The  facts  of  tlie  case  are  that  the  Standard  Oil  Com- 
pany are  stockholders  in  one  producing  company,  and  the  owner-ship 
of  that  stock  grew  out  of  just  this  ti-aiisactioii  : they  loaned  a gentle- 
man some  money  and  took  the  stock  of  that  company  for  security  ; 
the  money  was  not  repaid,  and  they  had  to  take  tiie  stock  to  get  their 
money.  They  are  not  interested  in  any  other  company  that  is  pro- 
ducing oil.  It  would  be  an  inconsistent  position  for  them,  which  they 
have,  I guess,  the  sense  to  understand,  that  a man  cannot  ride  two 
hor-ses.  He  cannot  be  a producer  and  at  the  same  time  in  market  every 
day  as  a purchaser  of  crude  oil. 

Q.  I thought  that  Mr.  llockafeller  was  one  of  the  original  producers 
of  the  crude  oil  ? 

A.  Well,  there  is  no  stranger  mistake  than  there  is  in  regard  to  that 
company ; there  is  not  a word  of  trutli  in  it. 

Q.  That  is  the  general  impression  ? 

A.  Well,  I don’t  know  but  it  is  ; it  is  not  true  ; he  has  no  persona 
interest  and  never  has  had.  I am  able  to  state  that  with  confidence 
from  the  fact  that  I was  a partner  of  his  before  the  existence  of  the 
Standard  Oil  Company,  I was  one  of  the  original  stockholders  of  the 
company. 

Q.  Who  are  the  members  of  the  Standard  Oil  Company  ? 

A.  Well,  it  would  be  impossible  for  me  to  give  you  the  names  of 
all  the  stockholders  ; there  are  quite  a good  many  of  them. 

Q.  Are  the  owners  of  the  wells  not  members  of  that  company  ? 

A.  I don’t  now  remember  but  three  ; I at  the  moment  cannot  recall 
but  tnree  gentlemen,  who  are  producers  of  oil,  that  are  stockholders  in 
our  company  , there  may  be  a fevv  others. 

Q.  Who  are  those  ? 

A.  Captain  J.  J.  Vandergrift,  J.  D.  Archibald  and  H.  L.  Taylor. 
I correct  that  because  I suppose  that  Taylor’s  partners  are  also  stock- 
holders; there  would  be  two  others  in  that  case. 

Q.  Are  any  of  the  managers  of  our  principal  railroads  in  that  com- 
pany ? 

A.  No,  sir. 

Q.  Have  the  railroads  any  interest  whatever  in  the  Standard  Oil 
Company  ? 

A.  None,  except  as  transporters  of  the  oil  the  Standard  has  to  ship. 

Q.  Can  you  tell  what  the  amount  of  dividend  is  that  has  been  paid 
for  ten  years  ending  1880  ? 

A.  No,  sir,  I cannot. 

Q.  Can  you  approximate  it  ? 


627 


^ ! 

A.  It  would  be  but  a guess  ; I should  say  less  than  an  Average  of  a 

million  dollars  a year ; less  than  ten  million  dollars  for  the  ten  years. 

Q.  Then  that  would  explain  this  statement  that  m that  year  that 
amount  had  been  paid  ? 

A.  Well*  it  might.  But  I put  it  to  you,  senator,  as  a gentleman  of 
fair  intentions  — in  the  first  place,  ‘it  seems  to  me  exceedingly  strange 
that  any  illustration  of  that  kind  was  necessary  — why  our  company 
should  be  singled  out  to  illustrate  a point. 

Q.  The  object  of  this  committee  is  to  investigate  in  relation  to 
making  corners  and  dealing  in  futures.  It  has  been  alleged  that  the 
Standard  Oil  Company  dealt  in  futures  ? 

A.  Well,  that  is  not  true  ; let  me  emphasize  what  I am  going  to 
say  — that  with  the  exception  of  this  selling  of  refined  oil  for  future 
delivery  — near-by  delivery  — for  instance  in  the  month  of  December, 
if  you  please,  for  January  delivery  — with  the  exception  of  that  thing, 
the  Standard  Oil  Company  has  never  dealt  in  futures ; now,  that  is  a 
statement  that  will  astonish  a great  many  people;  we  are  credited  with 
making  and  unmaking  prices  — making  great  fluctuations  in  prices. 

Q.  By  quotations  published  in  the  newspapers  it  is  represented  that 
refined  oil  has  been  limited  in  demand,  elosing  for  delivery  in  January 
at  seven  and  three-eighths  to  seven  and  one-half  and  home  trade  lots  a;t 
nine  and  one-half  cents;  now  why  is  that  diflerence  in  price  ? Why 
should  home  consumers  be  compelled  to  pay  more  ? 

A.  I am  glad  you  asked  the  question  ; the  oil  that  is  spoken  of  there 
is  the  regular  oil  of  eommerce  ; 110  test,  which  is  the  great  hulk  of  the 
oil  that  goes  abroad ; a large  ^proportion  I should  say  of  all  the  oil 
consumed  in  our  own  country  is  of  a quality  in  color  and  Are  test  and 
in  gravity,  far  exceeding  in  cost  and  value  the  oil  of  commerce ; for 
instance,  Pratt’s  Astral  Oil,  which  is,  as  I understand  it,  worth  con- 
siderably more  than  the  highest  quotation  there  ; the  diflerence  in  the 
price  is  wholly  owing  to  the  quality  of  the  goods ; we  make  some 
of  these  oils  of  as  high  a test  as  300  to  350  degrees  — fire  test. 

Q.  What  does  that  mean  ? 

A.  It  means  this  : that  you  can  put  a quantity  of  oil  into  a cup  be- 
neath which  is  an  alcohol  lamp;  you  heat  that  oil  up  by  means  of  a 
flame,  passing  over  the  face  of  it  a lighted  taper,  and  as  the  oil  heats 
the  vapor  begins  to  rise;  there  is  a thermometer  submerged  in  this 
oil,  and  as  the  oil  is  heated,  the  mercury  rises;  oil  standing  a test  of 
110  degrees  is  what  we  call,  in  parlance  of  trade,  the  oil  of  commerce,  - 
for  it  is  the  great  bulk  of  the  oil  that  is  used  ; now  this  oil  must  not 
ignite  until  it  has  reached  a heat  of  110  degrees  Fahrenheit ; now  that 
oil  of  course  is  more  inflammable  than  oil  that  would  not  ignite  at 
120 ; we  manufacture  these  oils  at  150,  175  and  so  on  up  to  300  de- 
grees of  fire  test.  ' 


628 


Q.  And  that  is  used  — 

A.  For  domestic  purposes  generally. 

Q.  And  IS  generally  about  what  test? 

A.  I believe  in  Ohio  it  is  140  degrees  ; in  some  of  the  Western  States 
it  is  much  more  than  that;  I am  not  familiar  with  the  domestic  trade  ; 
I have  not  given  it  any  personal  attention  for  a great  many  years;  I 
know  these  things,  perhaps,  not  as  well  as  many  persons  outside. 

Q.  But  exported  oil  bears  a test  up  to  110  ? 

A.  A large  percentage  of  the  oil  that  is  exported  is  110  oil  only. 

Q.  That  is  because  — 

A.  That  1 should  say  would  be  because  there  iscpiite  as  much  com- 
petition among  manufacturers  in  supplying  the  domestic  trade  as  there 
is  in  the  export  trade  ; we  have  not  power  to  get  an  extraordinary 
price  for  oil  sold  for  domestic  use,  and  when  we  sell  our  goods  we  ex- 
pect to  sell  them  at  as  low  a price  as  anybody  would  sell  them  of  a 
similar  quality. 

Q.  According  to  your  statement  with  regard  to  the  premiums  paid, 
this  Standard  Oil  Company  business  was  not  a very  profitable  one,  do 
I understand  ? 

A.  Oh,  no,  sir,  T don’t  say  that. 

Q.  Wherein  did  their  profits  consist  ? 

A.,  Why,  they  consisted  in  the  profits  of  their  business. 

Q.  How  long  has  the  company  been  in  existence  ? 

A.  Twelve  years  last  January. 

Q.  And  you  say  that  the  receipts  of  the  company  in  that  time  were 
a little  less  than  $10,000,000  ? 

A.  Oh,  no,  I am  speaking  of  dividends.  My  estimate  was  in  an- 
swer to  the  assertion  that  in  one  year  certain  dividends  were  paid, 
giving  the  idea  that  here  was  a corporation  that  was  paying  its  stock- 
holders enormous  dividends. 

Q.  Are  there  any  other  sources  of  profit  besides  the  dividends  ? 

A.  No,  sir. 

‘Q.  None  whatever. 

A.  No,  sir,  none  whatever. 

Q,  Then  dividends  have  been  paid  somewhere  about  $10,000,000  in 
the  last  ten  years  ? 

A.  I say  somewhere  about;  I express  the  opinion  that  it  is  less  than 
ten. 

Q.  What  was  the  capital  stock  of  the  company  when  it  was  first 
originated  ? 

A.  $1,000,000. 

i).  What  is  their  property  worth  to-day  ? * 

A.  fi'lirougliout  the  United  States? 


G39 


Q.  Yes  ? 

A.  Well,  $60,000,000  to  170,000,000. 

Q.  Then  they  must  liave  added  new  capital  ? 

A.  They  have  somewhat,  yes  — considerable. 

Q.  Was  that  drawn  from  the  profits  of  the  business  ? 

A.  Some  of  it  was  ; some  of  it  was  fresh  cash  contributed. 

Q.  How  much  was  drawn  from  the  profits  of  the  business  ? 

A,  I am  unable  to  answer  the  question  how  much  was  drawn  from 
the  business ; I could  answer  the  other  easier  ; that  I be 

•able  to  be  precise  about. 

Q.  Then  it  does  seem,  if  they  have  been  able  to  acquire  property 
worth  some  160,000,000  or  $70,000,000,  commencing  twelve  years 
ago  with  a capital  of  only  $1,000,000,  that  they  must  have  had 
greater  profits  than  $10,000,000  in  ten  years  ? 

A.  I don’t  deny  it  at  all,  sir;  I don’t  come  here  as  an  object  of 
charity. 

Q.  But  that  would  seem  to  bear  out  the  statement  made  here  that 
their  dividends  must  have  been  more  in  a year  than  you  have  stated  ? 

A.  I hold  the  witness’ to  the  language  employed.  He  says  nothing 
about  profits  whatever;  he  makes  a certain  assertion. 

Q.  But  you  say  the  only  source  of  profits  to  the  company  is  from 
the  dividends  ? 

A.  I say  the  only  source  to  the  stockholders  is  from  the  dividends ; 
I don’t  mean  to  say  that  the  dividends  that  have  been  paid  have  repre- 
sented the  earnings  of  the  company  at  all;  nothing  of  the  kind;! 
don’t  want  to  be  misunderstood  on  that  point. 

Q.  The  proceeds  of  the  company,  I understand,  are  equally  divided 
among  the  stockholders  in  proportion  to  their  stcoks  ? 

A.  Not  at  all  ; the  stockholders  have  voted  to  allow  it  to  remain 
and  accumulate  and  be  kept  in  the  business;  it  has  been  by  that  con- 
servative course,  which  has  enabled  the  managers  of  the  company  to 
always  be  in  the  front,  providing  themselves  with  all  the  best  known 
mechanical  appliances,  surrounding  themselves  with  all  possible  means 
for  protecting  and  caring  for  the  trade,  that  it  has  become  what  it  is 
— a great  factor  in  the  business. 

Q.  How  much  is  Mr.  Eockafeller  worth,  to-day,  in  his  own  private 
, right? 

A.  I could  not  answer  the  question. 

Q.  Can  you  give  an  approximate  idea  ; how  much  are  you  worth 
; yourself  ? 

A.  Well,  senator,  I don’t  think  that  is  a proper  question  to  answer 

Q.  Here  is  a stab  men t made  before  this  committee  in  good  faith  and 
i you  have  attacked  it,  and  it  is  our  duty  to  see  just  where  the  mistake 
‘ occurs  ; you  may  be  mistaken  or  the  witness  may  be  ? 


630 


A.  I am  not  mistaken  with  regard  to  any  facts  about  which  1 speak 

Q.  If  this  company  commenced  with  a capital  of  only  $l,00u,000 
twelve  years  ago,  and  now  have  property  to  the  amount  of  $60,000,- 
000,  and  have  only  received  about  $10,000,000  dividends,  I cannot  see 
where  the  balance  of  the  $60,000,000  came  from  ? 

A.  It  came-  from  earnings  and  additional  money  put  in  to  increase 
the  capital  of  the  company  by  new  stockholders ; we  have  to-day  prob- 
ably five  times,  may  be  ten  times  as  many  stockholders  as  we  had 
twelve  years  ago  when  we  commenced. 

Q.  How  often  do  you  declare  dividends  ? 

A.  Well,  that  depends  wholly  on  the  profits  of  the  business;  we  have 
no  fixed  rules  at  all  in  relation  to  it. 

Q.  Then  do  the  stockholders  get  their  profits  annually  as  dividends 
are  declared  ? 

A.  They  have  been  doing  so;  sometimes  our  dividends  have  been 
declared  — I remember  several  years  in  which  we  declared  an  annual 
dividend ; in  other  years  semi-annual ; other  years  quarterly  ; it  was 
not  my  object  to  enter  into  any  controversy  with  the  witness  whose 
language  and  whose  figures  I have  quoted;  it  was  simply  to  set  this 
committee  right  in  regard  to  the  facts  so  far  as  his  statements  were 
concerned ; I come  here  and  claim  to  be  able  to  speak  from  actual 
knowledge,  and  knowing  the  actual  facts,  I assert  that  the  witness 
knows  nothing  about  the  facts,  and  therefore  had  no  right  to  make 
such  statements. 

Q.  We  are  doing  our  duty  to  the  people ; we  want  to  get  at  the  facts 
as  they  really  are ; the  public  have  been  preyed  upon  by  certain  cor- 
2)orations  ; we  want  to  see  how  far  the  public  have  sufiered,  and  to  be 
prepared  to  remedy  the  evils  of  which  the  people  complain  ; now  if  the 
Standard  Oil  Company  has  been  making  aggressions  upon  the  people, 
of  course  it  is  our  duty  to  find  it  out;  here  is  a statement  which  seems 
pretty  large,  and  you  ha\^  asked  to  come  up  here  to  explain  it? 

A.  No  ; I asked  the  privilege  of  refuting  it.  Your  remark,  how- 
ever, encourages  me  to  ask  the  privilege  of  saying  now  something 
positively  in  regard  to  the  Standard  Oil  Company.  I had  intended 
to  have  kept  on  the  negative  side  of  thp  question.  The  Standard  Oil 
Company  has  been  aggressive.  Tlie  history  of  the  company,  from  the 
date  of  its  organization  down  to  tlie  ])resent  time,  so  far  as  it  has 
brought  results  affecting  the  people,  is  one  whicli  we  can  speak  of 
with  a great  deal  of  pride  and  pleasure.  We  started  in  business  with 
an  ample  ea))ltal,  largely  in  excess  of  anybody  engaged  in  the  business 
at  that  tirn(‘.  We  prudently  kept  our  money  in  the  business.  We 
wen*  determined  to  be  in  the  front,  and  at  the  front  all  the  while. 
We  spent  a great  many  thousands  and  hundreds  of  thousands  of  dol- 


631 


lars  ill  experimenting,  and  I guess  it  is  true  that  we  have  been  first 
and  foremost  in  almost  every  instance  with  all  mechanical  appliances 
and  devices  for  cheapening  the  cost  of  manufacturing  those  goods* 
We  have  aimed  to  make  the  very  best  quality  of  tlie  goods.  We  have 
been  liberal,  and  the  more  we  could  give  a man  for  his  dollar  the  bet- 
ter off  we  were,  so  far  as  profits  were  concerned.  We  believed  that 
our  best  profits  would  result  from  doing  the  largest  amount  of  business 
with  the  smallest  amount  of  profit.  Twenty-five  cents  a barrel  on 
50,000  barrels  is  quite  a considerable  sum  of  money.  Now  I mean  to 
assert,  without  any  fear  of  successful  contradiction,  that  the  Standard 
Oil  Company  has  done  more  to  improve  the  quality  of  the  oil  that  is 
being  consumed  in  the  country,  and  cheapening  its  cost  to  the  con- 
sumer, than  all  other  agencies  combined.  This  is  simply  an  ipse  dixit. 
I state  it  as  one  familiar  with  the  business. 

Q.  How  much  have  you  spent  within  the  last  ten  years  in  experi- 
menting ? 

A.  Do  you  mean  in  experimenting  in  the  manufacture  ? 

Q.  Yes> 

A.  That  would  be  impossible  for  me  to  answer  without  reference  to 
our  books.  I cannot  answer  the  question. 

Q.  Can’t  you  give  us  — 

A.  Well,  if  I should  say  several  hundred  thousand  dollars  that 
would  be  only  an  indifferent  idea.  It  might  be  less  — 

Q.  How  much  would  it  amount  to  in  one  year  ? 

A.  I should  say  two  or  three  hundred  thousand  dollars 

Q.  That  has  been  going  on  for  the  last  twelve  years  ? 

A.  No,  because  the  business  has  been  increasing.  I do  not  mean  to 
say  that  with  the  amount  of  business  we  had  when  starting,  which  has 
grown  at  present  to  40,000  or  50,000  barrels  a day,  that  the  expendi- 
tures during  the  early  years  of  the  history  of  the  company  were  at  all 
to  compare  with  those  of  the  later  years. 

Q Do  you  know  how  many  stockholders  there  are  in  the  company  ? 

A.  No,  I do  not  ; the  reason  of  that  is  that  my  private  secretary 
always  makes  out  our  list. 

Q.  About  how  many  ? 

A.  Well,  I can  guess  ; I should  say  about  two  or  three  hundred. 

Q.  Now  the  Standard  Oil  Company  are  the  only  refiners  in  the 
country,  are  they  not  ? 

A.  Not  by  any  means. 

Q.  How  many  other  companies  are  there  ? 

A.  Oh,  we  are  one  perhaps  of  twenty  or  thirty  others. 

Q.  You  own  all  the  pipe  lines  in  the  country  except  one,  I believe  ? 

A.  No  : there  is  the  Tidewater  Pipe  Line,  a distinct  and  separate 


632 


organization;  yes,  I think  we  own  now  the  entire  system  tliat  is 
known  under  tlie  name  of  the  United  Pipe  Line  — I think  tliat  that 
now  takes  all  the  oil  with  the  exception  of  the  the  Tidewater;  I know 
we  bought  one  concern  this  last  fall. 

Q.  Can  you  state  to  the  committee  what  the  net  earnings  of  that 
company  has  been  annually  within  the  last  ten  years  ? 

A.  No,  sir,  I cannot. 

Q.  Can  you  state  what  it  was  in  the  year  ’80  ? 

A.  No,  sir. 

Q.  Can’t  you  give  any  approximate  idea  ? 

A.  Well,  if  you  will  excuse  me  I would  prefer  not  to  guess  on  that 
point  for  it  would  be  but  a guess ; I cannot  state  from  recollec- 
tion. 

Q.  In  the  absence  of  positive  testimony  we  would  accept  your 
guess  ? 

A.  I would  prefer  not  to  guess. 

Q.  We  would  prefer  to  have  you  ? 

A.  Well,  it  would  be  a guess;  it  would  not  be  an  opinion. 

Q.  Can  you  state  it  by  referring  to  your  books? 

A.  I could  if  I was  at  the  office  of  course. 

Q.  Would  you  come  here  to-morrow  morning  and  make  that  state- 
men  t ? 

A.  Well,  I should  rather  not  do  so  for  this  reason : that  we  are  not 
in  the  position  before  the  community,  of  public  carriers;  we  are  ex- 
ercising no  right  of  eminent  domain;  we  are  accorded  no  distinct 
privilege;  we  are  simply  here  differing  only  in  degree  from  all  other 
manufacturers  buying  raw  material  and  selling  it  to  the  consumer, 
and  for  that  reason  I think  that  our  possession  as  manufacturers  and 
our  profits  should  be  held  sacred  ; if  we  were  occupying  a different 
position  I should  feel  differently  about  it. 

Q.  We  have  no  desire  to  interfere  with  your  private  affairs,  but  at 
your  own  request  you  have  appeared  before  the  committee  and 
you  have  made  an  attack  upon  the  statement  of  a witness  which 
I have  no  dou*bt  was  made  in  good  faith  under  oath,  and  now  it 
is  our  duty  to  see  how  far  your  contradiction  can  be  sustained  by 
the  facts,  and  we  must  insist  upon  your  giving  us  data  to  form  that 
conclusion  ? 

A.  My  statement  is  simply  a contradiction  as  to  the  matter  of  divi- 
dends ; T simply  examined  that  one  thing ; as  to  the  dividends  in  1880 ; 
it  never  occurred  to  me  that  the  man  meant  profits. 

Q.  What  were  the  profits  in  1880  ? 

A.  I am  unable  to  say  ; I did  not  look. 


633 


Q.  Can  you  tell  on  reference  to  your  books,  and  produce  that  testi- 
mony to-morrow  ? 

A.  I could ; I am  not  willing  to  do  so. 

Q.  We  must  ask  you  to  do  so  ? 

A.  Is  there  any  statement  of  profits  made  there  ? 

Q.  If  we  knew  the  profits  we  would  be  able  to  form  an  estimate  of 
how  much  the  dividends  were  according  to  your  own  statement? 

A.  Well,  I really  dislike  to  take  issue;  I may  have  fallen  into  an 
error,  but  I thought  probably  the  committee  would  be  glad  to  learn 
something  of  the  general  working  of  the  Standard  Oil  Company  — 
of  its  methods,  its  purposes  and  the  object  it  has  obtained;  I did  not 
expect  to  be  asked  any  questions  with  regard  to  the  profits  it  has 
made  ; as  I said  in  the  beginning,  this  was  purely  a personal  matter  ; 
I desired  to  contradict  it ; I supposed  that  the  simple  denial  of  state- 
ments made  by  a man  who  has  no  possible  means  of  knowing  what 
the  facts  were  — that  the  denial  by  another  one  who  has  all  the  means 
of  knowing,  and  who,  as  I say,  has  made  an  examination  — I supposed 
that  that  would  be  sufficient. 

Q.  You  may  be  mistaken  just  as  well  as  Mr.  Thurber  ? 

A.  But  where  I take  my  own  records,  made  for  the  year  1880,  as 
secretary  of  the  company,  taking  their  recorded  dividends,  and  finding 
them  as  I have  stated  them  to  you,  and  just  exactly  as  I have  stated 
them,  it  is  hardly  fair  to  assume  that  I am  mistaken,  is  it  ? 

Qr  The  word  ^‘dividends”  seems  to  be  the  difficulty;  there  may 
have  been  profits  declared  which  were  divided  among  the  stockholders  ? 

Mr.  Chittenden  — I think  I could  make  a suggestion  that  might 
help  the  chairman  and  the  witness  out  of  the  difficulty.  I think  I 
have  seen  it  stated  somewhere  that  there  was  an  investigation  relating 
to  the  affairs  of  the  Standard  Oil  Company  in  Pennsylvania,  in 
which  the  subject  of  their  capital  and  their  profits  was  made 
one  of  judicial  investigation.  To  the  witness  — Is  not  that  so  ? 

The  Witness  — I think  it  is. 

Mr.  Chittenden  — As  I remember  the  figures  — I have  them  from 
the  statements  made  here  — probably  that  was  the  source  of  the  in- 
formation. ' I suppose  that  was  so,  and  probably  there  may  be  a mis- 
nomer of  profits  or  dividends  ; but  that  is  probably  the  fact. 

Q.  When  was  that  investigation  held  ? 

A.  I have  really  forgotten  whether  it  was  in  the  latter  part  of  ’81, 
or  in  the  early  part  of  ’82. 

By  Mr.  Chittenden  : 

Q.  It  was  a question  of  taxation  ? 

A.  It  was  a question  of  taxation. 

• 80 


634 


Mr.  Chittenden  — And  your  officers  were  examined  in  court. 

By  Senator  Boyd  : 

Q.  What  was  the  amount  of  dividends  stated  there  ? 

A.  I know  nothing  whatever  of  this  matter  from  any  personal 
knowledge.  There  is  a gentleman  in  the  room,  however,  who  knows 
it  all  from  personal  knowledge,  and  if  you  will  excuse  me  and  call  him 
he  can  tell  you  — Mr.  Dodd.  I was  never  in  Harrisburgh.  I know 
nothing  about  that  matter  at  all.  I never  gave  it  any  attention 

Q.  Do  you  fix  the  prices  of  transportation  ? 

A.  No,  sir. 

Q.  That  is  a matter  of  contract,  is  it,  between  you  and  the  railroads? 

A.  So  far  as  we  are  concerned. 

Q.  Did  you  personally  appear  before  the  Hepburn  committee  ? 

A.  No,  sir. 

Q.  Certain  members  of  your  company  did,  I understand  ? 

Q.  Yes,  sir. 

Q.  Did  they  at  that  time  decline  to  give  testimony  in  relation  to 
their  net  or  gross  earnings  ? 

A.  They  declined  among  other  things  to  answer  certain  questions 
relating  to  the  private  affairs  of  the  company,  such  as  profits  and  divi- 
dends. They  proposed  to  answer,  and  did  make  written  answers  to 
all  the  interrogatories  except  those  which  related  to  the  private  affairs 
of  the  company.  I believe  that  the  answers  were  not  received;  they 
were  ruled  out. 

Q.  How  many  barrels  of  oil  were  exported  and  otherwise  disposed 
of  by  the  company  during  the  year  1880  ? 

A.  Well  I am  unable  to  answer  that  question. 

Q.  Could  you  answer  it  on  reference  to  your  books? 

A.  Yes. 

Q.  What  where  the  prices  per  barrel  ? 

A.  That  I am  not  able  to  answer. 

Q.  Could  you  on  reference  to  your  books  ? 

A.  Yes,  sir. 

Q.  Wiiat  were  the  profits  of  the  company  on  each  barrel  of  oil  sold  ? 

A.  That  T cannot  tell  you. 

Q.  Could  you  on  reference  to  the  books  ? 

A.  No;  except  by  taking  tlie  profits  and  dividing  them  by  the 
number  of  l)arrols.  That  would  establish  it. 

(1.  Can  you  give  to  the  committee  that  information  to-morrow? 

A.  If  I til  ink  it  possible  fo  do  it,  yes. 


035 


December  27,  1882. 

Henry  M,  Flagler  recalled : 

Examined  by  Mr.  Chittenden  : 

Q.  During  your  own  examination,  the  other  day,  before  this  com- 
mittee, and  also  during  the  examination  of  Mr.  Brewster,  you  made 
some  statements  in  relation  to  the  connection  of  other  companies  with 
the  Standard  Oil  Company,  which,  upon  being  read  over,  seemed  tore- 
quire  some  .further  explanation.  I wish  to  examine  you  first  in  ref- 
erence to  that.  You  stated,  I believe,  that  you  were  the  secretary  of 
the  Standard  Oil  Company  ? 

A.  I do  not  know  how  the  stenographer  may  have  reported  it;  I am. 
Q.  And  is  there  a corporation  by  that  name  ? 

A.  There  is. 

Q.  How  long  is  it  since  it  was  formed  ? 

A.  Something  more  than  twelve  years. 

Q.  And  is  the  corporate  name  of  it  The  Standard  Oil  Company  ? 

A.  No,  sir. 

Q.  What  is  it  ? 

A.  Standard  Oil  Company. 

Q.  Without  the  “the  ?” 

A.  Yes,  sir. 

Q.  Where  was  the  principal  place  of  business  at  that  time  ? 

A.  Cleveland,  Ohio. 

Q.  Was  it  formed  under  the  general  laws  of  Ohio  ? 

A.  Yes,  sir. 

Q.  By  written  articles  of  incorporation  ? 

A.  Yes,  sir. 

Q.  Now  you  spoke  of  some  other  Standard  Oil  Companies.  Is  there 
a Standard  Oil  Company  of  New  Jersey  ? 

A.  Yes,  sir, 

- Q.  When  was  that  formed  ? 

A.  During  the  current  year. 

Q.  Well,  state  ? 

A.  I am  not  able  to  state  the  exact  time. 

Q.  State  it  as  near  as  you  can  ? 

A.  The  first  of  August. 

Q.  Where  is  the  principal  place  of  business  of  that  company  ? 

A.  Bayou ue,  New  Jersey. 

Q.  That  is  on  New  York  bay,  is  it? 

A.  Yes,  sir. 

Q.  That  is  formed  by  written  articles  of  incorporation  under  the 
Jaws  of  New  Jersey,  I suppose  ? 


G36 


A.  Yes,  sir. 

Q.  And  with  the  same  corporate  name  ? 

A.  I am  not  absolutely  certain  about  that,  whether  it  is  “ The 
Standard  Oil  Company,”  or  ‘‘Standard  Oil  Company.”  Aside  from 
that  it  has  the  same  name.  I am  informed  that  it  is  incorporated 
under  the  name  of  the  Standard  Oil  Company  of  New  Jersey. 

Q,  Is  there  a similar  one  in  Pennsylvania  ? 

A.  There  is ; yes,  sir. 

Q.  When  was  that  incorporated  ? 

A.  I cannot  speak  from  absolute  knowledge,  but  I should  say  more 
than  ten  years  since. 

Q.  And  formed  by  written  articles  of  incorporation  under  the  gen- 
eral laws  ? 

A.  That  I am  not  able  to  say. 

Q.  You  know  whether  it  has  a special  charter  from  the  Legislature 
don’t  you  ? 

A.  No,  I do  not. 

Q.  Where  is  its  place  of  business  ? 

A.  To  the  best  of  my  judgment,  Pittsburgh. 

Q.  And  that  incorporate  name  is  what  ? 

A.  Standard  Oil  Company,  of  Pittsburgh. 

Q.  Are  there  any  other  Standard  Oil  Companies  ? 

A.  One  in  this  State. 

Q.  When  was  that  formed  ? 

A.  I think  about  the  same  time  that  the  one  in  New  Jersey  — I 
think  about  the  first  of  February,  this  present  year. 

Q.  Where  is  the  principal  place  of  business  of  that  company  ? 

A.  New  York  city. 

Q.  There  are  the  Ohio,  New  Jersey,  Pennsylvania  and  New  York. 
Are  there  any  others  ? 

A.  No  more. 

Q.  Now,  you  spoke  of  something  by  the  name  of  United  Pipe  Line. 
Is  that  a corporation  ? This  is  what  you  said,  addressing  Mr.  Brew- 
ster, “ I can  see  very  naturally  where  you  have  fallen  into  an  error  of 
expression  when  you  say  that  the  United  Pipe  Line” — 

A.  I can  answer  your  question,  which  was,  if  I remember,  whether 
it  was  an  incorporated  company. 

Q.  My  question  is  this  : is  what  you  spoke  of  here  as  The  United 
Pipe  Line  a corporation  ? 

A.  Yes,  sir. 

Q.  When  was  that  formed? 


637 


A.  I should  say  within  five  years  ; four  or  five  years  ago  as  near  as 
I can  remember. 

Q.  Where  is  its  principal  place  of  business? 

A.  Oil  City. 

Q.  And  under  what  law  is  that  incorporated  ? 

A.  Laws  of  Pennsylvania. 

Q.  By  general  articles  ? 

A.  I so  understand_,  yes,  sir. 

Q.  You  spoke  of  The  Standard  Oil  Trust;  is  that  a corporation  ? 

A.  No,  sir. 

Q.  Is  it  a joint-stock  company  ? 

A.  No,  sir. 

Q.  What  is  it  ? 

A.  An  indescribable  thing  I should  say  ; it  is  neither  of  the  things 
that  you  have  mentioned  ; neither  a corporation  nor  a partnership. 

Q.  It  is  not  the  name  of  a private  person ; tell  the  committee  what 
it  is  in  general  terms  ; I donT  want  to  go  into  much  detail  about  it ; 
it  is  something  that  takes  and  holds  the  title  of  property  ? 

A.  No,  sir  ; what  do  you  mean  by  title  to  property? 

Q.  You  know  just  as  well  as  I do  ? 

A.  Do  you  mean  real  estate  ? 

Q.  I mean  any  kind  of  property  ? 

A.  It  is  an  agreement  made  by  individuals  interested  who  have,  by 
virtue  of  that  agreement,  created  a trust  and  put  that  trust  in  the 
hands  of  trustees. 

Q.  Then  certain  individuals  representing  certain  interests  ? 

A.  Kepresenting  themselves,  as  individuals. 

Q.  Kepresenting  themselves,  have  appointed  trustees  and  vested 
them  with  the  title  of  property  ? 

A.  Yes,  sir. 

Q.  Do  the  trustees  hold  no  property  ? 

A.  They  hold  stock  and  bonds  and  securities  for  the  individuals  in 
trust. 

Q.  But  for  these  individuals  alone  ? 

A.  For  those  individuals  alone. 

Q.  They  don’t  hold  any  stock,  property  or  effects  that  belong  to  any 
of  these  corporations  as  corporations  ? 

A.  No,  sir. 

Q.  Now,  you  went  on  to  say  that  there  was  a Standard  Oil  Company 
in  this  State  and  in  Ohio,  New  Jersey  and  Pennsylvania,  besides  a 
number  of  other  companies,  and  the  stock  of  these  companies  to  a 
greater  or  less  extent  is  represented  in  The  Standard  Oil  Company  ; 
what  other  companies  did  you  refer  to  ? 


C38 


A.  I did  not  make  ilie  statement  as  you  liave  read  it. 

Q.  It  is  so  recorded.  Arc  there  any  other  companies  the  stock  of 
which,  is  to  a greater  or  less  extent,  represented  in  the  Standard  Oil 
’’.rrust,  any  other  tlian  the  companies  you  have  named  ? 

A.  In  other  words,  do  you  mean  to  ask  me  whether  the  trustees  hold 
the  stock  of  any  other  companies  than  the  four  Standard  Oil  Com- 
panies already  named  ; is  that  the  question  ? 

Q.  The  four  Standard  Oil  Companies  and  the  United  Pipe  Line  ? 

A.  As  to  whether  the  trustees  hold  any  other  stock  than  the  four 
companies  and  the  United  Pipe  Line  ; yes,  sir;  they  do. 

Q.  Does  the  Standard  Oil  Company,  or  its  managers  — that  is  the 
original  Standard  Oil  Company  — substantially  own  and  control  the 
other  corporJltions  you  have  named  to-day  ? 

The  Witness  — Mr.  Chairman,  may  I inquire  of  you  whether,  in 
your  judgment,  the  question  is  one  that  comes  within  the  scope  of  the 
resolution  that  created  this  committee,  or  whether  an  answer  to  that 
question  will  throw  any  light  at  all  upon  the  subject-matter  under 
investigation  ? 

Senator  Boyd  — Perhaps  Mr.  Chittenden  can  explain.  If  the  com- 
mittee know  what  Mr.  Chittenden  desires  to  draw  out  then  we  will 
know  better  what  to  do. 

Mr.  Chittenden  — Mr.  Flagler  and  Mr.  Brewster  have  come  vol- 
untarily before  this  committee  and  have  made  certain  statements  about 
the  property  of  the  Standard  Oil  Company,  and  the  relation  of  certain 
other  companies  to  the  Standard  Oil  Company,  and  they  have  given 
their  views  about  the  extent  to  which  the  Standard  Oil  Company  con- 
trols the  oil  business.  They  have  also  made  an  issue  with  a witness 
before  this  committee  as  to  a statement  which  he  made.  Under  that 
state  of  facts,  as  they  have  themselves  opened  the  subject,  it  seems  to 
me  proper  that  this  committee  should  know  now  exactly  what  the 
relations  of  these  companies  are  each  to  the  other,  what  strength  and 
power  they  have,  how  far  they  act  together  and  have  acted  together, 
and  how  far  they  control  the  oil  market  and  the  oil  business.  Now,  I 
shall  claim  to  have  this  gentleman  state  all  about  the  stock  — I shall 
not  go  into  details  about  it,  but  to  state  generally  about  the  stock, 
property  and  the  effects  of  these  different  companies  and  who  the  per- 
sons are  that  managed  them.  That  is  my  object. 

Senator  Browning  — Ido  not  know  what  questions  the  counsel 
jiroposes  to  put  to  the  witness.  When  an  objection  is  raised,  it  will 
be  time  to  decide.  My  own  opinion  is  that  this  question  is  put  for 
the  purpose  of  disclosing  the  opportunities  of  this  company  to  corner 
tlie  market  and  to  control  this  vast  enterprise,  and  I think  it  is  a very 
j»ro])er  question. 


G39 


Senator  Boyd — That  evidently  is  the  object  of  the  question,  but 
I prefeirred  to  have  Mr.  Chittenden  state  what  he  desired  to  disclose 
Now,  the  explanation  has  been  made  and  I agree  with  Senator  Brown- 
ing that  the  qiiusiion  is  a perfectly  proper  one  and  is  within  the  scope 
of  the  provisions  of  the  resolution  by  which  this  committee  was  ap. 
pointed. 

The  Witness — As  the  gentleman  has  based  his  grounds  for  asking 
the  question  upon  certain  statements  Avhich  he  says  the  witness, 
meaning  me,  made  ; and  as  I made  no  such  statement  your  reason 
falls  to  the  ground.  I think  you  will  find  in  the  record  that  I never 
made  any  such  statement  as  you  have  alluded  to.  Mr.  Brewster  made 
it. 

Senator  Boyd — Mr.  Chittenden  was  present  when  Mr.  Brewster 
made  his  statement  and  you  made  several  statements  to  aid  Mr.  Brews- 
ter to  make  his  statement.  That  I presume  is  what  Mr.  Chittenden 
bases  his  statement  upon,  that  you  made  those  remarks. 

The  Witness — Yes,  sir;  to  prevent  his  misleading  the  committee, 
lie  also  prefaced  that  statement  by  saying  that  we  came  here  volun- 
tarily to  make  these  statements  about  the  Standard  Oil  Company.  If 
the  clerk  has  the  letter  I wrote  to  the  honorable  chairman,  you  will 
find  that.  I specifically  stated  certain  un warrants  and  untruthful 
statements  had  been  made  by  a witness  upon  a former  occasion  respect- 
ing the  Standard  Oil  Company  and  I desired,  personally,  to  be  heard 
thereon.  I came  here  and  denied  specifically  all  the  statements  made 
by  the  witness  except  two,  which  are,  that  he  correctly  stated  the 
capital  stock  of  the  company  of  Ohio  when  it  was  originally  organized 
and  the  subsequent  capital.  The  other  statements  I deny  to-day.  I 
do  not  admit,  because  I came  here  for  a specific  purpose,  that  I put 
myself  in  any  position  voluntarily  to  make  any  statements  respecting 
the  Standard  Oil  Company,  which  are  not  proper  subjects  under  the 
resolutions. 

Senator  Boyd — I would  say  that,  as  you  have  intimated,  you  did 
flatly  contradict  the  statement  of  one  of  the  witnesses. 

Mr.  Chittenden — I am  unwilling  to  have  the  statement  go  in  the 
wav  the  witness  states  it.  Here  is  Mr.  Brewster’s  examination, 
volunteered,  with  scarcely  one  question,  except  the  formal  question, 
put  by  the  committee,  by  either  member  of  it.  Mr.  Brewster  goes  on 
and  makes  this  statement  in  Mr.  Flagler’s  presence,  not  called  out  by 
the  committee.  Mr.  Flagler  then  interrupts  him  and  states  what  I 
have  read,  and  then  Mr.  Brewster  goes  on  here,  page  after  page,  with  a 
labored  justification  and  an  attempt  to  prove  that  the  Standard  Oil 
Company  is  a public  blessing.  That  is  all  taken  down  and  becomes  a 
part  of  your  testimony,  and  I claim  the  right  to  a fair,  notan  improper, 


/ 


040 

cross-examination  on  that  subject.  I don’t  think  Mr.  F'lagler  states  it 
fairly  when  he  says  that  any  portion  of  what  I wisli  to  examine  him 
upon  is  called  out  by  any  questions  of  the  committee. 

The  Witness  — Am  I responsible  for  Mr.  Brewster’s  statement? 

Mr.  Chittenden  — I think  you  are,  sir.  He  is  an  officer  of  the 
company. 

The  W ITNESS  — What  officer  ? 

Mr  Chittenden  — I do  not  care  to  have  any  discussion. 

Q.  Does  the  Standard  Oil  Company,  or  its  managers  — that  is,  the 
original  Standard  Oil  Company  — substantially  own  and  control  the 
other  corporations  you  have  named  to-day  ? 

The  Witness — Does  the  committee  say  it  is  a proper  question  to 
be  asked  ? 

Senator  Boyd  — I think  it  is. 

( The  witness,  after  consulting  with  his  counsel,  Mr.  Dodd,  answers 
the  question  as  follows)  : 

A.  It  does  not,  sir. 

Senator  Boyd  — Inasmuch  as  reference  has  been  made  to  the  letter 
sent  by  Mr,  Flagler,  I would  like  to  ask  Mr.  Flagler  if  that  is  the  let- 
ter (showing  letter  to  witness  ) : 

Standard  Oil  Company, 

Standard  Block,  Cleveland,  0.,  and 
^ 44  Broadway,  New  York,  December  V6th,  1882. 

J.  D.  Rockefeller,  President;  Wm.  Rockefeller,  Vice-President; 

H.  M.  Flagler,  Secretary ; 0,  H.  Payne,  Treasurer ; to  Hon. 

John  G.  Boyd,  Chairman  Senate  Divest igating  Committee,  88  Cen- 
tre street,  city. 

Dear  Sir  — Being  aware  that  certain  unwarranted  and  untruthful 
statements  regarding  the  Standard  Oil  Company,  its  business  and 
methods,  have  been  made  to  your  honorable  committee,  we  desire  the 
opportunity  of  appearing  before  your  committee  at  the  earliest  prac- 
ticable moment,  to  be  heard  in  relation  to  this  subject. 

Very  truly  yours, 

H.  M.  FLAGLER,  Secretary. 

The  Witness  — It  is  my  signature.  I presume  it  is  the  letter. 

(Letter  marked  Exhibit  No.  4 of  this  date.) 

Q.  In  your  statement,  the  other  day,  you  said  there  is  a Standard 
Oil  Company  in  this  State  and  in  Ohio,  New  Jersey  and  Pennsyl- 
vania, beside  a number  of  other  companies,  and  the  stock  of  these 
(•oin))anies,  to  a greater  or  less  extent,  is  represented  in  the  Standard 


G41 


Oil  Trust ; to  what  companies  did  you  refer  by  this  term,  “ besides  a 
number  of  other  companies  ? ” 

A.  Do  you  want  me  to  give  the  names  ? 

Q.  Yes,  sir. 

A.  The  Sone  Manufacturing  Company;  Devoe  Manufacturing 
Company ; Charles  Pratt  & Company ; Acme  Oil  Company  ; Camden 
Consolidated  Oil  Company ; National  Transit  Company  ; Baltimore 
United  Oil  Company  ; I don’t  recollect  any  others,  at  the  moment. 

Q.  Have  you  papers  in  your  possession  which  will  accurately  show 
what  other  companies  are  included  in  the  answer  to  the  last  question  ? 

A.  You  mean  with  me  ? 

Q.  No  ; anywhere  in  your  possession  ? 

A.  No,  sir. 

Q.  Have  yon  access  to  such  papers  ? 

A.  I suppose  I could  have  access  to  them  ; yes,  sir ; I can  give  you 
a couple  of  more  now;  Galena  Oil  Company;  Eclipse  Lubricating 
Oil  Company  ; Imperial  Refining  Company. 

Q.  Ill  your  statement,  the  other  day,  you  spoke  of  the  Standard  Oil 
Company  as  possessing  property  to  the  amount  of  sixty  or  seventy 
millions  of  dollars  ; which  Standard  Oil  Company  did  you  then  refer 
to  ? 

A.  I didn’t  refer  to  any  of  them,  for  I didn’t  make  any  such  state- 
ment. 

Q.  Were  you  not  asked  what  the  property  of  the  Standard  Oil  Com- 
pany was  worth  ? 

A.  Very  likely  ; I don’t  remember  whether  I was  or  not ; the  record 
will  show  ; if  I was  asked  that  question,  I did  not  answer  it  in  that 
way . 

Q.  Did  you  answer  any  question  with  the  term  “ sixty  or  seventy 
millions  of  dollars  ” or  words  to  that  effect  ? 

A.  I am  not  quibbling  or  carping,  if  you  have  got  it  before  you  I 
simply  say  that  I didn’t  say  so  ; if  you  will  ask  me  questions  bearing 
on  the  acts  of  the  Standard  Oil  Company  relative  to  stocks,  corners, 
futures,  etc.,  I will  answer  any  question  ; if  you  want  to  know  as  to 
the  manner  of  conducting  the  business  of  the  several  companies,  what 
their  relations  are  to  the  petroleum  business,  their  manner  of  dealing 
as  to  corners,  futures  and  that  sort  of  thing,  I am  ready  to  answer. 

Mr.  Chittendek  — I hope  this  witness  will  not  be  personally 
offensive  to  counsel. 

The  Witness  — Will  the  counsel  indulge  me  in  a word  ; it  is  jus^ 
this  : I will  try  to  be  his  peer  in  politeness.” 

Q.  On  your  last  examination,  were  you  asked  this  question,  Ac- 
*^81 


642 


cording  to  your  statement  with  regard  to  the  premiums  paid,  this 
Standard  Company’s  business  was  not  a very  profitable  one,”  were  you 
asked  that  question  ? 

A.  I have  no  recollection  of  it. 

Q.  Did  you  not  answer  in  reply  to  that,  Oh,  no,  sir,  I did  not  say 
that  ? ” 

A.  I can  recall,  I think,  such  an  answer. 

Q.  Were  you  not  asked  this  question,  “ And  you  say  that  the  re- 
ceipts of  the  company  in  that  time  were  a little  less  than  ten  million 
dollars  ?”  Were  you  asked  that,  and  did  you  answer,  “Oh,  no,  I am 
speaking  of  dividends  ? ” 

[Objected  to,  that  the  witness  should  not  answer  until  he  sees  the 
record.] 

Q.  Now,  in  the  same  connection,  were  you  not  asked  what  was  the 
capital  stock  of  the  company  when  it  was  first  originated,  to  which 
you  answered,  “ One  million  dollars,”  and  were  you  not  then  asked, 
“What  is  their  property  worth  to-day?  ” and  your  answer,  “ Through- 
out the  United  States?  Q.  Yes?  A.  Well,  sixty  or  seventy  million 
dollars  ?”  Now  did  you  not  answer,  substantially,  that  the  property 
of  the  Standard  Oil  Company  throughout  the  United  States  was  worth 
from  sixty  to  seventy  million  dollars?  (Record  shown  witness.) 

A.  I find  it  so  here,  but  I want  to  correct  this  answer. 

Q.  We  will  correct  that  afterward  ? 

A.  Very  naturally,  I was  not  referring  to  the  Standard  Oil  Com- 
pany at  all. 

Q.  Now,  in  whatever  answer  you  then  made,  did  you  intend  to  in- 
clude the  companies  and  their  stock  which  you  have  named  to-day, 
as  being  connected  with  the  Standard  Oil  Trust? 

A.  Well,  not  limited  to  those  I have  named  to-day,  for  it  is  my 
opinion  that  I have  not  named  them  all,  but  I did  intend  that  the  an- 
swer should  embrace  all  the  company’s  stock  in  whole  or  in  part, 
which  is  held  by  these  trustees,  a thing  which  is  generally  called  the 
Standard  Oil  Company  but  which  is  not  the  Standard  Oil  Company. 

Q.  What  is  it,  if  it  is  not  the  Standard  Oil  Company  ? 

A.  Tliat  is  a difficult  question  to  answer. 

Q.  What  is  the  proper  name  of  it  ? 

A.  The  Lord  only  knows,  I don’t. 

Q.  You  say  that  sometliing  or  somebody  that  owns  this  sixty  or 
seventy  millions  of  property  is  called  the  Standard  Oil  Company  but 
IS  not  the  Standard  Oil  Company ; now,  what  is  the  person,  partner- 
ship or  corporation  called  which  owns  that  property  ? 

A.  Wliy,  1 have  tried  to  give  you  a list  of  the  names  of  as  many  ot 


643 


the  firms  and  companies  as  lean  remember  ; I have  another  one  which 
comes  to  my  mind  now. 

Q.  Now,  you  say  the  original  Standard  Oil  Company  was  organized 
in  Ohio,  if  I understand  you;  is  that  so  ? 

A.  Yes,  sir ; in  Ohio. 

Q.  And  about  the  year  1872  ? 

A.  No,  1870. 

Q.  What  was  its  capital  ? 

A.  Originally  ? 

Q.  Yes,  sir  ? 

A.  One  million  of  dollars,  when  it  was  first  organized. 

Q.  Did  that  company  take  over  any  previously  existing  business  ? 

A.  Will  you  kindly  explain  what  you  mean  ? 

Q.  Did  that  company  purchase  at  the  time  of  its  organization,  and 
become  possessed  of,  any  previously  existing  plan  or  business  ? 

A.  Yes,  sir. 

Q.  By  what  name  was  it  known  ? 

A.  There  were  two  firms  in  existence  that  the  Standard  Oil  Com- 
pany, when  organized,  first  purchased  the  plant  of.  One  oi  them  was 
known  as  William  Rockafeller  & Company  and  the  other  as  Rock- 
iifeller,  Andrews  & Flagler. 

Q.  Where  was  the  property  situated  ? 

A.  In  Cleveland, 

Q.  At  what  price  did  the  company  purchase  it? 

A.  I cannot  answer  the  question. 

Q.  Don’t  you  know  ? 

A.  If  I did,  I could  answer.  No,  sir,  I do  not  know. 

Q.  Did  they  issue  stock  in  payment  for  it  ? 

A.  No,  sir ; they  did  not.  They  bought  it  for  money  and  paid  for 
it  in  money  ; issued  stock  to  the  stockholders. 

Q.  You  were  interested  in  one  of  the  companies  yourself,  were  you 
not  ? 

A.  I was. 

Q.  Do  you  not  know  what  the  Standard  Oil  Company  paid  for  that  ? 

A.  No,  sir. 

Q.  Did  you  not  know  at  the  time  ? 

A.  I did  at  the  time,  yes. 

Q,  Was  it  half  a million  of  dollars  ? 

A.  I shall  decline  to  answer  the  question. 

Q.  Was  not  the  capital  stock  of  one  million  dollars  of  the  Standard 
Oil  Company  substantially  issued  or  its  proceeds  appropriated  for  the 
purchase  of  those  two  previously  existing  concerns  substantially  ? 

A.  I decline  to  answer  the  question. 


644 


Q.  Yoa  took  stock  in  that  company  at  the  time,  did  you  not  ? 

A.  I decline  to  answer  the  question. 

Q.  How  did  you  pay  for  your  stock  ? 

A.  I decline  to  answer  that. 

Q.  When  that  company  started,  had  it  any  cash  capital  except  those 
two  previously  existing  concerns  ? 

A.  I decline  to  answer  the  question. 

Q.  When,  if  at  any  time,  was  the  capital  stock  of  that  company  in- 
creased ? 

A.  According  to  the  best  of  my  recollection,  about  June  or  July 
of  1872. 

Q.  To  what  sum  or  amount  was  it  increased  ? 

A.  To  the  sum  of  $3,500,000. 

Q.  Has  it,  at  any  time  since  then,  been  increased  ? 

A.  It  has  not. 

Q.  Did  you  receive  any  ot  that  increased  stock  ? 

A.  I decline  to  answer  the  question. 

Q.  Was  not  that  increase  of  two  and  a half  millions  divided  among 
the  original  shareholders  pro  rata  ? 

A.  I decline  to  answer  the  question. 

Q.  Was  it  not  wholly  paid  for  out  of  the  profits  of  the  company  ? 

A.  I decline  to  answer. 

Q.  Do  you  decline  to  answer,  because  these  questions,  if  answered, 
would  subject  you  to  any  prosecution  ? 

A.  I decline  to  answer  that  question. 

Q.  Tlien  am  I to  understand  that  you  do  not  decline  to  answer  it 
on  the  ground  that  it  would  subject  you  to  any  prosecution  ? 

A.  You  are  at  liberty  to  understand  it  as  you  please. 

By  Senator  Boyd  : 

Q.  How  is  the  committee  to  understand  it  ? 

A.  I decline  to  answer  because  it  is  an  improper  question. 

Q.  The  committee  decide  that  it  is  not  an  improper  question.  If 
you  have  any  good  reason  to  offer  we  will  gladly  accept  it,  and  hear 
it,  but  I don’t  see  any  necessity  for  this  controversy  between  counsel 
and  witness, ' We  are  here  doing  a simple  duty,  and  of  course  we  ex- 
pect you  gentlemen  to  aid  us  ; that  is  why  you  are  called  here,  and  if 
counsel  puts  any  improper  question,  of  course  we  will  exclude  it,  but 
I cannot  see  that  any  question  hero  put  is  improper. 

Sernitor  BiiOWNiiyG  — I would  like  to  supplement  what  Senator 
Iloyd  lias  said  by  adding  that  if  you  have  any  statements  that  you  now 
desire  to  make  why  you  regard  tliese  as  improper  questions,  and  why 
they  ought  not  to  bo  [)ut,  I am  willing  to  hear  you  -on  that  question, 
now. 


645 


The  Witness  — I thank  you,  senator,  for  the  opportunity.  I de- 
cline to  answer  the  questions  because  they  have  no  bearing  whatever 
upon  the  subject  matter  at  issue  ; the  company  is  a corporation  organ- 
ized under  the  laws  of  the  State  of  Ohio  and  it  is  not  a subject  of  fit 
inquiry  by  the  Senate  of  this  State  ; I have  expressed  a willingness  to 
testify  cheerfully  and  promptly  in  relation  to  all  matters  relating  to 
■corners  and  dealings  in  futures;  I claim  the  right  to  judge  as  to 
whether  I took  stock  in  a company  twelve  years  ago,  whether  that  has 
any  bearing  whatever  upon  the  question  in  hand  ; I deem  the  question 
wholly  irrelevant  and  I would  be  glad  to  put  myself  right  before  the 
committee;  I cannot  see  how  the  committee  can  justify  any  such 
question  as  that. 

Senator  Boyd  — We  are  very  much  obliged  to  any  witness  that 
■comes  before  the  committee  and  offers  any  suggestion  that  tends  to 
promote  the  public  interest.  Now,  when  you  leave  this  stand  if  any 
other  witness  comes  and  contradicts  you,  we  will  protect  you  and  sub- 
ject that  witness  to  a rigid  examination. 

Mr.  Dodd  — When  the  inquiry  comes  into  mere  personal  business, 
it  is  the  right  and  the  duty  of  the  witness  to  refuse  to  answer. 

Senator  Boyd  — So  far  as  any  inquiry  in  relation  to  any  private 
matter  is  concerned,  but  so  far  as  any  inquiry  goes  to  show  the  finan- 
cial condition  for  several  years  past  of  the  Standard  Oil  Company, 
in  order  to  show  that  its  dividends  might  have  been  as  stated  by  the 
other  witness,  I deem  it  proper. 

The  AYitness  — The  witness  referred  to  stated  that  in  the  year  1880 
the  dividends  of  the  Standard  Oil  Company  had  been  ten  millions  and 
some  dollars  ; now,  if  the  Chairman  can  conceive  of  any  possible  con- 
nection between  my  denial  of  a statement  of  a former  witness  of  an 
event  which  occurred  in  1880,  and  as  to  whether  I took  any  stock  in 
the  Standard  Oil  Company  in  1872,  I am  at  a loss  to  see  the  connec- 
tion. 

Mr.  Chittenden  — The  whole  of  this  testimony  is  not  only  legiti- 
mate, but  exceedingly  important.  This  gentleman  stated,  when  he 
was  on  the  stand  before,  that  the  funds  of  this  company  had  very 
largely  come  from  contributions  by  the  stockholders  to  the  capital 
stock  of  the  company  in  money.  Suppose  it  should  turn  out  that 
here  is  a business  which  has  grown  to  $60,000,000  or  $70,000,000, 
which,  by  locating  one  company  in  Ohio,  and  another  in  Pennsylva- 
j nia,  and  another  just  the  other  side  of  New  York  bay,  and  others 
scattered  all  over  the  country  beyond  the  reach  of  the  laws  of  New 
, York,  this  company  is  enabled  without  the  contribution  of  any  sub- 
stantial money,  but  by  absorbing  other  companies,  from  time  to  time 
and  from  year  to  year,  by  that  aggressive  policy  which  both  Mr.  Flag- 


646 


ler  and  Mr.  Brewster  emphasized  the  other  day,  they  have  finally  suc- 
ceeded in  obtaining  the  practical  management  of  the  oil  business,  so 
that  to-day  they  refine  and  handle  ninety  per  cent  of  the  product  of 
the  oil.  Now  if  this  is  an  honest,  straightforward  business,  and  there 
is  nothing  wrong  about  it,  the  witness  should  tell  this  committee  every 
fact,  circumstance  and  particular  about  its  history,  about  what  it 
started  from,  how  much  capital  and  money  have  been  contributed  to 
it,  explain  its  aggressive  policy,  and  show  that  this  company  is  what 
both  these  gentlemen  sought  to  have  it  understood  to  be  by  you  the 
other  day,  a public  benefit  and  blessing  instead  of  a public  curse. 
Now  I don’t  want  to  go  into  these  details  any  further  than  to  show 
what  these  companies  are  that  it  controls,  how  it  controls  them, 
whether,  in  point  of  fact,  their  principal  places  of  business  are  located 
ill  the  other  States,  or  whether  really  and  substantially  the  principal 
place  of  business  of  all  these  companies  is  in  New  York  city,  where 
the  whole  property  ought  to  be  subject  to  the  control  of  the  State  au- 
thorities, where  it  ought  to  pay  its  share  of  the  taxes,  bear  its  share 
of  the  public  burdens,  and  do  its  share  of  the  duties.  Now,  in  that  iioint 
of  view,  an  investigation  into  the  origin  of  this  company  and  the  manner 
iu  which  it  has  been  conducted,  seems  to  me  eminently  proper,  and  of 
course'  I shall  go  no  farther  than  is  necessary  to  bring  out  those  facts. 

Mr.  Dodd  — That  is  not  the  object  for  which  this  committee  was 
appointed,  nor  is  it  within  the  scope  of  their  powers.  I simply  desire 
to  state  to  you  if  that  is  tlie  object  of  this  investigation,  I shall  in- 
struct the  witness  to  answer  no  further  questions  whatever. 

The  Witness  — Mr.  Chittenden  says  that  I made  a statement  as 
he  has  repeated  it.  I deny  using  the  language  or  giving  the  meaning 
as  he  stated  in  his  speech. 

By  Mr.  Ohitten^deis'  : 

Q.  1 said  that  you  stated  that  the  property  of  this  company  consisted 
largely  of  contributions  made  by  the  stockholders  in  money  to  its 
capital.  Do  you  say  you  didn’t  state  that  ? 

A.  I say  if  there  is  any  thing  standing  there  like  that,  it  is  a mistake 
of  the  stenographer. 

Q.  At  what  time  was  the  office  of  the  Standard  Oil  Company  in  this 
city  opened? 

A.  The  Standard  Oil  Company  of  Cleveland  ? 

Q.  Any  Standard  Oil  Company? 

A.  About  the  1st  of  August,  1882. 

Q.  At  what  time  did  the  Standard  Oil  Company  of  Ohio,  or  that 
organized  at  Cleveland  first  have  an  office  in  this  city  ? 

A.  Aliout  1870  was  the  time  of  its  organization. 


647 


Q.  Who  was  president  of  that  company  ? 

A.  At  that  time,  Mr.  Itockafeller. 

Q.  Has  he  been  president  ever  since  ? 

A.  Yes,  sir. 

Q.  Where  did  he  live  when  the  company  was  organized  ? 

A.  In  Ohio. 

Q.  When  did  he  remove  to  this  city? 

A.  He  has  never  removed  to  this  city  to  my  knowledge. 

Q.  Does  he  not  live  here  ? 

A.  No,  sir. 

Q.  Does  he  not  spend  most  ©f  his  time  here  ? 

A.  No,  sir. 

Q.  When  did  you  remove  to  this  city  ? 

A.  About  three  years  since,  permanently,  to  make  it  my  residence. 
Q.  Was  Mr.  Bostwick  one  of  the  original  officers  of  this  company  ? 
A,  He  was  not. 

Q.  Has  not  the  business  which  is  popularly  known  as  the  business 
of  the  Standard  Oil  Company  been  substantially  conducted  in  this 
city  since  its  organization? 

A.  No,  sir. 

Q.  Has  not  the  largest  part  of  it  been  transacted  in  this  city  ? 

A.  No,  sir. 

Q.  Where  has  it  been  ? 

A.  Wherever  it  has  had  interests  about  the  country.  Cleveland 
probably  more  than  any  other  place. 

Q.  How  many  directors  has  it  at  the  present  time  ? 

A.  I decline  to  answer. 

Q.  Do  not  a majority  of  those  directors  live  in  New  York  ? 

A.  I decline  to  answer. 

Q.  Do  not  a majority  of  all  its  officers  live  in  New  York? 

A.  I decline  to  answer. 

Q.  Is  not  New  York  city  the  place  of  business  of  substantially  all 
its  officers  ? 

A.  I decline  to  answer. 

Q.  Are  not  its  dividends  paid  in  New  York  city? 

A.  I decline  to  answer. 

Q.  Are  not  its  dividends  declared  in  New  York  city? 

A.  I decline  to  answer. 

Q.  I understood  you  to  state,  on  your  former  examination,  that  a 
large  proportion  of  the  profits  of  the  Standard  Oil  Company  were  not 
divided  but  were  suffered  to  accumulate  with  the  consent  of  the  stock- 
holders. Do  you  mean  there  was  ever  any  vote  of  the  stockholders  to 
that  effect  ? 

A.  I decline  to  answer. 


G48 


Q.  Are  you  able  to  state  what  dividends  that  company  has  actually 
made  ? 

A.  I decline  to  answer. 

Q.  What  dividends  did  they  make  in  the  year  1879  ? 

A.  I decline  to  answer. 

Q.  In  the  year  1880  ? 

A.  I decline  to  answer.  It  has  already  been  given. 

Q.  In  1881 ? 

A.  The  same  answer, 

Q.  Who  is  president  of  the  Standard  Oil  Company  of  New  Jersey? 

A.  I decline  to  answer. 

Q.  Why? 

A.  I don’t  see  that  it  has  any  bearing  upon  the  rjuestion. 

Q.  Are  not  the  oMcers  of  the  Standard  Oil  Company  of  New  Jersey 
the  same  as  those  of  the  Standard  Oil  Company  of  Cleveland  ? 

A.  I decline  to  answer. 

Q.  Are  not  the  officers  of  the  Standard  Oil  Company  of  Cleveland 
of  New  Jersey,  of  Pennsylvania  and  of  New  York  the  same  ? 

A.  I decline  to  answer. 

Q.  Are  not  those  four  companies  all  substantially  under  the  same 
control  ? 

A.  I decline  to  answer. 

Q.  Why  was  the  Standard  Oil  Company  of  New  Jersey  organized  ? 

A.  I decline  to  answer.  ^ 

Q;  Why  was  the  Standard  Oil  Company  of  New  York  organized  ? 

A.  The  same  answer, 

Q.  What  was  the  capital  of  the  Standard  Oil  Company  of  NewYork? 

A.  I decline  to  answer. 

Q.  Was  it  not  $5,000,000  ? 

A.  I decline  to  answer. 

Q.  Wasn’t  that  stock,  in  part  or  in  whole,  paid  for  in  property? 

A.  I decline  to  answer.  * 

Q.  You  have  given  the  names  of  a number  of  corporations  con- 
nected with  the  Standard  Trust;  does  the  Standard  Oil  Compaii}^,  of 
Cleveland,  or  its  managers,  substantially  own  and  control  those  cor- 
porations? 

A.  I decline  to  answer. 

Q.  Are  not  those  corporations  all  competing  companies  which  have 
l)een  aljsorbed  by  the  Standard  Oil  Company  ? 

A.  1 decline  to  sinswer. 

Q.  Was  it  not  a part  of  the  aggressive  policy  of  the  Standard  Oil 
Company,  which  you  mentioned  the  other  day,  to  absorb  all  competing 
companies  ? 


G49 


A.  The  same  answer. 

Q.  How  many  refineries  of  petroleum  or  coal  oil  were  there  in  exist- 
ence in  the  States  of  Ohio,  Pennsylvania,  New  York  and  New  Jersey, 
when  the  Standard  Oil  Company,  of  Cleveland,  was  organized  ? 

A.  I am  unable  to  say. 

Q.  Don’t  you  know  there  were  more  than  fifty? 

A.  No,  sir. 

Q.  Do  you  not  know  any  thing  on  that  subject  ? 

A.  Not  much  ? 

Q.  I believe  you  stated  the  other  day  that  there  were  a large  number 
of  refining  concerns  now  that  were  connected  with  the  Standard  Oil 
Company  ? 

A.  I think  I did. 

Q.  How  many  such  are  there,  to  your  knowledge  ? 

A,  I can’t  answer;  it  would  only  be  a matter  of  opinion. 

Q.  You  can  state  how  many  you  remember  or  know  of  ? 

A.  No  ; I don’t  remember  ; I know  there  are  a good  many  refineries 
outside  of  those  I have  mentioned. 

Q.  Are  there  five  in  the  United  States? 

A.  I should  think  so. 

Q.  Are  there  ten  ? 

A.  I should  think  so. 

Q.  Won’t  you  name  one  ? 

A.  No,  I will  not. 

Q.  Can  you  name  one  ? 

A.  Yes. 

Q.  Why  do  you  refuse  to  name  one  ? 

A,  I decline  to  answer  why. 

Q.  Did  not  the  Standard  Oil  Company,  in  the  year  1876,  prove  be- 
fore the  Hepburn  committee  that  it  refined  about  ninety  per  cent  of 
the  product  of  the  oil  wells  ? 

A.  I have  no  recollection  that  it  proved  any  thing  before  the  Hep- 
burn committee. 

Q.  Did  not  its  officers  so  state  before  that  committee  ? 

A.  I don’t  know. 

Q.  Did  you  not  so  state  before  that  committee  ? 

A.  No,  sir. 

Q,.  Does  not  the  Standard  Oil  Company  and  the  refineries  with  which 
it  is  connected  and  controls  refine  ninety  per  cent  of  the  product  of 
the  oil  wells  at  the  present  time  ? 

A.  I decline  to  answer  the  question. 

Q.  Do  you  know  whether  it  does  or  not  ? 

82 


G50 


A.  I decline  to  answer. 

Q.  Does  not  the  Standard  Oil  Company  by  means  of  contracts  with 
the  railroads  and  its  other  facilities  control  the  rates  of  transportation 
for  crude  oil  ? 

A.  I decline  to  answer  the  question. 

Q.  Does  it  not  in  like  manner  control  substantially  the  price  of 
crude  oil  ? 

A.  I decline  to  answer  the  question. 

Q.  Did  you  testify  on  the  last  day  when  you  were  examined  con- 
cerning some  fluctuations  in  the  market  for  crude  oil  that  have  oc- 
curred recently  ? 

A.  Your  record  will  show. 

Q.  I ask  for  your  recollection  about  it  ? 

A.  I cannot  answer. 

Q.  Have  there  been  such  fluctuations? 

A.  Yes,  sir. 

Q.  Give  us  as  near  as  you  can  the  highest  price  of  crude  oil  during 
the  last  few  months  ? 

A.  I believe  $1.36  per  barrel  was  the  highest,  but  I won’t  be  abso- 
lutely sure. 

Q.  And  in  reaching  that  point  did  the  price  start  at  about  fifty  cents  ? 

A.  It  did,  the  price  was  below  fifty  cents. 

Q.  About  when  ? 

A.  During  the  summer  of  the  present  year. 

Q.  And  it  went  up  to  $1.35  or  $1.36  when  ? 

A.  I can't  give  you  the  time  ; I should  say  about  two  months  ago. 

Q.  The  last  portion  of  that  rise  was  very  rapid,  was  it  not  ? 

A,  I believe  it  was. 

Q.  And  just  preceding  that  rise  did  the  Standard  Oil  Company  pur- 
chase a large  quantity  of  crude  oil  ? 

A.  Not  to  my  knowledge. 

Q.  Don’t  you  know  that  it  purchased  several  million  barrels  in  an- 
ticipation of  that  rise  ? 

A.  I do  not. 

Q.  Are  you  familiar  with  the  purchases  made  by  your  company  ? 

A.  I am. 

Q.  Did  they  not  send  orders  to  Oil  City  to  buy  as  high  as  a million 
barrels  at  the  time  just  preceding  that  rise  ? 

A.  Not  to  my  knowledge. 

Q,  What  amount  of  oil  did  the  Standard  Oil  Company  hold  when 
that  rise  took  place  ? 

A.  I decline  to  answer  the  question. 


651 


Q.  Was  it  a million  barrels  ? « 

A.  I have  already  declined  to  answer  the  question. 

Q.  Did  the  Standard  Oil  Company  sell  out  a large  quantity  of  crude 
oil  at  those  high  prices  ? 

A.  They  did  not. 

Q.  How  much  did  they  sell  ? 

A.  I am  unable  to  answer  the  question. 

Q.  What  is  the  business  of  the  Standard  Oil  Company  ? 

A.  Simply  buying  crude  oil  and  refining  it  and  undertaking  to 
make  an  article  of  illuminating  oil  and  sell  it. 

Q.  The  company  does  sell  crude  oil,  does  it  not  ? 

A.  It  does  in  a very  small  way,  sometimes. 

Q.  Does  it  not  sometimes  sell  in  the  market  as  high  as  a million 
barrels  ? 

A.  Never. 

Q.  Half  a million  ? 

A.  Never. 

Q.  As  high  as  a hundred  thousand  ? ■ 

A.  I am  unable  to  state  in  regard  to  that. 

Q.  Does  the  Standard  Oil  Company  control  the  United  Pipe  Line 
Company  ? 

A.  In  what  sense  do  you  use  the  word  ‘^control;”  dictate  its 
policy  ? 

Q.  In  its  ordinary  sense  ; control  its  price  ? 

A.  It  has  no  price  ; the  United  Pipe  Line  is  not  a dealer  in  oil. 

Q.  Its  price  for  transportation  ? 

A.  It  has  prices  for  transportation  and  storage. 

Q.  Are  not  those  prices  substantially  under  the  control  of  the  man- 
agers of  the  Standard  Oil  Company  ? 

A.  They  are  not. 

Q.  Who  is  the  president  of  the  United  Pipe  Line  ? 

A.  J.  J.  Yandergrift. 

Q.  The  vice-president  ? 

A.  D.  O’Day. 

Q.  What  is  the  concern  of  which  Mr.  Brewster  is  vice-president  ? 

A.  The  National  Transit  Company. 

Q.  Is  that  a corporation  ? 

A.  Yes,  sir. 

Q.  Owned  or  controlled  by  the  Standard  Oil  Company  ? 

A.  No,  sir. 

Q.  What  is  the  business  of  that  company  ? 

A Transporting  oil. 

Q.  By  means  of  the  pipes  of  the  United  Pipe  Line  Company  ? 


652 


A.  No,  sir. 

Q.  Has  it  no  connection  with  it  ? 

A.  It  receives  oil  from  the  United  Pipe  Line  and  transports  it  from 
the  interior  to  the  sea-board. 

Q.  Please  tell  us  where  this  United  Pipe  Line  terminates  coming 
East?  At  Glean,  on  the  line  of  the  Erie  road ; I think  it  is  at  Sala- 
manca, on  the  Rochester  and  State  Line  road,  and  I am  not  sure 
whether  it  is  Kane,  on  the  Philadelphia  and  Erie  road. 

Q.  Does  this  Transit  Company  transport  oil  from  where  the  Pipe 
Line  delivers  it  to  the  railroad  ? 

A.  Yes,  sir,  in  some  cases.  Glean  is  one  of  these  points. 

Q.  Where  is  the  office  of  the  Transit  Company  in  this  city  ? 

A.  44  Broadway. 

Q.  Is  that  Mr.  Brewster’s  office  ? 

A.  Yes,  sir. 

Q.  When  was  that  Transit  Company  organized  ? 

A.  I am  unable  to  say  of  my  own  knowledge.  Mr.  Brewster  says 
he  thinks  a year  ago  last  January. 

Q.  That  Transit  Company  makes  contracts  with  the  railroad  com- 
panies for  the  transportation  of  oil,  does  it  not? 

A.  Mr.  Brewster  advises  me  that  it  has  one  contract  with  a rail- 
road. 

Q.  The  Standard  Gil  Company  purchases  crude  oil  in  the  oil 
fields,  does  it  not  ? 

A.  Yes,  sir. 

Q.  And  has  that  oil  transported  to  New  York  ? 

A.  Some  of  it. 

Q,  Has  the  Transit  Company  any  thing  to  do  with  the  transporta- 
tion of  that  oil  at  the  present  time  ? 

A.  It  has  transported  some  of  the  oil  used  by  the  Standard  Gil 
Company. 

Q.  Does  it  transport  the  greater  part  of  it  ? 

A.  It  has,  recently,  yes. 

Q.  For  how  long  a time  ? 

A.  I should  say  for  two  months. 

Q.  Do  the  owners  of  the  Standard  Gil  Company,  the  managers,  own 
any  stock  in  this  Transit  Company? 

A.  I decline  to  answer  the  question. 

Q.  Has  the  Standard  Gil  Company  contracts  with  the  railroad  com- 
panies for  the  transportation  of  oil  ? 

A.  It  has  not. 

(2-  1 1 as  it  (*v(‘r  liad  ? 

A.  Yes,  sir. 


653 


Q.  When  did  it  cease  to  have  such  contracts  ? 

A.  I should  say  upwards  of  five  years  ago  ; no,  it  had  one  contract 
with  the  Pennsylvania  road  of  a more  recent  date. 

Q.  When  did  that  cease  ? 

A.  Well,  two  or  three  years  ago. 

Q.  How  was  your  oil  transported  during  the  period  between  the  ter- 
mination of  that  contract  and  the  making  of  the  contracts  with  the 
Transit  Company  ? 

A.  What  contracts  with  the  Transit  Company  ? 

Q.  You  said  that  the  Transit  Company,  two  or  three  months  ago, 
began  to  transport  the  oil  for  the  Standard  Oil  Company  ? 

A.  No,  sir ; I did  not  make  that  statement.  1 said  that  it  had  trans- 
ported pretty  much  all  of  the  oil  brought  to  New  York  for  the  last  two 
months;  I did  not  say  it  began  to  do  it. 

Q.  When  did  it  begin  to  transport  oil  for  the  Standard  Oil  Oom- 
. pany? 

A.  When  it  had  its  line  completed  to  New  York,  which  was  a year 
ago,  more  or  less. 

Q.  What  do  you  mean  by  its  line ; has  it  a railroad  line  ? 

A.  A pipe  line. 

Q.  Then  the  Transit  Company  is  itself  a pipe  line  company  ? 

A.  I have  so  stated  ; yes,  sir. 

Q.  Did  your  contracts  with  the  railroad  terminate  when  the  Transit 
Company’s  pipeline  was  opened? 

A*  No,  sir;  before  that.  ^ 

Q.  How  long  before  that  ? 

A.  In  some  cases  a year,  five  years,  four  years,  three  years,  two 
years. 

Q.  Before  the  termination  of  those  contracts  and  the  opening’ of  the 
Transit  Company’s  pipe  line,  how  was  your  oil  transported  ? 

A.  Transported  by  the  railroads  at  prices  made  with  them  from 
time  to  time  for  its  transportation. 

Q.  You  had  contracts  with  them  for  transportation  ? 

A.  What  do  you  mean  by  contracts,  a written  paper,  or  an  agree- 
ment ? 

Q.  An  agreement. 

A.  They  were  all  verbal  agreements  made  from  time  to  time  ; might 
last  a month  ; lasted  as  circumstances  necessitated. 

Q.  Were  those  prices  lower  than  their  tariff  prices  ? 

A.  I don’t  know  what  their  tariff  prices  were.  I should  say,  how- 
ever, in  reply  to  that,  that  the  price  paid  by  the  Standard  Oil  Com- 
pany for  the  transportation  of  crude  oil  by  the  railroads  was  the  price 
at  which  any  one  else  could  have  transported  oil  aside  from  the  Stand- 
ard Oil  Company, 


654 


Q.  IIow  do  you  know  ? 

A.  Because  I know  they  were  willing  to  do  it  for  anybody  else.  I 
said  I did  not  know  what  tlieir  schedule  of  prices  were;  I only  know 
by  common  report  and  by  their  saying  they  would  not  transport  our 
oil  any  less  than  anybody  else’s. 

Q.  These  railroad  companies  have  given  you  rebates  in  former  times, 
have  they  not  ? 

A.  I decline  to  answer  the  question,  if  it  is  a question. 

Q.  When  did  such  rebates,  if  they  existed,  cease  ? 

A.  I decline  to  answer. 

Q.  Have  you  any  contracts  now  with  the  railroads  under  which  you 
received  rebates? 

A.  No. 

Q.  Did  you  receive  such  rebates  in  the  year  1881  ? 

A.  I decline  to  answer. 

Q.  Did  you  receive  as  high  as  $100,000  in  such  rebates  in  the  year 
1881  ? 

A.  Tliat  I decline  to  answer. 

Q.  Have  you  not  in  some  years  received  rebates  to  an  amount  as  high 
as  a quarter  of  a million  of  dollars  ? 

A.  That  1 decline  to  answer. 

Q.  Where  were  such  rebates  paid  to  you  or  to  your  company  ? 

A.  I am  unable  to  say. 

Q.  By  whom  were  they  paid  ? 

A.  I am  unable  to  say. 

Q.  Can  you  state  the  quantity  of  oil  that  the  companies  under  the 
control  of  the  Standard  Oil  Company  have  refined  and  exported  dur- 
ing the  past  year  ? 

A.  No,  I cannot. 

Q.  Can  you  state  what  peicentage  of  the  exports  have  been  made  by 
the  Standard  Oil  Company  or  parties  connected  with  it  ? 

A.  I cannot. 

Q.  Do  you  think  it  is  as  high  as  ninety  per  cent  of  the  exports  ? 

A.  I prefer  not  to  think  about  it. 

Q.  You  decline  to  express  any  opinion  on  the  subject  ? 

A.  Yes,  sir. 

Q.  Has  the  Standard  Oil  Company  any  refineries  in  or  near  this 
city  ? 

A,  It  has. 

Q.  Where  are  they  situated  ? 

A.  limiter’s  Point,  Long  Island. 

Q.  Wliiit  is  tlie  name  of  tliose  refineries  ? 

A.  1 don’t  know  that  tliey  have  any  name. 


655 


Q.  What  is  their  capacity  for  refining  ? 

A.  That  I am  unable  to  say. 

Q.  Can  you  tell  any  thing  about  it  ? 

A.  No,  sir. 

Q.  What  other  refineries  are  there  in  or  near  this  city  aside  from 
that  ? 

A.  Well,  there  are  quite  a number  as  I understand ; I have  not  vis- 
ited any  of  them.  I don’t  know  that  I have  been  in  a refinery  in  the 
vicinity  of  New  York  in  six  or  seven  years. 

Q.  Do  you  know  of  any  ? 

A.  I know  by  hearsay. 

Q.  What  one  do  you  know  of  by  hearsay  ? 

A.  Charles  Pratt  & Co. 

Q.  They  are  associated  with  the  Standard  Oil  Company,  are  they 
not? 

A.  I decline  to  answer. 

Q.  Charles  Pratt  is  a director  in  the  new  Standard  Oil  Company  of 
New  York  ? 

A.  I decline  to  answer. 

Q.  The  refinery  of  Charles  Pratt  & Co.  is  as  much  under  the  control 
of  the  Standard  Oil  Company  as  any  of  the  other  companies  you  have 
named,  is  it  not  ? 

A.  I decline  to  answer. 

Q.  Now  give  us  the  name  of  some  other  ? 

A.  I understand  that  Lombard  & Ayres  have  a refinery. 

Q.  Where  is  that  ? 

A.  I don’t  know  where. 

Q.  Do  you  know  what  its  capacity  is  ? 

A.  I do  not. 

Q.  Has  the  Standard  Oil  Company  any  connection  with  them  ? 

A.  I decline  to  answer. 

Q.  Does  the  Standard  Oil  Company  control  it  ? 

A.  I decline  to  answer.  / 

Q.  Does  not  the  Standard  Oil  Company  in  your  opinion  substan- 
tially control  the  entire  refining  business  in  the  States  of  New  York 
and  New  Jersey  ? 

A.  I decline  to  answer. 

Q.  I put  the  same  question  in  regard  to  the  refineries  in,  and  in  the 
neighborhood  of  Cleveland  ? 

A.  I make  the  same  answer. 

Q.  Can  you  name  ten  refineries  in  existence  at  the  present  time  in 
the  United  States  that  are  not  controlled  by  or  associated  with  the 
Standard  Oil  Company? 


656 


A.  Not  at  the  moment. 

A.  Can  you  name  five  ? 

A.  I guess  not. 

Q.  Can  you  name  one  ? 

A.  I guess  not. 

Q.  Your  daily  business  requires  you  to  understand  the  market  for 
refined  oil  and  the  production  and  consumption,  does  it  not  ? 

A.  No,  sir. 

Q.  Who  connected  with  your  establishment  in  New  York  could  in 
form  the  committee  of  these  outside  refineries  ? 

A.  I decline  to  answer. 

Q.  Of  what  does  the  sixty  or  seventy  millions  of  property  which  you 
stated  the  other  day  consist  ? 

A.  I decline  to  answer. 

Q.  Is  not  a large  part  of  it  at  the  present  time  in  the  State  of  New 
Y"ork  ? 

A.  I decline  to  answer. 

Q.  It  was  stated  the  other  day  by  Mr.  Brewster  that  the  Standard 
Oil  Company  had  a large  corps  of  correspondents,  domestic  and  for* 
eign,  and  agents  in  foreign  countries ; was  that  statement  correct  ? 

A.  I am  unable  to  say. 

Q.  To  what  office,  and  where  is  it  located,  do  those  agents  report  ? 
A.  That  I cannot  answer. 

Q.  Do  they  not  report  to  the  New  York  office  ? 

A.  I am  unable  to  state. 

Q.  Do  you  have  an  office  in  this  city  ? 

A.  No,  sir.  What  do  you  mean  by  my  having  an  office  ? 

Q.  I ask  whether  you  have  an  office  in  this  city,  where  you  do  busi- 
ness ? 

A.  Yes,  sir. 

Q.  Wliere  is  it  ? 

A.  44  Broadway. 

Q.  The  office  of  the  Standard  Oil  Company,  is  it  not? 

A.  No,  sir. 

Q.  Where  is  the  office  of  the  Standard  Oil  Company  in  this  city? 

A.  44  Broadway. 

Q.  Is  your  office  in  the  same  building  ? 

A.  Yes,  sir. 

(2.  Does  the  Standard  Oil  Company  rent  that  building? 

A.  '’14iat  I am  unable  to  say. 

(2.  You  do  not  know  any  thing  about  it  ? 

A.  No,  sir. 

(2-  That  is  the  place  you  named  as  the  office  of  the  Transit  Company  ? 


G57 


A,  U has  ail  office  in  the  same  building. 

Q.  Are  not  agents  sent  out  from,  and  do  they  not  report  to,  that 
building,  44  Broadway? 

A.  I am  unable  to  answer. 

Q.  Who  is  the  president  of  the  New  Jersey  Company  ? 

A.  I decline  to  answer. 

Q.  Is  not  his  office  in  New  York  ? 

A.  I decline  to  answer. 

Q.  Is  not  the  business  of  the  New  Jersey  .Company  substantially 
conducted  in  that  buHding,  44  Broadway  ? 

A.  I decline  to  answer. 

Q.  Is  not  the  business  of  the  other  companies  you  have  named  as 
connected  with  the  Standard  Trust  substantially  conducted  in  that 
building  ? 

A.  I decline  to  answer. 

Q.  Who  is  the  treasurer  of  the  Standard  Oil  Company? 

A.  I decline  to  answer. 

Q.  Are  you 

A.  I decline  to  answer. 

Q.  Does  the  Standard  Oil  Company  make  any  return  to  the  comp- 
troller of  this  city  of  its  gross  receipts  ? 

A.  What  Standard  Oil  Company  are  you  talking  about  now  ? 

Q.  Any  Standard  Oil  Company  with  which  you  are  connected  ? 

A.  I am  unable  to  answer  the  question. 

Q.  Does  any  Standard  Oil  Company  with  which  you  are  connected 
pay  any  taxes  in  this  city  or  State  ? ' 

A.  I think  it  does. 

Q.  How  much  a year? 

A.  I am  unable  to  say. 

Q.  Two  hundred  dollars  a year  ? 

A.  I cannot  answer  the  question. 

Q.  Does  it  pay  more  than  two  hundred  dollars  ? 

A.  I can’t  answer. 

Q.  Do  you  not  know  that  it  merely  pays  taxes  on  its  office  and 
furniture  ? 

A.  I can’t  answer  the  question. 

Q.  Do  you  know  what  proportion  of  the  oil  brought  to  New  York 
is  exported  ? 

A.  1 do  not. 

Q.  Did  you  not  hear  Mr.  Brewster  state  the  other  day  that  it  was 
about  eighty  per  cent  ? 

A.  I don’t  know  whether  I heard  him  or  not. 

83 


658 


Q.  You  said  something  the  other  day  about  petroleum  not  being 
the  third  in  the  list  of  exports,  did  you  not  ? 

A.  I think  I said  it  was  the  fourth  as  I understood  it. 

Q.  State  how  you  divide  the  exports  ? 

A.  I don’t  divide  ' them ; I made  the  statement  upon  what  I have 
understood  to  be  the  facts  in  the  case ; I don’t  know  what  is  ahead  of 
it,  except  I understand  the  cereals  and  cotton  are,  and  then  what 
ranks  ahead  of  petroleum  I am  unable  to  state. 

Q.  Do  you  not  know  .that  if  the  exports  are  divided  into  provisions, 
cotton  and  petroleum,  or  into  articles  of  food,  cotton  and  petroleum? 
that  petroleum  stands  third  ? 

A.  No,  I have  no  knowledge  of  it ; I have  never  studied  the  tables 
of  exports,  and  do  not  know  from  personal  knowledge  what  it  is.  I 
have  always  understood  it  was  the  fourth  in  value.  ~ 

Senator  Browxin^g  — You  don’t  object  to  its  being  the  third  ? 

The  Witness — No,  sir. 

Q.  Are  you  a member  of  the  Petroleum  Exchange  ? 

A.  No,  sir,  I am  not. 

Q.  Do  you  deal  in  that  Exchange  ? 

A.  I do  not. 

Q.  Does  your  company  ? 

A.  It  does  not. 

Q.  No  connection  with  it  ? 

A.  None  whatever. 

Q.  Do  you  buy  and  sell  futures  in  oil  ? 

A.  What  kind  of  oil  ? 

Q.  Petroleum  ? 

A.  There  are  crude  and  refined  petroleum.  Separate  them,  and  I 
will  answer  both  questions. 

Q.  Well,  in  crude  petroleum;  do  you  buy  futures  in  crude  petro- 
leum ? 

A.  We  do  not. 

Q.  Nor  sell  ? 

A.  Nor  sell. 

Q.  Do  you  buy  futures  in  refined  oil  ? 

A.  We  do  not. 

Q.  Do  you  sell  them  ? 

A.  Do  you  mean  now  in  the  sense  of  a man  selling  something  he 
lias  not  got,  and  does  not  expect  to  deliver  ? 

Q.  Yes,  sir. 

A.  We  do  not,  to  tlic  extent  of  a gallon,  and  never  have. 

Q'  Do  you  ever  sell  any  more  futures  than  you  have  of  oil  in  hand, 
or  in  the  i)roces3  of  manufacture,  to  deliver  ? 


659 


A.  No,  sir. 

Q.  Did  I understand  you  to  state,  the  other  day,  something  on  the 
subject  of  ships  accumulating  in  this  port  waiting  for  cargo;  did  you 
refer  to  that  subject  ? 

A.  I believe  I did ; yes,  sir.' 

Q.  Do  you  think  the  oil  business  had  any  connection  with  the  accu- 
mulation of  those  ships  waiting  for  cargo  ? 

A,  Certainly ; it  has  as  much  as  any  other  article  with  which  ships 
are  loaded. 

Q.  When  do  you  remember  of  any  circumstance  of  such  an  accumu- 
lation ? 

A.  Not  being  familiar  with  our  warehouse  business  I am  unable  to 
give  you  dates.  I only  know  this  from  the  daily  records  that  there 
are  times  when  we  have  a large  number  of  ships  in  the  berth,  and  at 
other  times  there  are  a very  small  quantity. 

Q.  Do  you  remember  a conspicuous  illustration  of  that  occurred  in 
January,  1881,  when  there  were  nearly  nine  hundred  ships  in  this 
port,  and  around  here,  waiting  for  cargos 

A.  No,  I have  no  knowledge  of  it, 

Q.  Do  you  remember  that  such  a case  occurred  in  the  months  of 
September  and  October,  1881  ? 

A.  I do  not. 

Q.  Do  you  know  whether  or  not  the  accumulation  of  those  ships 
have  occurred  at  times  when  there  were  what  are  termed  corners  in 
the  grain  trade  ? 

By  Senator  Browiting: 

Q.  Is  the  Standard  Oil  Company,  which  you  say  is  not  the  Stand- 
ard Oil  Company,  a consolidation  of  all  the  oil  producers  or  oil  refin- 
ers, or  both  of  those  interests  ? 

' A.  Neither;  it  is  not  a consolidation  of  the  oil  producing  or  the  oil 
refining,  or  the  two  together. 

Q.  It  puzzles  me  to  know  what  it  is. 

A.  The  stock  is  owned  to  a greater  or  less  extent  by  individuals 
who  are  connected  with  other  companies,  but  these  companies  are  not 
an  entirety. 

Q.  A syndicate  ? 

A.  I don’t  know  what  you  call  a syndicate. 

Q.  Is  there  a committee  representing  the  trustees  who  have  a com- 
mon or  separate  interest  in  all  these  oil  companies  ? 

A.  No  ; that  is  not  exactly  the  fact  of  the  case.  There  is  a com- 
mittee appointed  by  these  trustees  whose  duty  it  is  to  hear  represen- 
tatives of  any  or  all  of  these  companies,  and  this  committee  act  as  an 


660 


advisory  committee  to  the  gentlemen  of  the  various  companies  with 
whom  they  come  in  contact. 

Q.  Is  that  a hoard  of  control  ? 

A.  No  ; the  trustees  do  no  business. 

Q.  Have  they  authority  over  the  different  companies  ? 

A.  No,  sir. 

Q.  So  their  duties  only  commence  when  there  is  a difference  of 
opinion  as  to  rates  or  prices,  growing  out  of  competition  between  the 
different  companies  ? 

A.  Yes,  sir;  and  the  competition  may  exist  between  companies  in 
no  way  connected. 

Q.  So  they  have  no  absolute  control  over  these  companies  except 
upon  questions  of  authority  to  settle  disputes  ? 

A.  Not  to  that  extent.  Each  company  is  wholly  independent  of 
the  other.  This  committee  acts  as  an  advisory  committee;  has  no 
power  to  control  the  actions  of  any  company. 

By  Senator  Boyd  : 

Q.  It  has  no  legal  existence  ? 

A.  No,  sir. 

By  Senator  Biiownin'G: 

Q.  Other  than  that  created  by  honor,  as  a committee  agreed  upon 
by  these  companies  to  decide  as  to  how  much  each  company  shall 
raise  or  reduce  its  rates  so  as  to  destroy  competition  ? 

A.  Nothing  of  the  kind. 

Q.  Do  you  recollect  when  that  committee  was  first  appointed  ? 

A.  Very  soon  after  the  organization  of  the  trust,  in  the  early  part 
of  this  year. 

Q.  Of  recent  origin  ? 

A.  Yes,  sir. 

Q.  And  before  that  each  company  did  its  business  separately  ? 

A.  Yes,  sir  ; as  it  saw  fit. 

Q.  What  is  crude  oil  worth  a barrel  at  the  well  ? 

A.  I have  not  been  down  town  to-day  ; yesterday  it  was  worth  about 
76  or  77  cents. 

Q.  What  is  the  expense  of  the  transportation  of  it  to  the  place 
where  it  is  refined  ? 

A.  Abour  sixty  cents  a barrel. 

Q.  And  what  is  tlie  cost  of  refining  ? 

A.  About  half  a cent  a gallon. 

(2.  And  what  does  refined  oil  sell  for  to-day  in  the  market  ? 


661 


A.  About  three  and  a half  or  three  and  a quarter  cents  a gallon.  I 
, may  mislead  you.  You  ask  what  is  the  cost  of  refining;  that  does  not 
cover  the  loss.  You  take  the  net  cost  of  a barrel  of  crude  oil,  bring- 
ing it  to  market,  refining  it,  and  the  absolute  loss  in  the  refuse,  and 
there  is  not  a profit  of  a quarter  of  a cent  a gallon. 

Q.  Take  a hundred  barrels  of  crude  oil,  what  is  the  net  waste  in  re- 
fining it  ? 

A.  I should  say  about  ten  per  cent ; then  there  are  various  refuses 
which  are  not  worth  as  much  a gallon  as  oil  — naphtha,  tar,  etc.  ; it 
is  considered  excellent  if  we  got  seventy-five  gallons  out  of  one  hun- 
dred of  crude  oil ; and  that  will  depend  upon  the  fire  test  of  the  oil  ; 
if  you  make  a fire  test,  you  cannot  get  that. 

Q.  When  was  the  Standard  Oil  Company  organized,  the  one  that 
does  exist  ? 

A.  There  are  three  or  four  that  exist ; for  instance  the  Standard  Oil 
Company  of  New  York  was  organized  this  last  summer. 

Q.  When  was  the  first  Standard  Oil  Company  organized  ? 

A.  1870. 

Q.  Now  what  did  oil  sell  for  by  the  barrel  in  the  market  at  the 
time  this  first  Standard  Oil  Company  was  organized  in  1870  ? 

A.  Twenty  to  twenty-five  cents. 

Q.  What  does  the  same  oil  or  similar  oil  sell  for  to-day? 

A.  Seven  cents  a gallon. 

Q.  A difference  of  eighteen  cents  ? 

A.  Yes,  sir,  if  the  price  was  twenty-five  then  ; I may  have  it  a little 
too  high  or  too  low. 

A.  That  is  the  result  ? 

A.  Yes,  sir. 

By  Mr.  Chittexdeit  : 

Q.  What  was  the  product  of  the  crude  oil  made  in  1870  ? 

A.  I am  able  to  say  only  that  it  was  equal  to  the  demand  and  con- 
siderable greater. 

Q What  was  it  in  barrels  ? 

A.  I can’t  tell  what  it  was  then  or  is  now ; I know  there  has 
never  been  a time  when  there  was  not  as  much  as  the  world  wanted. 

Q.  You  do  not  claim,  do  you,  that  this  reduction  in  the  price  in  re- 
fined oil  from  twenty-five  to  seven  cents  is  wholly  the  result  of  im- 
provements cheapening  the  process  of  refining  ? 

A.  Not  wholly  due  to  that,  no,  sir. 

Q.  You  know  that  the  product  of  crude  oil  in  1870  was  not  a quarter 
of  what  it  is  to-day,  do  you  not  ? 


G62 


A.  No,  I don’t  know  what  the  proportions  are  ; I should  think  very 
likely  that  in  1870  the  relation  of  consumption  to  production  was 
about  the  same  as  now. 

By  Senator  Browning  : 

Q.  Is  the  amount  of  crude  oil  produced  in  1870  or  from  that  time 
down  to  this  a matter  of  record  ? 

A.  I presume  so. 

Q.  Where  ? 

A.  I have  no-doubt  but  what  it  is;  may  be  it  is  here;  I have  not  it 
and  never  have  seen  it. 

By  Mr.  Chittenden  : 

Q.  Was  not  the  product  of  crude  petroleum  in  1870,  four  millions 
four  hundred  and  eleven  thousand  and  sixteen  barrels  ? 

A.  I cannot  say, 

Q.  And  was  not  the  same  product  in  1880  twenty-five  million  eight 
hundred  and  five  thousand  three  hundred  and  sixty- three  barrels  ? 

A.  I can’t  say. 

Q.  According  to  your  recollection  is  not  that  about  the  proportion? 

A.  It  may  seem  strange  that  I am  not  able  to  be  at  all  precise,  but  ever 
since  I arrived  at  man’s  estate  I cannot  remember  statistics,  but  I know 
if  I am  buying  at  eight  and  one-half  and  selling  at  eight  and  three- 
fourths  I am  ahead. 

Q.  You  say  that  the  charges  on  oil  from  the  oil  fields  are  about 
sixty  cents  a barrel  ? 

A.  I say  it  cost  us  sixty  cents  a barrel. 

Q.  What  do  you  pay  for  transportation  ? 

A.  Sixty  cents. 

Q.  What  do  you  pay  the  United  Pipe  Line  for  transporting? 

A.  Twenty  cents  a barrel. 

Q.  Do  they  bring  it  from  the  oil  fields  to  New  York  for  that  ? 

A.  No,  sir ; they  bring  it  to  Olean  on  one  line,  and  I think  to  Kane 
on  the  Pensylvania  road. 

Q.  What  I want  to  get  at  is  the  actual  cost,  the  actual  price  paid 
per  barrel  in  large  quantities  for  transporting  petroleum  from  the  oil 
fields  to  the  refineries  here  ? 

A.  Sixty  cents  is  about  the  average  price. 

(2-  As  to  this  Standard  Trust,  that  is  created  by  an  agreement  in 
writing,  is  it? 

A.  Yes,  sir. 

Q.  Have  you  possession  of  that  writing? 


663 


A.  I have,  at  my  office. 

Q.  Will  you  furnish  the  committee  with  a copy  of  it  ? 

A.  No,  sir. 

Q.  You  could  if  you  chose  to  ? 

A.  I suppose  so,  unless  some  one  prevented  me. 

By  Senator  Browning  : 

Q.  Are  you  the  custodian  of  that  agreement  ? 

A.  No,  I cannot  say  I am. 

Q.  Whoever  is  the  custodian  of  that  agreement  is  he  subject  to 
orders  from  the  Board  or  any  one  else  as  to  the  production  of  that 
report  ? 

A.  I suppose  he  would  he. 

Mr.  Chittenden  — I have  to  say  to  the  committee  that  there  is 
no  use  in  my  atempting  to  examine  either  Mr.  Brewster  or  Mr.  Rocka- 
feller  if  they  pui’sue  the  course  of  Mr.  Flagler. 

Adjourned  to  Friday,  December  29,  1882,  at  ten  o’clock,  A.  M. 

Benjamin  Brewster,  being  duly  sworn,  was  then  interrogated  and 
testified  as  follows  : 

By  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  In  New  York  city. 

Q-  What  is  your  business  ? 

A.  I am  vice-president  of  the  National  Transit  Company,  which 
controls  the  United  Pipe  Line  and  also  Trunk  Pipe  Lines,  piping  oil. 

Q.  How  long  have  you  been  such  officer  ? 

A.  Since  something  over  a year. 

Q.  Are  you  familiar  with  the  business  of  the  Standard  Oil  Company  ? 

A.  I am,  to  a very  considerable  extent. 

Q.  You  among  other  gentlemen  appear  before  this  committee  for  tiie 
purpose  of  making  a statement;  what  is  it  your  desire  to  state  ? 

A.  It  seemed  to  me  it  would  be  interesting  to  this  committee  be- 
cause, as  I conceive,  a misapprehensibn  exists  regarding  the  operations 
of  the  Standard  Oil  Company,  to  know  something  of  its  operations 
practically  ; I am  more  particularly  in  charge  of  the  storage  and  piping 
of  oil ; to  begin  at  the  beginning,  this  oil  territory  is  covered  by  a 
district  something  less  than  100  miles  square,  and  out  of  that  grows  the 
fact  which  exists  of  one  company  practically  controlling  the  business — 
I speak  now  of  the  United  Pipe  Line  — because  it  is  done  better,it  is 
done  cheaper  and  it  is  for  the  benefit  of  the  great  mass  of  producers  ; 
the  LTnited  Pipe  Lines  are  connected  with  more  than  20,000  wells;  they 


064 


have  their  tankage  Ininched  at  different  points  of  sliiprnent;  tlie  oil  is 
taken  from  the  various  i)roducing  districts  and  thrown  out  to  these 
hunches  of  tankage  ; as  you  are  aware,  tlie  amount  of  oil  in  store  has 
steadily  increased  from  September,  1877,  when  the  total  reserved  stock 
in  the  United  Pipe  Line  was  something  less  than  a million  and  a ludf 
of  barrels,  until  at  the  close  of  November  the  gross  stocks  were  31 
000  barrels;  now  as  showing  something  of  the  magnitude  of  this  busi- 
ness, the  stocks  in  1881  increased  8,500,000  barrels;  that  necessitated 
the  building  of  store-houses  to  care  for  that  amount  of  oil ; I will  say 
that  a farm  of  100  acres  accommodates  eighteen  tanks — an  aveiage 
level  farm  of  100  acres  ; that  seems  like  a great  deal,  but  we  locale  these 
tanks,  we  dig  ditches  around  them  and  build  ridges  so  that  in  the  evenr, 
of  a tank  being  struck  by  lightning,  we  with  our  artillery,  which  we  keep 
at  all  bunches  of  tankage,  perforate  the  tanks  below  the  oil  line  and  ir 
runs  out  through  those  holes  and  we  are  able  to  confine  it  to  a single  tank; 
a fair  price  perhaps  for  tankage  would  be  thirty  cents  a barrel ; conse- 
quently there  was  required  for  plants  in  1881  something  over  two  million 
and  a half  of  dollars  for  store  houses — additional  store-houses — saying 
nothing  of  the  additional  pipe,  pumps  and  all  the  machinery  required 
to  handle  this  oil;  in  1882, up  to  the  close  of  November,  the  stock  had 
increased  8,000,000  of  barrels,  so  that  taking  Uecember  into  con- 
sideration, 1882  wdll  require  an  addition  of  two  millions  and  a half 
of  dollars  to  build  these  extra  store-houses.  Of  course,  to  do  that,  you 
require  a strong  company,  because  if  these  store-houses  are  not  produced 
the  oil  goes  upon  the  ground  at  the  cost  of  the  producer.  Now,  in  these 
producing  regions, whld-catting  if  you  please, is  going  on  constantly, which 
means  men  are  at  the  front  sinking  wells  and  seeking  new  develop- 
ments. When  a new  district  is  discovered  the  producer  puts  up  local 
tankage  — well-tankage  as  it  is  termed  — enough  to  accommodate  his 
well  perhaps  three  or  four  days,  perhaps  a week  ; but  he  at  that  mo- 
ment is  perfectly  helpless  except  for  some  Pipe  Line,  some  storage 
company,  to  relieve  him  of  his  oil,  because  a barrel  of  oil  simply 
means  forty-two  gallons  of  oil  in  bulk.  Now  for  him  to  undertake  to 
deliver  that  oil  anywhere,  to  find  packages,  or  even  to  deliver  it  in 
bulk  from  these  remote  distriets  because  this  oil  is  found  like  other 
minerals  in  the  midst  of  dense  forests  and  wild  regions,  he  says  to  the 
United  Pipe  Line,‘^  I wuint  you  to  connect  with  my  well.’’  We  run  a 
pipe  to  his  tank.  He  says,  I want  to  run  my  oil  to-morrov/.”  We 
send  a gauger  who  measures  the  oil,  ho  opens  the  faucet  and  lets  it  run 
and  tluMi  it  is  treated  ])recisely  as  money.  It  is  Jones’  well  number 
, district , dated , 379y^(j^  barrels  of  oil.  Now  Ihe  mo- 
ment that  that  oil  comes  into  the  custody  of  the  United  Pipe  Lines  from 


GG5 


that  moment  it  is  the  oil  of  commerce  marketable  on  all  the  Exchanires 
and  available  to  him  as  money.  And  here  I think  you  will  se^^  the 
advantages  in  this  district  of  having  one  strong  compciny  on  whom 
every  producer  can  rely,  to  take  care  of  this  oil,  as  if  you  district  this 
into  three,  five  or  a dozen  companies,  one  company  supplies  only  a 
certain  district  and  relieves  only  a certain  district.  Consequently  the 
market  for  that  oil  is  limited.  That  was  found  to  be  the  difficulty  in 
old  times  when  there  was  seven  different  companies.  I want  oil  but  I 
want  oil  in  company  B,  because  that  delivers  it  where  I want  it  and 
your  oil  is  in  C,  and  therefore  I cannot  take  it.  Now  when  this  be- 
comes one  consolidated  company,  the  United  Pipe  Lines,  it  delivers 
oil  wherever  the  customer  requires  that  oil  at  any  of  its  points  of  de- 
livery. Tt  jouts  the  humblest  producer  in  the  most  remote  and  inac- 
cessible district  on  a precise  equality  with  the  man  who  produces  his 
oil  adjacent,  if  you  please,  to  a railway  station. 

Q.  That  is  the  benefit  of  the  Pipe  Line  system  ? 

A.  That  is'the  benefit  of  having  one  line  to  do  this  business.  Now 
this  company  is  incorporated  under  the  laws  of  the  State  of  Pennsyl- 
vania. 

Q.  Which  company  is  that  ? 

A.  The  United  Pipe  Line. 

Q.  You  don’t  speak  of  the  Standard  Oil  Company  ? 

A.  No,  but  this  is  a Standard  interest ; it  is  an  adjunct  of  the  Stand- 
ard, Perhaps  I should  not  say  adjunct  of  the  Standard,  but  the 
Standard  really  control  this  jm’operty,  and  furnish  the  capital  to  take 
care  of  this  production  and  really  are  the  owners  of  this  property. 

Q.  But  is  the  company  a separate  and  distinct  company  from  the 
Standard  Oil  Company  ? 

A.  A separate  and  distinct  organization  from  the  Standard  Oil 
Company,  incorporated  by  the  State  of  Pennsylvania  ; now  the  offi- 
cers of  this  company  are  compelled,  under  oath,  on  or  before  the  tentli 
of  each  month  to  make  a statement  of  their  condition  — to  show 
where  this  oil  is,  how  much  there  is  of  it,  and  what  obligations  are 
extant  against  that  oil.  In  passing,  I will  say  that  the  United  Pipe 
Lines  have  bought,  within  five  days,  450,000  barrels  of  oil  to  maintain 
its  stocks  ; when  the  cold  weather  comes  in  there  is  a shrinkage,  and 
before  we  make  our  return  this  whole  mass  of  oil  is  gauged,  I will  say 
for  your  information,  every  day,  and  we  know  that  it  is  there. 

Q.  You  say  the  Pipe  Line,  in  order  to  supply  a certain  demand,  pur- 
chases so  many  barrels  of  oil  ? 

A.  No,  sir;  to  preserve  the  integrity  of  this  stock  from  shrinkage 
and  for  evaporation,  from  shrinkage  from  any  source  ; if  you  hold  our 
certificate  for  a thousand  barrels  of  oil,  if  you  have  a credit  balance 
84 


in  any  amount  of  oil,  we  are  responsible  to  you  for  that  oil,  except  in 
cases  of  fire  and  tanks  being  struck  by  lightning,  and  that  becomes  a 
general  average  upon  this  whole  mass  so  far  as  you  are  concerned  ; the 
company  loses  the  tank  ; the  oil  becomes  a general  average  upon  the 
whole  mass. 

Mr.  Flagler  (to  the  witness)  — I can  see  very  naturally  where  you 
have  fallen  into  an  error  of  expression,  when  you  say  that  the  United 
Pipe  Line  is  an  adjunct  of  the  Standard  Oil  Company  ; you  will 
remember  that  the  Standard  Oil  Company  don’t  own  it  at  all:  the 
Standard  Oil  Trust  own  the  stock  of  the  Standard  Oil  Company,  and 
own  most  of  the  stock  of  the  United  Pipe  Line,  and  own  the  stock  of 
this  company  and  that  company  ; the  Standard  Oil  Company  is  merely 
one  more,  to  be  literal  about  it;  people  speak  of  the  Standard  Oil  Com- 
pany as  the  great  hydra-headed  monster  which  represents  every  thing; 
that  is  not  the  fact ; there  is  a Standard  Oil  Company  in  this  State,  and 
in  Ohio,  Now  Jersey  and  Pennsylvania,  besides  a number  of  other 
companies,  and  the  stock  of  these  companies  to  a greater  or  less  extent 
is  represented  in  the  Standard  Oil  Trust. 

Senator  Boyd  — And  the  Pipe  Line  is  owned  by  the  Trust  ? 

Mr.  Flagler  — Whatever  interest  is  owned  by  the  Trust ; it  is  not 
the  entirety,  however;  it  is  a very  large  percentage  of  it. 

The  Witness — Now  I think  you  have  before  you,  that  here  is  one 
comprehensive  scheme  which  takes  this  oil  of  the  producer  which  pro- 
vides him  with  facilities  for  storing  and  running  this  oil,  and  which 
puts  the  small  and  large  upon  absolutely  the  same  footing ; now 
I will  go  a step  further  and  say  here  that  the  Standard  Oil  Company 
come  in  and  their  buyers  are  at  the  front  every  day  in  the  year  to  buy 
credit  balances,  that  is  the  amount  of -these  small  pjurchases  at  the 
market  rate  all  the  time  ; if  you  are  a small  producer  in  a remote  dis- 
trict, at  the  nearest  village  you  will  find  a Standard  Oil  buyer,  and 
you  take  your  ticket  which  represents  a credit  balance  and  he  pays 
you  the  money  for  it  at  precisely  the  same  rate  that  a man  is  selling 
50,000  barrels  for  on  the  Exchange ; a better  scheme  for  the  protection 
of  the  producing  interest,  and  a fairer  scheme  for  all  I can  scarcely 
conceive;  now  the  charge  for  storage,  if  you  please,  to  the  producer  — 
his  oil  goes  into  the  line  and  he  is  allowed  thirty  days’  free  storage; 
in  that  thirty  days,  if  he  sell  his  oil,  there  is  no  charge  ; no  charge  is 
made  to  the  producer  for  the  connections  to  his  well ; after  his  thirty 
(lays’  free  storage,  then  the  storage  costs  him  one  cent  and  a quarter 
per  barrel  per  month  or  fifteen  cents  per  barrel  per  year  ; when  this 
oil  is  taken  from  the  line  by  the  manufacturer,  whether  it  be  the  Stand- 
jird  (fil  Company’s  or  anybody  else’s,  a running  charge  of  twenty  cents 


GG7 


per  barrel  is  paid ; that  is  only  when  the  oil  leaves  the  possession  of 
the  line ; it  may  be  ten  days  after  they  take  it  into  the  line,  it  may  be 
ten  years;  for  this  whole  30,000,000  barrels  taken  into  the  line  not 
one  cent  has  been  yet  collected  under  this  system;  but  this  is  not 
onerous  upon  the  producer  ; the  producer  puts  his  oil  into  the  line  and 
there  is  no  charge,  except  if  he  chooses  to  hold  it  there  for  a better  mar- 
ket, then  ho  pays  the  storage  charges  ; as  I said  before,  the  Standard 
Oil  Company  have  their  buyers  at  the  front  to  take  these  balances  at 
the  market  rate ; now  we  come  next  to  the  department  which  I repre- 
sent— the  National  Transit  Company  Trunk  Line;  there  is  a line 
running  from  the  oil  regions  to  New  York,  terminating  at  Bayonne; 
that  line,  part  of  the  way,  has  three  pipes  capable  of  delivering  an 
aggregate  of  48,000  barrels  per  day;  for  the  whole  way  it  has  t\vo 
pipes  capable  of  delivering  here  32,000  barrels  per  day,  and  at  about 
each  twenty-five  or  thirty  miles  we  have  pumping  stations;  these  Trunk 
Pipes  have  exercised  no  right  of  eminent  domain;  they  have  bought 
their  way,  and  paid  their  way,  and  when  they  have  found  a party  who 
says,  don’t  want  your  pipe  line,”  they  have  made  a detour  and  have 
found  those  who  did  want  pipe  lines,  and  have  paid  and  come  through ; 
now  we  go  over  the  hills  and  through  the  valley  paying  no  attention 
to  the  grades,  but  at  the  proper  intervals  we  have  these  pumping 
stations  and  throw  this  oil  to  the  sea-board,  and  those  pulsations  are 
going  on  day  and  night  from  one  year’s  end  to  the  other ; now  why  do 
we  do  this,  and  who  is  benefited?  We  do  it  to  reduce  the  cost,  and 
when  the  cost  is  reduced,  just  so  certain  as  the  laws  of  gravitation 
operate,  the  consumer  is  benefited  ; there  are  ephemeral  and  manipu- 
lative movements  of  the  market,  but  when  you  reduce  the  cost  of  any 
given  product,  that  benefit  goes  to  the  consumer,  and  the  record  of  the 
Standard  is  without  parallel  in  that  respect. 

Q.  In  the  record  of  the  Standard.  According  to  Mr.  Flagler’s  state- 
ment •— 

A.  While  these  corporations  are  separate  .and  distinct,  it  is  practi- 
cally one  set  of  men  who  are  handling  this  interest. 

Q.  Then  one  set  of  men  control  all  these  oil  companies  referred  to 
by  Mr.  Flagler,  do  they  ? When  you  refer  to  the  Standard,  you  mean 
what  is  called  the  Standard  Trust,  I suppose  ? 

A.  I use  Standard  in  the  general  sense. 

Q.  As  applied  to  all? 

A.  In  the  general  sense. 

Q.  You  cannot  blame  the  public  if  they  use  Standard  in  the  same 
sense  ? 

A.  My  dear  sir,  I want  them  to  use  it  in  thesame  sense,  because  the 
Standard,  instead  of  being  a company  to  be  held  up  to  opprobrium 


6G8 


and has  been,  as  its  record  shows,  a public  benefactor.  You 

very  pertinently  said  that  this  committee  represent  the  people.  They 
do  not  represent  a faction  ; they  do  not  represent  any  disaffected 
refinery  ; they  represent  the  masses.  Now  whose  light  is  petroleum  ? 
It  is  the  poor  man’s  light  emphatically.  You  referred  to  the  export 
of  oil  at  four  and  three-eighths  cents  a gallon  for  refined  oil  alongside 
the  ship  here  at  New  York.  Now  there  is  a large  amount  of  that 
crude  oil  consumed  in  the  country,  but  not  as  it  is  consumed  abroad, 
because  our  people  are  better  able  to  use  better  light,  and  we  have  to 
bring  these  low  crude  oils  from  the  West,  because  the  demand  for  high 
test  oils  — these  high  test  oils  in  petroleum  represent  the  cream  in  the 
milk.  Now  we  have  put  this  machinery  to  work  and  reduced  the  cost 
of  these  goods,  and  no  man  or  set  of  men  come  to  the  Standard  except 
to  combine  to  put  up  prices ; never  have  they  come  to  the  Standard 
and  said:  ‘‘Let  us  lower  prices.”  Now  I am  speaking  of  these  trunk 
pipe  lines,  and  I say  why  do  we  do  it  ? Why  do  we  put  this  money  in  ? 
In  the  first  jdace  oil  was  hauled  out  of  the  regions  in  packages  on  cars  ; 
then  in  wooden  tanks  on  platform  cars  ; then  came  various  improve- 
ments in  the  way  of  tank  cars,  until  now  a very  perfect  tank  car  with 
a valve  at  the  top  to  load,  and  a valve  at  the  bottom  with  which  to 
unload,  is  in  use.  Next  comes  the  trunk  pipe,  which  throws  the  oil 
from  the  producing  regions  to  the  sea.  Originally  these  refineries 
were  located  in  the  interior.  We  found  in  the  development  of  this 
business  — I cannot  give  you  the  figures  exactly,  because  1 have  not 
refreshed  my  mind,  but  perhaps  eighty  per  cent  of  this  oil  is  ex- 
ported. 

Q.  Is  that  eighty  per  cent  of  all  the  oil  produced  ? 

A.  Eighty  per  cent  of  all  the  oil  consumed  — the  world’s  con- 
sumption ; I should  say  seventy-five  to  eighty  per  cent  is  exported 
from  this  country.  Now  we  have  found  that  petroleum  and  its  residu- 
ary products  could  be  produced  cheaper  here,  and  therefore 
■we  have  Vjrought  the  refiners  to  the  sea-board.  Now  see  what 
this  Standard  Oil  Company  have  done  for  the  port  of  New  York.  No 
other  city  has  a pipe  line  to-day  but  New  York.  A tabulated  list  of 
exports  shows  that  while  in  1881  Philadelphia  exported  2,000,000  ; 
Baltimore  302,000,  and  New  York  6,500,000  of  barrels,  in  1882, 
Philadelphia  instead  of  2,000,000  exported  1,600,000;  Baltimore  in- 
stead of  exporting  362,000,  exported  228,000,  and  New  York  instead 
of  6,500,000  exported  something  more  than  7,000,000  barrels.  Now 
gentlemen  the  prime  factor  in  that  was  the  Standard  Oil  Company, 
liecause  it  can  deliver  these  goods  cheaper  here  than  Philadelphia  can 
deliver,  or  than  Baltimore  can  deliver  them. 

il-  Ooes  the  Standard  send  any  oil  to  Philadelphia  or  Baltimore  ? ^ 


669 


A.  The  Standard  has  refineries  at  both  places.  When  I speak  of 
this  I am  using  the  word  “ standard’’  in  its  general  sense — standard  in- 
terests. 

Q.  Then  you  mean  by  producing  this  tabulated  statement  to  show 
that  instead  of  continuing  to  send  large  quantities  from  Philadelphia 
and  Baltimore,  they  are  decreasing  the  quantities  shipped  from  there 
and  increasing  the  quantities  shipped  from  New  York  ? 

A.  I mean  to  say  that  so  far  that  has  been  the  result ; that  the 
facilities  we  have  given  the  port  of  New  York  have  made  it  the  port 
of  export. 

Q,  Those  facilities  consist  in  the  pipe  lines  ? 

A.  Those  facilities  consist  in  the  pipe  lines  sent  to  New  York  that 
we  have  the  capacity  to  deliver  the  goods  here  cheaper. 

Mr.  Flagler — I ask  the  chairman  to  ask  the  witness  in  regard  to 
the  production  of  oil  in  foreign  countries. 

The  Witness  — I Av^as  coming  to  that  a little  later,  but  I will  bring 
out  that  point  now.  1 want  to  say  here,  Mr.  Chairman,  that  I am 
stating  here  simply  what  I believe  to  be  the  facts,  but  I may  put  them 
in  a clumsy  way  and  may  omit  a great  many  things.  If  I can  present 
this  case  as  it  is  entitled  to  be  presented,  you  will  be  convinced  that 
such  is  the  fact  regarding  the  working  of  this  great  interest  — that  it 
is  a benefit  to  the  people,  and  has  given  the  people  cheaper  oil  than 
could  have  been  done  from  any  divided  control  of  this  matter.  Now 
the  charge  has  been  made  that  we  were  wasting  the  product  of  this 
country,  that  we  sold  oil  too  cheap  abroad,  that  we  could  get  double 
the  price  just  as  easy  as  to  get  what  we  do  get.  Now,  gentlemen,  that 
simply  arises  from  the  lack  of  knowledge  of  the  situation.  I want  to 
call  your  attention  to  this  fact,  that  the  Standard  Oil  Company  has  a 
resident  agent  in  the  East  Indies  to  protect  the  petroleum  interest.  Now 
every  other  exporter  is  benefited  by  that,  for  he  is  not  there  to  protect  any  ’ 
particular  brand  but  the  petroleum  interests  of  this  country  and  to  see 
that  no  unfriendly  legislation  is  brought  about  there,  and  protect  us  in 
every  way  possible.  We  have  a staff  of  foreign  correspondents,  be- 
cause Ave  have  a great  capital  invested  in  this  business,  and  it  behooves 
us  to  knoAV  what  the  condition  of  the  world  is  regarding  the  market. 
Now  I say  to  you  that  the  Eussian  fields  are  very  threatening  to-day. 
That  a railroad  has  been  built,  that  American  tank  cars  have  been  in- 
troduced, that  a pipe  line  forty  miles  long  has  been  established  there, 
and  it  is  only  by  these  grinding  processes  that  we  shall  be  able  to  re- 
tain the  trade  of  Western  Europe  ; already  they  are  in  Eastern  Europe 
with  their  lubricating  oils.  Their  oils  are  not  as  good,  although  we 


have  reports  from  some  fields  that  their  burning  oil  is  equal  to  ours, 
but  the  average  is  not  equal  to  ours.  T think  that  is  the  fact  regard- 
ing that  point,  and  the  statistics  will  show  that  the  price  of  oil  has 
been  steadily  deci’easing  in  price,  that  the  margin  between  the  manu- 
facturing and  selling  prices  has  been  steadily  lessening,  and  gentle- 
men, from  that,  if  you  will  excuse  the  expression,  comes  a great  deal 
of  this  Damn  the  Standard now  the  policy  of  the  Standard  Oil 
Company  — if  its  policy  was  as  charged,  it  would  not  live  a great 
while ; in  my  judgment  the  policy  with  which  it  is  charged  would  be 
suicidal ; the  policy  by  which  it  has  lived  is  to  grind  a large  grist  and 
take  a small  toll,  and  when  they  forget  that  and  take  a large  toll,  th^y 
bring  a hornet’s  nest  of  opposition  about  their  ears,  which  they  suffer 
for;  now  the  speculation  of  187G  was  not  the  creation  of  the  Stand- 
ard, but  it  has  suffered  from  it  ever  since  ; undue  profits  were  realized 
and  it  multiplied  the  machinery  in  existence*;  and  now,  gentlemen,  I 
appeal  to  you  if  it  is  not  common  sense,  if  it  does  not  protect  this 
large  property  to  work  cheaper  than  anybody  else  can  afford  to  work, 
and  if  we  do  that,  the  brother  manufacturer  may  suffer,  but  the  peo- 
ple are  benefited;  of  course,  it  is  impossible  to  cover  this  whole 
ground;  I want  to  give  the  committee  an  idea  of  what  the  company  is 
doing,  and  an  idea  of  their  policy,  because  I believe  that  this  commit- 
tee are  misinformed  ; I believe  that  the  public  are  misinformed  ; now  the 
Standard  have  made  money  ; in  1870,  I went  into  the  oil  regions  and 
the  question  was,  will  it  do  to  invest  capital  in  this  enterprise  ? Is  it 
a permanent  industry?  Oil  w^as  $4.85  a barrel;  I met  a man  there 
who  had  100,000  barrels,  and  he  said,  it  will  be  $10  a barrel  in  less 
than  sixty  days;  these  oil  wells  are  giving  out it  bankrupted  him  of 
course,  because  he  took  the  wrong  tack  ; the  Standard  Oil  Company 
have  never  faltered  ; they  have  had  the  courage  of  their  convictions ; 
they  have  put  their  money  into  this  industry;  the}^  are  producing  oil, 
and  doing  their  work  cheaper  than  any  rival  organization  can  afford 
to  do  it,  and  that  is  their  policy,  and  by  that  only  will  they  survive; 
and  I ask  you  whether  that  is  common  sense  or  nonsense,  wlietlier  it 
does  not  appeal  to  you  that  that  is  the  true  theory  of  this  business. 

Now  oil  is  unique.  Its  territory  is  covered  within  a 100  miles 
square.  Wheat  is  produced  everywhere  ; corn  is  produced  every- 
where ; cotton  is  produced  in  a great  many  districts  so  far  this  dis- 
trict is  confined  and  it  can  be  worked  more  economically  by  this 
machinei-y  controlled  in  a few  hands  than  it  can  by  scattered  and 
weak  organizations.  I think  1 have  shown  you  that  in  the  United 
Pipe  Lines.  Now  if  that  isso,  I repeat  simply  that  the  law  of  gravita- 
tion is  n<;t  any  more  certain  to  work  than  that  the  lower  cost  of  pro- 
<luction  will  beindit  the  consumer,  and  does  do  it.  And  I refer  to  the 
fact  that  in  the  winter  of  ’57  the  running  charge  was  thirty  cents  a 


671 


barrel.  Now  the  United  Pipe  Lines  have  not  brought  about  all  this 
changed  result  but  still  it  is  cheapening  the  doing  of  this  business  all  the 
time.  Now  a great  deal  has  been  said  and  it  is  an  old  cry  for  certain 
parties  to  say,  stop  thief/’  and  point  to  the  wrong  man.  It  is  the 
oldest  trick  in  the  world  for  a man  who  is  going  to  move  the  market  in 
Wall  street  to  employ  Mr.  Vanderbilt  or  Mr.  Gould’s  broker.  It  is  not 
novel  or  very  ingenious  that  men  who  are  working  to  move  the  oil 
market  should  employ  the  Standard  brokers  to  elevate  or  depress  it. 
But  now  I want  to  call  your  attention  to  the  testimony  of  two  wit- 
nesses here.  Mr.  Welch  thought  in  his  testimony  that  the  Standard 
Oil  Company  had  very  little  to  do  with  the  speculation  in  oil.  Mr. 
Thnrber  in  his  testimony  said  that  the  Standard  Oil  Company  have 
made  from  $20,000,000  to  $40,000,000.  Now  I want  to  say 
that,  the  Standard  Oil  Company  had  no  more  to  do  with  that  specula- 
tion than  you. 

Q.  What  speculation  was  that  ? 

A.  That  was  the  speculation  where  oil  went  from  49f  up  to  $1.36. 
Why,  Mr.  Chairman,  a creating  country  is  always  a speculative  country. 
Let  me  call  your  attention  to  one  fact — that  oil  stood  four  days  ago 
closing  at  $1.08|-  a barrel,  with  a well  to  open  which  would  test  a new 
district.  The  next  morning  that  well  had  been  opened  and  was  a gusher 
producing  a thousand  barrels  a day,  and  before  night  oil  was  below 
ninety  cents.  Had  that  proved  a dry  well,  oil  would  have  been  a 
dollar  and  a quarter.  What  has  the  Standard  to  do  with  that  ? 
The  Standard  is  in  the  oil  business  and  they  are  bound  to  have  good 
information,  but  the  Standard  does  not  speculate  in  oil.  Let  me 
emphasize  that.  The  Standard,  like  every  good  merchant  dealing  in  a 
certain  class  of  goods,  if  he  believes  they  are  cheap  he  accumulates  a 
stock.  The  Standard  does  not  accumulate  stock  for  sale  in  its  crude 
form  ; it  accumulates  stock  for  manufacture.  We  always  buy  these 
balances  from  the  small  producers.  Of  course  we  turn  them  over  at  the 
Exchanges  and  relieve  ourselves  from  them,  so  that  that  is  merely  a stand- 
off, for  we  cannot  lose  our  place  at  the  front.  We  are  bound  to  protect 
those  small  producers  and  we  do  it  without  cost  to  ourselves,  and  it  is  an 
admirable  arrangement  for  them  and  for  us  too;  now  when  this  gi’eat 
oil  speculation  was  made  what  did  that  come  from  ? Why  Cherry 
Grove  opened  the  17th  of  May  to  illustrate  well  646,  which  you  don’t 
know  about  and  we  do  ; we  had  no  interest  in  it  whatever,  but  oil 
went  down  and  this  little  district  here  in  sixty  days  increased  to  35,- 
000  barrels  per  day  production,  and  in  sixty  days  it  was  down  to  10,- 
000,  and  in  thirty  days  more,  down  to  4,000  barrels;  that  is  what  made 
the  speculation  ; oil  went  up,  up,  up ; the  Standard  Oil  Company  do 


not  buy  oil  or  sell  it,  or  interfere  with  the  market  at  jill,  hut  keep  its 
machinery  moving,  selling  the  refined  product  and  keeping  this  vjist 
army  of  labor  employed,  and  employed  at  ^od  rates,  and  gentlemen 
understand  perfectly  well  that  there  is  no  such  blessing  to  the  peer 
man  as  constant  employment.  Here  I come  to  this  question  of  fu- 
tures. No  great  manufacturing  business  can  be  conducted  without 
selling  futures.  Last  year  our  consumption  of  oil  was  something  over 
19,000,000  barrels  that  we  ground  through  this  mill  legitimately;  a 
portion  of  this  goes  out  as  crude,  because  Spain  has  a duty  against  re- 
fined oil  which  favors  crude  ; therefore  the  crude  goes  there  to  be  re- 
fined. In  Germany  a refinery  is  now  being  erected  and  they  have  the 
same  state  of  affairs  ; a portion  goes  out  as  crude.  France  has  a tariff 
in  the  same  way.  To  keep  this  vast  machinery  employed  we  cannot 
say  to-day,  ‘‘we  won’t  sell  you  any  thing  for  to-morrow,  because  we 
do  not  know  what  is  going  to  happen.”  We  know  what  is  going  to 
happen;  we  know  that  the  army  of  labor  wants  employment ; we 
know  that  this  great  capital  must  be  kept  moving  or  it  will  roast  us  ; 
therefore  we  say,  “we  will  sell  you  oil  for  to-morrow,  we  will  sell  it 
for  next  rrionth  within  reasonable  limits.”  Now,  gentlemen,  that  oil 
is  immediately  charged  up,  one  against  the  other,  and  we  always  own 
the  oil ; but  we  have  secured  thirty  days’  business,  sixty  days’  or  ninety 
days’  business  if  you  please,  for  this  machinery  ; nothing  could  bo 
more  legitimate  so  far  as  we  are  concerned ; a policy  that  would  nob 
permit  that  would  be  fatal  to  any  great  enterprise  ; how  does  it  affect 
those  that  are  buying  from  us  ? the  foreign  markets  are  chartering 
ships ; I have  got  February  oil  to  deliver  ; I want  my  ship  here  in 
February;  so  that  you  make  your  arrangement  ; that  is  all  hona  fide  ; 
it  is  all  in  the  line  of  business,  and  like  the  noise  that  goes  with  the 
stage-coach,  the  coach  cannot  go  without  it.  When  you  come  to  transac- 
tions that  are  purely  ideal,  why  I cannot  bring  myself  to  believe  that 
they  are  any  thing  but  mischievous,  that  they  create  a fever  in  the 
parties  who  deal  in  them  ; perhaps  a sort  of  reasoning  can  be 
brought  out  to  say  that  it  stimulates  trade,  but  when  the 
country  is  in  a speculative  mood  and  fevered  with  the  excite- 
ment of  speculation,  we  are  not  exactly  in  the  frame  of  mind 
to  do  that  steady  business  which  makes  a country  prosperous  and  rich. 
That  would  seem  to  be  my  conviction  regarding  that  matter;  that  is 
about  the  general  idea  I have  at  present.  If  you  desire  it,  Mr.  Chairman, 
there  is  a statement  of  the  business  of  th(‘  United  Pipe  Lines  show- 
ing the  growth  of  this  reserved  stock  up  to  this  day.  It  is  simply 
what  is  placed  before  the  public.  There  is  nothing  secret  about  this 
thing.  It  is  charged  that  the  Standard  controls  this  thing  and  mon- 
opolizes it;  nothing  could  be  farther  from  the  truth.  That  is  simply 


a st-atement  of  the  exports  for  a series  of  years,  and  here  is  a statement 
showing  the  prices  of  oil  and  wtiat  the  steady  decline  has  been.  I 
don’t  know  that  it  is  pertinent  to  this  matter  of  corners  or  futures, 
but  I felt,  seeing  the  statements  that  have  been  submitted  here,  that 
this  matter  was  not  properly  understood  by  your  committee,  and  I 
would  like  to  be  questioned  by  you  regarding  any  points  on  which  you 
may  desire  information. 

Q.  You  say  that  the  Standard  Oil  Company  does  not. produce  oil 
nor  control  the  wells  ? 

A.  With  the  exception,  as  Mr.  Flagler  says,  of  a minor  interest  in  a 
small  company  which  they  have  obtained,  they  do  not ; practically 
they  do  not. 

Q,  But  they  produce  a very  small  proportion  of  the  oil  which  is  re- 
fined here? 

A.  Well,  that  is  represented  by  the  stockholders.  Practically  I 
may  say  we  are  producers. 

Q.  They  are  owners  of  the  refineries  ? 

A.  They  are  owners  of  the  refineries,  but  allow  me  to  say  here,  Mr. 
Chairman,  that  to-day  there  are  refineries  sufficient  in  existence,  out- 
side of  the  Standard,  to  supply  every  barrel  and  gallon  of  oil  that  is 
required  for  consumption  in  the  United  States.  The  Standard  has 
not  a monopoly  of  refining  interests. 

Q.  All  the  oil  that  is  refined  by  the  Standard  Oil  Company,  with 
the  exception  of  this  small  quantity  that  comes  from  an  interest  in 
one  well,  has  to  be  previously  purchased  by  the  company? 

A.  Every  barrel,  and  also  that,  because  that  belongs  to  a company 
in  which  we  have  only  a small  interest. 

Q.  All  the  oil  which  is  refined  by  the  Standard  Oil  Company  must 
be  purchased  first  from  the  producer  by  the  company? 

A.  Yes,  sir. 

Q.  Then  afterward  they  sell  it? 

A.  Then  afterward  we  sell  the  refined  product.  I do  not  mean  to 
say,  in  saying  that,  that  if  we  had  a large  stock  of  oil  and  we  believed 
that  a drop  was  impending,  we  wouldn’t  sell  any  oil ; but  I do  mean 
to  say  that  in  this  great  speculation,  this  great  rise  of  oil,  the  Standard 
neither  bought  nor  sold  a barrebof  oil  above  eighty-five  cents  except 
these^purchases  at  the  front. 

Q.  Has  the  Standard  any  interest  in  the  Oil  Exchanges? 

A.  No,  sir;  except  that  members  of  the  Standard  are  members  of 
the  Oil  Exchanges. 

Q.  They  are  separate  organizations  ? 

A.  They  are  separate  organizations. 

Q But  controlled  by  members  of  the  Standard  Oil  Companv  ? 

85 


G74 


A.  Not  at  all,  no,  sir.  Here  is  an  Exchan^  of  one,  two  or  threo 
hundred  members  ; the  Standard  may  liave  two  or  three  tickets  in  it, 
that  is  all. 

Q.  Then  the  Exchanges  trade  with  the  Standard  Oil  Company,  do 
they  ? 

A.  The  Exchanges,  if  you  will  allow  me,  are  just  as  the  New  York 
Exchange,  or  just  as  the  Stock  Exchange.  The  brokers  are  the  mem- 
bers. The  Exchanges  do  not  trade,  but  tlie  members  of  the  Exchange 
trade  with  each  other  for  their  customers.  If  you  have  a liundred 
thousand  barrels  of  oil,  you  say  to  your  broker,  “sell  a hundred  thou- 
sand barrels  of  oil  for  me.”  He  goes  in  and  sells  to  any  customer  he 
can  find.  If  you  say  buy,”  he  goes  in  and  buys  it  of  whoever  has  it 
to  sell.  The  Exchange  is  merely  the  medium  through  which  it  is 
done.  It  is  like  a club  ; certain  members  liave  tlie  privilege  of  going 
there  and  eating  their  meals  and  occupying  those  rooms  ; just  so  with 
the  Exchange  — certain  members  who  have  been  initiated  and  paid 
their  dues  have  the  privilege  of  going  there. 

Q.  Do  you  say  that  the  Pipe  Lines  have  been  constructed  by  the 
Standard  Trust  ? 

A.  No,  sir,  by  the  National  Transit  Company.  It  is  a corporation 
of  the  State  of  Pennsylvania,  and  it  has  a very  large  amount  of  stock- 
holders entirely  outside  of  the  Standard  Trust. 

Q.  Of  what  companies  is  the  Standard  Trust  composed  ? 

A.  The  Standard  Trust  holds  the  stock  in  trust  of  a large  number 
of  companies  ; I could  not  undertake  to  name  them,  but  it  holds,  for 
instance,  a certain  amount,  or  controlling  interest  in  the  National 
Transit  Company,  a controlling  interest  in  the  United  Pipe  Lines,  in 
the  stock  of  the  Bayonne  Eefinery  Company,  and  so  on. 

Q.  But  the  Standard  Oil  Company  has  an  interest  in  the  Pipe  Line  ? 

A.  The  Standard  Trust  controls  it  and  holds  control  of  the  stock 

♦Q.  What  w^as  the  cost  of  the  construction  of  the  various  Pipe  Lines 
in  round  numbers  ? 

A.  Well,  that  I am  quite  unable  to  give  you. 

Q.  Have  you  any  approximate  idea  ? 

A.  Well,  yes,  the  whole  United  Pipe  Lines  and  National  Transit 
Trust  Company  must  approximate  to  more  than  $20,000,000  ; more 
that  $20,000,000  invested  there. 

Q.  What  proportion  of  that  was  invested  by  the  Standard  Oil  Com- 
pany  ? 

A.  Well,  a majority  of  it. 

Q.  What  is  the  value  of  the  refineries  and  store-houses  of  the  Stand- 
ard Oil  C()m])any  ? 

A.  Well,  the  store-houses  are  included  ; that  is,  what  you  call  store- 


675 


houses  are  the  tanks  for  this  oil  ; a 35,000  barrel  tank  I call  a 35,000 
barrel  store-house.  That  would  be  included  in  the  cost  of  the  Pipe 
Lines. 

Q.  That  does  not  belong  exclusively  to  the  Standard  Oil  Company  ? 

A.  No. 

Q.  The  refineries  do  ? __ 

A.  The  refineries  most  of  them  do ; some  do  not ; we  have  undivided 
interests  ; we  have  partners  in  various  outlying  refineries  that  work 
their  interest  entirely  independent  of  the  Standard  ; but,  senator,  the 
aggregate  value  of  this  Standard  Trust  property  is  in  the  neighborhood 
of  !|50,000,000  or  $60,000,000  ; now,  I cannot  tell  you  how  that  is 
made  up. 

Q.  What  other  producing  fields  in  the  world  are  Arnerican  produc- 
ers compelled  to  compete  with  ? 

A.  The  most  dangerous  field,  and  only  dangerous  field  is  the  Rus- 
sian field ; there  are  fields  in  Germany ; there  are  some  in  the  East 
Indies  ; there  is  quite  a production  in  California  ; but  we  consider  the 
Russian  field  the  prolific  field  ; the  Russian  fields  are  furnishing  all  the  v 

steamers  on  the  Y olga,  and  they  are  using  petroleum  for  fuel ; the 
quantity  is  large,  and  while  the  refined  oil  is  not  equal  to  ours,  it  is  a 
question  of  economy  in  their  producing  it ; their  oil  is  admirably  fitted 
for  lubricating  purposes,  as  I have  said,  and  they  are  inundating 
Eastern  Europe  with  it  to  the  exclusion  of  our  oil. 

Q.  Have  they  refineries  in  Russia? 

A.  They  are  building  refineries  in  Russia  now. 

Q.  Where  are  their  fields  situated  t 

A.  I was  thinking  of  that  this  morning ; I have  got  it  in  my  mind’s 
eye  on  the  map;  it  is  in  the  southern  part  of  Russia;  one  field  is  near 
the  Black  sea,  and  another  prolific  field  down  near  the  Caspian  sea. 

Q.  Are  there  other  native  products  besides  petroleum  which  compete 
with  the  petroleum  interests  of  this  country  in  foreign  countries  ? 

A.  Not  at  these  low  prices  ; now  you  take  petroleum  and  we  are 
, advised  that  in  the  East  Indies  many  acres  were  formerly  devoted  to  the 
1 cultivation  of  rape  seed  for  oil ; they  have  abandoned  that  industry; 
j petroleum  has  crowded  out  those  products  because  of  the  superiority 
1 of  the  light  and  its  cheapness. 

I Q.  What  is  the  source  of  profit  to  the  pipe  line  ? 

I A.  Its  rate  of  freight  — what  it  gets  over  and  above  what  it  costs  ; 

'i  it  carries  oil  for  a certain  price,  and  what  that  price  is  above  the  cost 
i of  doing  business  is  the  profit. 

Q.  And  do  you  convey  oil  for  all  companies  and  all  producers  that 
y apply  to  you  ? - 


676 


A.  These  pipe  lines  I will  say  are  a new  mode  of  transportation,  and 
that  is  a question,  and  the  manner  of  handling  this  oil  — for  instance 
to  stock  the  New  York  Line  we  will  say  requires  500,000  haritls  of 
oil ; now  you  have  oil  in  the  regions  ; you  deliver  us  10,000  barrels  of 
oil ; now  the  question  of  just  when  that  10,000  barrels  of  oil  would  be 
deliverable  there  is  somewhat  difficult  to  determine  ; but  what  we  do 
we  add  transportation  and  deliver  the  oil  to  the  parties  here,  and 
deliver  a great  deal  of  oil  in  that  way. 

Q.  I mean  the  pipe  lines  under  the  control  of  your  company  ? 

A.  Well,  the  National  Transit  Company  control  the  United  Pipe 
Lines.  / 

Mr.  Flagleu  (to  the  Chairman) — Wasn’t  it  in  your  mind  to  ask  him 
about  whether  they  received  and  delivered  for  all  parties  ? That  is  em- 
phatically true  so  far  as  the  United  Pipe  Lines  are  commenced. 

Q.  And  you  convey  oil  for  all  producers  ? 

A.  For  all  producers. 

Q.  Have  you  fixed  rates  for  transportation  ? 

A.  We  have. 

Q.  How  are  those  rates  fixed  ? 

A.  They  are  fixed  by  the  exigency  of  the  case,  whatever  it  may  be. 

Q.  Then  they  are  arbitrarily  fixed  by  the  company  ? 

A.  They  are  arbitrarily  fixed  by  the  company. 

Q.  There  is  no  State  law  regulating  them  ? 

A.  There  is  no  State  law  regulating  them ; the  check  if  you  please 
would  be  the  railroad  which  is  parallel  to  us  all  the  time  and  don’t 
give  away  its  business  unless  we  can  do  it  cheaper  than  they  can. 

Q.  Then  there  is  competition  between  the  pipe  lines  and  the  rail- 
roads ? 

A.  There  is  competition  between  the  pipe  lines  and  railroads  as  a 
matter  of  course,  and  they  have  fought  strenuously  against  losing  this 
business  you  can  imagine;  here  we  have  two  pipe  lines  with  the  ca- 
pacity of  32,000  barrels  a day  ; any  railroad  that  has  had  its  grasp  upon 
that  don’t  like  to  give  it  up,  and  will  not  give  it  up  unless  we  can  do 
business  cheaper  than  they  do.  ^ 

Q.  Have  you  any  idea  how  many  persons  are  connected  with  the 
Standard  Oil  interests  represented  by  the  Standard  Trust  Company 
and  your  Transit  Company? 

A.  No,  sir,  but  it  is  an  army;  it  is  indefinite  and  that  is  as  near  as 
I can  come  to  it. 

Q.  Composed  of  persons  scattered  all  over  the  Union  I suppose  ? 

A.  All  over  this  country  and  abroad,  too,  but  of  course  mostly  in 
this  country. 

Q.  Is  there  any  foreign  capital  invested  in  the  enterprise  ? 


m 


A.  No,  sir. 

Q.  What  was  the  original  capital  invested  by  all  these  interests  ? 

A.  All  these  interests  did  not  exist  when  the  original  company  was 
formed. 

Q.  Then  these  are  branches  ? 

A.  These  have  come  in  ; agreat  many  of  these  companies  have  come 
in  and  received  stock  for  these  interests  that  have  come  in. 

Q.  How  are  dividends  declared  as  among  these  various  branches  of 
the  interest  ? 

A.  Declared  from  the  earnings  paid  into  the  Trust ; each  one  en- 
tirely independent. 

Q,  Each  company  pays  independently  into  the  trust  ? 

A.  Each  company  pays  independently  into  the  trust. 

And  then  the  trust  divides  among  the  stockholders  ? 

A.  The  trust  divides  among  the  stockholders. 

Q.  Do  you  know  how  many  stockholders  receive  a portion  of  the 
dividends  ? 

A.  I have  never  looked  at  the  list,  and  I don’t  know. 

Q.  This  statement,  given  in  Pennsylvania,  began  in  1872.  Now 
would  the  dividends  amount  to  810,000,000  or  over? 

A.  Oh,  when  that  statement  was  made  that  you  referred  to,  the  Trust 
was  not  in  existence. 

Q.  How  long  has  the  Trust  been  in  existence  ? 

A.  I think  a year  last  January.  If  you  will  allow  me  I would  like 
to  digress  one  moment  here,  because  I think  it  is  a matter  of  interest 
to  you  as  legislators.  The  State  of  Pennsylvania  brought  suit  foi- 
ls,000,000  of  taxes  against  the  Standard  for  ten  years’  overdue  taxes 
— unpaid  taxes  — claiming  that  if  we  had  bought  oil  within  the  State 
of  Pennsylvania  wo  had  done  business  within  the  meaning  of  the  law, 
and  were  liable  for  a tax  upon  our  whole  capital,  wherever  invested  ; 
that  is  to  say,  if  the  Western  Union  Company  are  doing  business  in 
Pennsylvania,  their  whole  170,000,000  is  taxable  there ; if  the  Erie 
railroad  has  twenty-five  miles  in  Pennsylvania  and  500  miles  else- 
where, the  whole  capital  is  taxable  there.  Now  to  state  that  proposi- 
tion seems  to  be  to  refute  it ; and  yet,  senator,  as  it  seems  to  me,  the 
public  mind  is  so  poisoned  and  misinformed  regarding  this  thing,  that 
the  papers  of  the  city  of  New  York  absolutely  seemed  to  gloat  over  the 
fact  that  the  Standard  was  at  last  getting  its  desert.  Let  us  see  : here 
is  a corporation  that  has  steadily  brought  business  to  New  York,  and 
has  more  than  2,000  vessels  employed  to  do  this  business  annually, 
and  the  State  of  Pennsylvania  comes  in  and  says:  We  mine  these 
products,  and  we  ought  to  get  the  benefit  of  it,  and  we  will  tax  you 
upon  your  business,  wherever  it  is  done  ; we  will  tax  you  upon  all  your 


678 


business,  and  upon  all  your  money  employed  to  bring  the  oil  to  the  port  I 
of  New  York.’^  Now,  New  York  did  not  not  understand  that.  We  J 
said:  “ If  that  is  the  law,  why  we  must  have  separate  corporations;  1 
we  must  have  a Standard  Oil  Company  to  do  the  business  of  New  ] 
York,  one  to  do  business  in  New  Jersey,  and  one  to  do  busi- 
ness  in  Ohio,  if  that  is  the  law,  because  we  are  liable  to  be  taxed  over  / 
and  over  and  over,  and  were  forced  into  this. 

Q.  That  is  into  the  making  of  separate  companies  ? 

A.  Exactly. 

Q.  Then  the  Standard  Oil  Company  exists  for  Nevv  York  State  ? 

A.  The  Standard  Oil  Company  exists  for  New  York  State. 

Q.  The  Standard  Oil  Trust  exists  for  what  State  ? 

A.  It  is  incorporated  under  the  laws  of  the  State  of  New  York,  but 
it  holds  the  stock  of  these  various  corporations.  The  Standard  Oil 
Company  of  New  York  is  one  corporation,  and  the  Standard  Oil  Trust 
is  another. 

Q.  You  say  there  are  several  companies  interested  in  this  enterprise  ; 
the  Standard  Oil  Company  is  incorporated  for  the  State  of  New  York  ? 

A.  Yes,  sir ; it  does  the  business  of  the  State. 

Q.  What  company  does  the  business  of  the  State  of  New  Jersey  ’ 

A.  The  Standard  Oil  Company  of  New  Jersey. 

Q.  And  of  the  State  of  Ohio  ? 

A.  The  Standard  Oil  Company  of  Ohio. 

Q.  Then  the  Standard  Oil  Company  consists  of  various  companies 
existing  in  various  States  ? 

A.  Exactly ; and  other  corporations  as  well,  that  we  have  a partial 
interestdn,  oftentimes,  or  wholly,  if  you  please. 

Q.  The  Standard  Oil  Trust  was  created,  you  say,  a year  and  a half 
ago? 

A.  I think  a year  last  January. 

.Q.  Then  it  must  have  been  in  existence  in  1880,  at  the  time  when 
it  is  alleged  here  that  the  dividends  amounted  to  $10,000,000  ? 

A.  I think  it  was  in  January,  1881,  that  it  was  organized  ; but  that 
statement  there,  respecting  dividends,  is  so  clearly  erroneous,  that  I 
imagine  it  covers  a period  of  ten  years’  dividends  instead  of  one  year. 

Q.  Will  you  state  what  is  the  difference  between  the  dividends  and 
the  net  profits  of  the  company  ? 

A.  You  mean  in  amount  ? 

Q.  Yes. 

A.  That  I should  be  utterly  unable  to  state.  For  instance,  we  shall 
spend  $2,500,000  for  tankage,  this  year  — the  United  Pipe  Line  — 
and  that,  of  course,  when  it  is  expended,  cannot  be  divided  up,  but  it 


GT9 


is  the  accumulated  property.  The  dividend  is  the  money  which  is 
disbursed  to  the  stockholders  and  taken  from  the  business. 

Q.  After  deducting  certain  sums,  which  the  company  consider  nec- 
essary to  improve  their  property  ? 

A.  Yes. 

Q.  How  much  money  did  they  expend  in  improving  their  property 
in  the  year  1880  ? 

A.  Well,  my  connection  with  this  company  dates  from  January, 
1881. 

Q.  Then  you  don’t  know  ? 

A.  No,  I don't  know  ; the  Standard  Oil  Company,  I would  say,  will 
spend  this  year  in  construction,  $8,000,000. 

Q.  That  is  taken  out  of  the  net  profits  ? 

A.  Yes,  if  we  make  the  money  ; if  we  don't  make  the  money,  we 
must  either  contribute  more  money,  or  have  an  indebtedness. 

Q.  But  the  company  has  steadily  made  money  from  year  to  year 
since  the  time  of  its  commencement  ? 

A.  Oh,  yes;  it  is  one  of  those  happy  instances  where  we  benefit  the 
people  and  make  a little  money  ourselves,  and  I want  you  to  follow 
the  facts  and  look  at  the  figures  and  see  if  that  is  not  so.  Now,  some 
blunderer  may  worry  along  and  ruin  himself,  as  well  as  damage  people 
around  him,  and  neither  help  the  people  nor  benefit  himselfi  I want 
fair  consideration  given  to  these  figures. 

Q.  Does  your  Transit  Company  own  any  property  in  New  York 
State  ? 

A.  Oh,  yes,  sir. 

Q.  What  does  that  property  consist  of  ? 

A.  We  have  stations  ; we  buy  land  for  receiving  tanks.  We  have, 
for  instance,  at  every  station  two  tanks  or  more  ; we  pump  from  the 
next  station  west  into  one  tank  one  day  and  are  drawing  from  the 
other  tank,  and  the  next  day  we  turn  to  the  other  tank  and  draw  from 
the  other. 

Q.  Then  your  storages  are  at  Green  Point  and  elsewhere  are  they? 

A.  Those  belong  to  the  refiners.  Suppose  one  pump  breaks  we 
should  want  to  stop  the  whole  line ; therefore,  for  that  purpose,  we 
require  real  estate.  I would  like  to  have  you  see  one  of  our  pumping 
stations;  it  would  interest  you.  It  has  a big  twelve-inch  plunger  and 
two  of  these  immense  pumps  that  are  just  pushing  night  and  day 
from  one  year’s  end  to  the  other,  making  commerce  and  developing 
business  here.  And  it  is  a record  which  has  no  fluctuation  from  the 
beginning,  which,  modestly  I think,  we  deserve  some  credit  for,  in- 
stead of  abuse.  i 

Q.  What  is  the  value  of  the  Transit  Company’s  property,  located  in 
the  State  of  New  York  ? 


GSO 

A.  Well,  that  would  require  an  inventory  to  be  made,  and  furtlier 
than  tiiat,  it  may  be  said  scarcely  to  be  completed ; we  are  really  in 
the  throes  of  creation  now. 

Q.  Where  are  your  tanks  situated  ? 

A.  Well,  we  have  seven  stations  between  this  and  the  initial  part  of 
Olean.  Most  of  this  is  in  New  Jersey.  How  many  stations  are  there 
in  New  York  State,  Mr.  Flagler  ? 

Mr.  Flagler  — There  are  quite  a number  of  them  in  the  State  of 
New  York.  I guess  we  haven’t  but  two  or  three  stations  in  Jersey. 

The  WiTisTESS  — Then  we  have  four  or  five  stations  in  New  York. 

Q.  What  is  the  value  of  that  property? 

A.  Well,  a station  costs  — it  is  asking  me  a question  I am  unable 
to  answer,  because  it  is  a subject  to.whicli  I have  never  given  a thought. 
This  line  has  only  been  in  operation  a few  months,  and  it  is  some- 
thing that  is  coming  all  the  time.  We  really  have  not  got  settled 
down  to  work;  we  really  do  not  know  where  we  are.  We  are  doing 
business  and  pushing  it  along  all  the  time ; we  had  1,000  men  on 
our  pay-roll  last  month  on  the  National  Transit  Company. 

Q.  Y^ou  mean  for  construction  ? • 

A.  Construction  and  also  keeping  the  line  in  operation. 

Q.  You  say  that  you  have  been  spending  money  in  extending  the 
commercial  interests  of  the  company  throughout  foreign  countries  ; 
about  how  much  have  you  spent  in  that  manner  ? 

A.  Not  a large  amount  ; I presume  it  costs  us  $20,000  a year  to 
keep  our  corresponding  agent  in  the  East  Indies;  we  pay  a corre- 
spondent here  $1,000,  and  there  $1,000  — not  a very  large  amount. 

Q.  Do  you  know  the  value  of  the  Standard’s  property  in  the  State 
of  New  York  ? 

A.  No,  sir,  I don’t;  while  1 have  a general  knowledge  of  all  this 
business,  my  intimate  knowledge  is  more  connected  with  this  pipe 
line  interest. 

Q.  Could  you  give  or  send  us  a statement  to-morrow  about  the  value 
of  your  Transit  property  situated  in  the  State  of  New  York  ? 

A.  I think  that  I should  decline  to  do  that  ; I don’t  see  where  the 
proper  ground  lies  in  this  investigation  for  calling  for  it. 

Q.  It  lies  in  this  way;  we  did  not  call  you  as  a witness  and  you  have 
volunteered  to  come  and  make  a certain  statement ; now  of  course  it  is 
our  duty  to  act  the  part  of  cross-examiners  ; according  to  all  rules  of 
evidence,  we  have  a right  to  cross-examine  you  on  all  these  details  ? 

A.  Senator,  you  wouldn’t  take  any  advantage  of  that ; we  see  certain 
statements  which  are  thrown  out  broad-cast,  which  are  unfair  and  give 
wrong  impressions;  now  we  come  here  and  give  you  a statement  of 
facts  ; now  I su))mit,  senator,  it  is  crowding  the  mourners  a litlle  to  ask 


me  how  many  ducats  I have,  etc.,  and  so  on  ; I don’t  quite  see  how  that 
comes  in  under  your  ruling  of  cross-examination;  we  have  not  said 
that  we  haven’t  made  any  money ; we  have  not  said  we  haven’t  an 3^ 
property ; but  we  do  defy  any  set  of  men  to  point  to  an  abuse  of  the 
public  by  us. 

Q.  I don’t  doubt  that;  my  object  is  to  set  you  right,  just  as  much 
as  it  is  to  get  the  information ; you  have  stated  that  the  Press  has 
misrepresented  you  and  that  the  public  have  wrong  impressions,  and  it 
does  seem  to  me  that  when  you  refuse  to  make  a statement  as  to  the 
value  of  your  property,  located  in  this  State,  which  may  be  subject  to 
taxation,  that  there  is  certainly  a little  coloring  for  the  opinion  of  the 
Press  ? 

A.  When  that  question^comes  from  the  tax  gatherer  who  comes  for  it 
all  the  time,  he  gets  his  answer. 

Q.  I will  ask  you  the  question  ? 

A.  I desire  to  go  upon  the  record  — I want  you  to  think  it  over  and 
judge  whether  this  is  quite  a fair  question  to  ask  under  the  scope  of 
this  committee. 

Q.  You  have  gone  beyond  where  the  scope  of  this  committee  is? 

A.  So  did  these  parties  whom  you  permitted  here  to  testify. 

Q.  They  referred  to  this  as  a matter  of  cornering  ? 

A.  There  are  several  pages  I read  this  morning  that  are  as  innocent 
regarding  corners  and  futures  as  any  literature  that  I have  seen. 

Q.  I will  ask  you  what  in  your  estimation,  under  oath,  is  the  value  of 
all  the  property  owned  by  the  National  Transit  Company  located  in  the 
State  of  New  York  ? 

A.  I am  unable  to  state. 

Q.  Are  you  able  upon  reference  to  your  books  to  give  the  committee 
that  information  ? 

A.  It  would  be  a matter  of  considerable  difficulty  to  do  so.  I cannot 
say  that  it  is. an  impossibility.  ' 

Q.  How  long  would  it  take  you  to  obtain  that  information  on  refer- 
ence to  your  books  ? 

A.  That  I am  unable  to  state. 

Q.  About  how  long  ? 

A.  From  the  books  it  cannot  be  obtained. 

Q.  From  any  other  source  ? 

A.  The  other  source  would  be  to  send  parties  to  locate  certain  prop- 
erty which  is  within  the  State.  This  National  Transit  Company  has  a 
charter  from  the  State  of  Pennsylvania  and  operates  in  the  States  of 
Pennsylvania  New  Jersey  and  New  York,  etc.  Now  this  property  is 
not  segregated  and  we  have  never  taken  a separate  inventory. 

86 


682 


Mr.  Dodd  — In  paying  the  taxes  in  the  S»tate  of  ICew  York,  I think 
that  separation  is  made.  It  is  necessary  in  paying  the  tonnage  tax 
in  either  State,  that  New  York  should  get  that  portion  of  it  that  lies’ 
in  its  territory,  and  Pennsylvania  the  portion  that  lies  within  its  terri- 
tory. I think  this  division  has  been  made  as  nearly  as  possible  and 
will  be  found  in  the  reports  both  at  Ilarrisburgh  and  at  Albany. 

The  Witness  — That  is  a matter  that  is  in  the  charge  of  the  comp- 
troller. 

Q.  Our  object  is  to  see  whether  we  cannot  ascertain  really  that  this 
statement  may  be  correct.  Is  there  any  thing  else  that  you  would  like 
to  state  to  the  committee? 

A.  I have  exhausted  my  memorandum. 

Adjourned  to  December  16,  1882,  at  10  o’clock,  A.  M. 


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STATEMENT  Respecting  Petroleum  Exports  — (Continued). 
Yearly  Exports. 


i 


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The  aboye  figures  are  in  barrels  of  forty-two  gallons  each. 


Yearly  and  Monthly  Statistics  of  Petroleum,  1876-1882. 


688 


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— Hoococ5rHcoocoo?ey 
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ST  ATISTIOS  — ( Continued). 


689 


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690 


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C95 


Production  is  taken  from  Pipe  Line  Runs,  which  will  prove 
correct  in  the  long  run,  but  may  mislead  temporarily.  The  stocks  at 
wells  have  been  reduced  during  last  year  about  1,500,000  barrels,  which 
accounts  partially  for  the  large  runs  of  1881. 

Six  principal  European  ports  comprise  Bremen,  Antwerp, 
Hambift’g,  Rotterdam,  Amsterdam  and  Stettin. 

The  above  tables  show,  in  the  figures  of  the  past  year,  some  very 
important  and  interesting  facts: 

The  'production  which  Avas  believed  at  the  beginning  of  last  year  to 
be  at  its  height  continued  to  increase  until  July,  but  has  undoubtedly 
in  the  mainfield  — Bradford — been  decreasing  since,  Avhile  the  newly 
found  Eastern  district  — Allegany  county  — has  during  this  period 
about  made  up  Bradford’s  loss.  Whether  it  will  do  so  much  longer  is 
very  much  doubted,  as  my  best  information  states,  that  the  Eastern 
field  cannot  produce  much  more  than  the  present  production  of  about 
10,000  to  11,000  barrels,  and  furthermore,  that  in  all  probabilities  it 
will  soon  share  the  fate  of  all  previous  fields,  that  is,  to  decrease,  if  too 
much,  and  Avild  drilling  is  going  on,  as  this  must  exhaust  any  territory 
This  is  also  the  case  in  Bradford,  Avhere  the  decrease  Avould  be  much 
larger  except  for  the  heaA^y  torpedoing  of  a great  manyAvells  last  year. 

The  consuniption  all  over  the  world  has  been  increasing  so  enormously 
that  our  exports  exceeded  those  of  last  year  over  fifty  per  cent.  Taking 
into  consideration,  that  in  some  parts  of  the  far  East,  petroleum  has 
only  been  introduced  the  last  few  years,  it  is  fairly  to  be  expected  that 
the  steady  increase  of  the  last  fifteen  years  will  continue.  Should  this 
be  the  case  and  the  yearly  increase  only  amount  to  ten  or  fifteen  per 
cent,  it  requires  only  a moderate  decrease  in  the  production  to  change 
the  condition  of  our  article  completely,  and  to  do  aAvay  Avith  the  con- 
tinuous increase  of  stocks. 

Oil  bought  at  present  prices  of  about  eighty  cents  will  cost,  after  a 
year,  about  $1.05,  and  after  tAvo  years,  about  $1.25,  including  all  charges 
storage  and  interest,  etc.,  etc. ; and  as  there  is  to-day  no  cheaper  article 
offered  for  investment  or  speculation,  I can  only  advise  buying  oil,  as 
long  as  the  present  dull  and  depressing  conditions  last.  When  a general 
change  has  taken  place  and  is  shoAvn  openly,  it  will  be  too  late  to 
benefit  by  it. 

New  York,  Januar'y  16,  1882. 

Respectfully, 

NIC.  MEHLEN, 

23  William  Street. 


United  Certificate,  81-J. 


Decernher  29,  1882. 


Benjamin  Brewster  recalled  : 

Mr.  Dodd  also  appears  as  counsel  for  Mr.  Brewster. 

By  Mr.  Chittenden  : 

Q.  In  your  testimony  the  other  day  the  following  inquiries  were 
put  and  answered : 

Q.  That  is  the  benefit  of  the  pipe  line  system  ? 

A.  That  is  the  benefit  of  having  one  line  to  do  this  business  ; now 
this  company  is  incorporated  under  the  laws  of  the  State  of  Pennsyl- 
van  ia. 

Q.  Which  company  is  that  ?' 

A.  The  United  Pipe  Line. 

‘‘Q  You  do  not  speak  of  the  Standard  Oil  Company? 

A.  No,  this  is  a Standard  interest ; it  is  an  adjunct  of  the  Stand- 
ard interest ; perhaps  1 ought  not  to  say  adjunct  to  the  Standard, 
but  the  Standard  really  control  this  property  and  furnish  the  capital 
to  take  care  of  this  production  and  really  are  the  owners  of  this  prop 
erty.” 

Now  to  what  corporation  did  you  refer  in  that  testimony,  what 
was  its  name  ? 

A.  When  I spoke  of  the  Standard,  I spoke  of  the  Standard  in  its 
general  public  sense ; there  are  a great  many  of  these  matters  that  are’ 
called  Standard,  but  I referred  to  the  United  Pipe  Line’s  corporation. 

Q,  Is  there  a corporation  called  the. United  Pipe  Line’s  Company? 

A.  United  Pipe  lanes,  not  Pipe  Line’s  Company;  UnitedPipe  Lines 
I think  is  the  corporation. 

Q.  Where  is  that  company  incorporated  ’ 

A.  Pennsylvania. 

Q.  When  was  it  incorporated? 

A.  I think  in  1876  or  1877  ; I may  be  wrong. 

Q.  Are  you  an  officer  of  that  company  ? 

A.  I am  not. 

Q.  What  is  its  capital  ? 

A.  I cannot  state  that. 

Q.  Your  liest  impression  ? 

A.  I cannot  state  it. 

il.  Is  it  ten  millions  of  dollars  ? 

A.  I decline  to  give  an  impression. 

Wliat])ipe  lines  does  that  company  own  or  control,  from  what 
phu^e  to  whiit  place  do  they  extend  ? 

A.  Itownsand  controls  the  tankage  containing  thirty  millions  of 
barrels  of  oil  in  round  numbers  ; the  small  pipes  leading  to  the  twenty 
thousand  wells  with  which  it  is  connected  and  the  pipes  leading  to 


697 


certain  delivery  points  where  this  tankage  bundled  as  I explained  in 
jiny  testimony  the  other  day — Glean;  and  I am  unable  to  give  all  the 
points. 

Q.  Give  the  extreme  points  to  whieh  it  runs  eastward  in  the  diree- 
tion  of  the  sea-board. 

A.  My  impression  is  that  Glean  is  the  eastern  point,  but  I am  not 
certain  ; but  it  is  all  within  a hundred  miles  square  of  the  oil  territory. 

Q.  Does  it  substantially  control  what  you  call  the  tankage  in  the  oil 
territory  ? 

A.  It  owns  a very  great  majority  of  the  tankage  there. 

Substantially  all  of  it? 

A.  I have  made  my  answer. 

Q.  Is  that  all  the  answer  you  can  give? 

A.  That  is  my  description  of  it ; it  owns  a very  great  majority  of 
the  tankage  there  but  not  all  of  it  by  any  means. 

Q.  Assuming  that  Glean  is  the  eastern  terriiinus,  how  is  the  oil 
transported  from  that  point  east  t0  the  sea-board  ? 

A.  By  rail  and  by  pipes  at  the  option  of  the  shipper. 

Q.  By  what  pipes? 

A.  The  National  Transit  Company’s  pipes. 

Q.  And  they  run  from  Glean  where  ? 

A.  Bayonne. 

Q.  Gn  New  York  bay  ? , 

A.  Gn  the  N^w  York  bay  or  Jersey  coast  ; in  New  Jersey. 

Q.  Is  the  National  Transit  Company  a corporation  ? 

A.  It  is. 

Q.  Where  organized  ? 

A.  In  Pennsylvania. 

A.  It  has  a charter. 

A.  Yes,  sir  ; obtained  from  the  Legislature. 

Q.  When? 

A.  I am  unable  to  give  the  date ; it  is  an  old  charter. 

Q.  Well,  how  old,  fifteen  years  r 

A.  It  may  be  and  it  may  not  be  more  than  ten,  I don’t  know. 

Q.  Was  it  a charter  expressing  that  it  was  for  the  construction  of 
pipe  lines  for  conveying  oil  ? 

A.  That  I don’t  know. 

Q.  Have  you  a copy  of  that  charter  ? 

A.  I have  not. 

Q.  Have  you  a copy  in  your  office  in  this  city  ? 

A.  I presume  there  is  one. 

Q.  Will  you  furnish  it  to  the  committee  ? 

A.  I decline. 

Q.  Where  is  the  principal  place  of  business  of  that  corporation  ? 

88 


698 


A.  Perhaps  New  York  ; it  has  aline  running  to  Cleveland,  a line  to 
Pittsburgh,  a line  to  Buffalo,  and  a line  to  Milton  on  the  line  to 
Philadelphia;  each  one  of  those  lines  does  its  business  and  the  Bayonne 
business  ; the  official  accounts  are  kept  in  New  York 

Q.  Where  is  the  office  at  which  the  principal  pecuniary  affairs  of 
that  company  are  transacted  ? 

A.  What  do  you  mean  by  pecuniary  affairs  ? 

Q.  Its  business  ? 

A.  There  is  more  business  done  in  New  York,  because  this  is  the 
largest  — the  delivery  at  New  Jersey  is  the  largest  delivery. 

Q.  Who  is  the  president  of  that  company? 

A.  Clement  A.  Griscom. 

Q.  Where  does  he  reside  ? 

A.  Philadelphia. 

Q.  Engaged  in  any  business  there  ? 

A.  He  is. 

Q.  Is  he  engaged  in  business  in  New  York  ? 

A.  He  is  connected  with  the  Bed  Star  Line. 

Q.  How  many  directors  has  the  company? 

. It  has  six. 

Q.  Give  their  names  ? 

A.  I decline. 

Q.  Why? 

A.  Because  it  is  not  relevant  to  the  subject  under  consideration,  and 
for  the  general  reasons  which  I assigned  here  that  were  stricken  out 
Q.  How  many  of  those  directors  live  in  New  York? 

A.  I decline  to  answer. 

Q.  Are  you  a director  ? 

A.  I am  ; I live  in  New  York. 

Q.  Are  you  the  vice-president  ? 

A.  I am. 

Q.  Who  is  the  managing  superintendent  of  the  business  of  that 
company  ? 

A,  The  general  manager  is  D.  O’Day. 

Q.  Who  has  the  general  control  of  the  business  of  that  company, 
the  superior  officer  ? 

A.  Perhaps  I do  as  much  as  any  one. 

Q.  Wliere  does  Mr.  O’Day  live  ? 

A.  His  liome  is  at  Buffalo;  he  is  on  the  different  lines  the  greater 
portion  of  the  time. 

Q.  Is  he  a director  ? 

A.  1 decline  to  state. 

(2-  Wliat  is  the  capital  of  tliat  company? 

A.  !!!:io,0()0,oo(). 


699 


Q.  All  paid  in  ? 

A.  All  paid  in. 

Q.  How  ? 

A.  Lawfully  paid  in. 

Q.  In  money  ? 

A.  I decline  to  state. 

Q.  Wasn’t  it  all  issued  for  property  ? 

A.  I decline  to  state. 

Q.  Were  you  an  original  subscriber  to  any  of  the  stock? 

A.  I decline  to  state. 

Q.  Do  you  hold  any  stock  now  ? 

A.  I decline  to  state. 

Q.  How  did  you  pay  for  your  stock  ? 

A.  I decline  to  state,  as  being  neither  pertinent  or  relevant  to  the 
object  of  this  committee. 

Q.  Do  you  know  how  much  of  that  stock  is  held  by  the  Standard 
Trust  ? 

A.  I decline  to  state. 

Q.  Do  you  decline  to  state  whether  you  know  that  fact  or  not  ? . 

A.  I don’t  know. 

Q.  Do  you  not  know  that  more  than  a majority  is  ? 

A.  I decline  to  answer. 

Q.  Do  you  not  know  that  the  Standard  Trust  controls  that  cor 
poration  ? 

A.  I know  it  does  not. 

Q.  Does  it  own  a majority  of  the  stock  ? 

A.  It  does  not. 

Q.  Do  you  know  who  owns  the  stock  in  that  company  ? 

A.  I decline  to  answer. 

Q.  How  long  have  you  been  vice-president  of  that  company? 

A.  Perhaps  a year. 

Q.  Has  it  made  dividends  since  you  were  vice-president  ? 

A.  I decline  to  answer. 

Q.  Are  you  an  officer  of  the  Standard  Oil  Company  ? 

A.  I am  not. 

Q,  Do  you  know  that  the  Standard  Oil  Company  was  organized  in 
this  city  in  the  month  of  August  last  ? 

A.  I do. 

Q.  Did  you  sign  those  articles  of  incorporation  ? 

A.  I think  I did  ; and  here  let  me  ask  if  you  term  a director  an 
officer. 

Q.  I rather  think  I do  ? 

A.  I beg  your  pardon  ; I had  in  my  mind  as  officers,  the  president,, 
Vice-ptesident  and  secretary,  but  I am  a director  of  that  company. 


1 


700 

Q.  You  are  a director  in  the  Standard  Oil  Company  of  New  York, 
are  you  not  ? 

A.  I think  so. 

Q.  Are  you  a director  in  any  of  these  other  Standard  Oil  Companies 
of  Pennsylvania,  New  Jersey  or  Ohio  ? 

A.  No,  sir. 

Q.  What  was  the  capital  of  the  Standard  Oil  Company  of  New 
York  ? 

A.  I decline  to  state. 

Q.  Was  it  not  $5,000,000? 

A.  I have  declined  to  state. 

Q.  Do  you  know  how  it  was  paid  in? 

A.  I decline  to  state. 

Q.  Do  you  not  know  that  half  of  it  was  paid  in  in  property  ? 

A.  I decline  to  state. 

Q.  Did  you  not  make  oath  to  the  certificate  that  half  of  it  was  paid 
in,  in  property? 

A.  I decline  to  state  on  the  ground  of  irrelevancy. 

Q.  Was  not  the  other  half  of  that  declared  by  its  certificate  to  be 
intended  to  be  issued  for  the  purpose  of  other  refineries  ? 

A.  I decline  to  state ; if  that  is  so,  the  certificate  will  show  it. 

Q.  Are  you  a stockholder  in  the  Standard  Trust  ? 

A.  I decline  to  state. 

Q.  Do  you  know  what  the  capital  of  the  Standard  Trust  is  ? 

A.  I decline  to  state. 

Q.  Does  the  Standard  Trust  issue  certificates  of  stock  ? 

A.  I decline  to  state. 

Q.  Have  you  not  got  in  your  possession  certificates  of  stock  issued 
by  the  Standard  Trust  ? 

A.  I decline  to  state. 

Q.  Do  you  not  know  in  those  certificates  its  capital  is  stated  at 
$70,000,000? 

A.  I decline  to  answer. 

Q.  What  was  the  purpose  of  organizing  this  Standard  Oil  Company 
of  New  York,  in  August  last  ? 

A.  I decline  to  answer,  as  irrelevant  and  not  pertinent  to  the  busi- 
ness of  tliis  committee. 

Q.  In  your  testimony  the  other  day  you  spoke  of  the  aggressive 
policy  of  the  Standard  Oil  Company;  what  did  you  mean  by  that  ? 

A.  1 mean  the  vigorous  policy  — that  it  creates  business;  that  it 
sends  its  agents  to  tlic  Eastern  world,  to  Europe,  and  develops  a 
market  for  this  ])roduct. 

(2-  Did  tliat  include  tlie  absorption  of  other  refineries  ? 


701 


A.  That  includes  the  absorption  of  other  refineries,  if  that  is  in  the 
line  of  developing  this  business. 

Q.  Do  you  not  know  that  it  has  been  the  steady,  aggressive  policy 
of  this  company,  ever  since  you  have  known  any  thing  about  it,  to 
absorb  and  obtain  control  of  other  refineries  ? ^ 

A.  I know  that  if  a refiner  wants  to  sell  his  business  he  comes  to  us, 
and  if  his  terms  are  agreeable  we  buy  it,  the  same  as  any  other  parties 
in  the  business  would  buy  it ; no  other  way. 

Q.  And  as  a preparation  for  that  you  endeavor  to  prevent  ms 
making  a profit  in  this  business,  don’t  you  ? 

A.  We  do  not. 

Q.  How  long  have  you  been  connected  with  the  Standard  Oil  Com- 
pany in  any  way  ? 

A.  I have  been  a stockholder  since  1870  ; since  the  formation  of 
the  company  ? 

Q.  Have  you  been  an  officer  all  that  time  ? 

A.  No,  sir. 

Q.  In  what  capacity  have  you  been  connected  with  the  company  ? 

A.  I said  as  a stockholder. 

Q.  How  many  refineries  were  there  running  in  1870,  when  this  com- 
pany was  organized  ? 

A.  I have  no  knowledge  on  that  subject ; it  was  not  my  business  in 
1870,  and  my  general  impression  would  be  that  of  any  man  not  in  the 
oil  business.  I had  no  knowledge  of  any  value  on  that  subject. 

Q.  Do  you  not  know  that  since  it  was  organized  it  has  absorbed  and 
become  possessed  of  the  control  of  more  than  fifty  such  refineries  ? 

A.  I do  not. 

Q.  I understood  you  to  state,  the  other  day,  that  there  were  a num- 
ber of  refineries  now  running  with  which  the  Standard  was  not  con- 
nected ; did  you  so  state  ? 

A.  I state  so  now. 

Q.  How  many  in  this  State  ? 

A.  I don’t  know. 

Q.  Do  you  know  of  one  ? 

A.  I do.  . 

Q.  Yv^here  is  that  ? 

A.  I decline  to  locate  it. 

Q.  Do  you  know  of  two  ? 

A.  I do. 

Q.  Where  are  the  two  ? 

A.  I decline  to  locate  them. 

Q.  Do  you  know  of  any  such  refineries  in  any  other  State  ? 

A.  I do. 

Q.  How  many  ? 

A.  I decline  to  state  definitely ; I think  there  are  thirty  or  forty,  or 
more. 


1 


702 

Q.  Where  is  one  of  them  located  ? 

A.  I decline  to  name  any  one  of  them. 

Q.  What  percentage  of  the  annual  product  of  petroleum  is  pur- 
chased and  handled  by  the  Standard  Oil  Company  and  the  various 
concerns  which  it  controls? 

A.  A very  large  proportion ; I am  unable  to  give  the  exact  percent- 
age. 

Q.  Ninety  per  cent  of  it  ? 

A.  My  impression  would  be  not  as  much  as  that  ; I should  think 
perhaps  eighty  per  cent,  but  I could  not  say  that  positively. 

Q.  Does  not  the  Standard  Oil  Company  substantially  control  the 
market  for  refined  oils. 

A.  The  Standard  Oil  Company  makes  its  prices,  and  other  refiners 
make  their  prices.  The  Standard  Oil  Company  does  not  control  the 
market  for  refined  oil. 

Q.  Does  it  not  substantially  control  the  market  of  refined  oil  for 
exporting  to  all  other  countries  in  the  world  ? 

A.  The  Standard  Oil  Company  has  great  weight  in  the  making  of 
prices,  but  that  it  controls  it  is  not  true. 

Q.  You  do  not  think  it  does  ? 

A.  I do  not. 

Q.  In  any  respect? 

A.  I say  it  has  very  great  weight ; it  has  influence,  and  influence 
developed  to  a certain  extent  is  control.  ^ 

Q.  You  spoke  about  agents  and  correspondents  which  this  Standard 
Oil  Company  had  to  watch  things  in  all  parts  of  the  world ; where  has 
it  such  agents  ? 

A.  It  has  one  in  the  East  Indies,  one  of  its  clerks  who  travels  about 
from  point  to  point,  and  has  opened  several  of  the  Eastern  ports  to 
cargo  business. 

Q.  Tell  us  where  they  are  ? 

A.  Then  it  has  its  correspondents  in  nearly  all  the  important  foreign 
markets. 

Q.  Well,  has  it  agents  in  Australia  ? 

A.  No. 

Q.  lias  it  correspondents  there? 

A.  No,  I think  not. 

C^.  It  don’t  trade  with  Australia  then  ? 

A.  It  sells  goods  to  Australia. 

(,|.  Where  else  is  this  large  army  you  spoke  about,  where  are  they 
located  ? 


703 


A..  If  you  will  find  large  army  in  my  testimony  — 

Q.  Well,  large  number  ? 

A.  If  you  will  find  large  number  I will  have  it  stricken  out. 

Q.  Do  you  mean  to  say  you  did  not  state  the  other  day  that  this 
company  had  a very  large  number  of  agents  and  correspondents  in  all 
parts  of  the  world  ? 

A.  I don’t  think  that  was  my  language. 

Q.  Well,  did  you  not  so  state  in  substance  ? 

A.  I stated  that  it  had  its  correspondents  and  it  spent  a very  con- 
siderable sum  of  money. 

Q.  I want  to  know  where  this  concern  has  got  any  foreign  agents  or 
correspondents  ? 

A.  I have  stated  before,  in  nearly  all  the  important  markets. 

Q.  Name  them  ? 

A.  I decline  to  do  that ; I decline  to  state  who  they  are. 

Q.  You  are  not  asked  to  state  who  they  are  ? 

A.  I anticipated  a little;  I thought  that  would  be  the  next  ques- 
tion and  I could“save  time. 

Q.  You  are  asked  to  state  the  markets? 

A.  That  I decline,  and  rest  on  my  general  statement. 

Q.  Can  you  state  such  markets  ? 

A.  I cannot. 

Q.  Is  the  business  of  exporting  petroleum  to  foreign  countries  by 
the  Standard  Oil  Company  divided  up  into  departments  ? 

A.  No,  sir. 

Q.  There  is  no  such  arrangement,  is  there,  that  one  set  of  men  had 
charge  of  the  business,  for  example  in  the  East  Indies,  and  another  in 
Eussia,  and  another  in  Ireland,  and  another  in  Germany  ? 

A.  No,  sir. 

Q.  You  mentioned  the  other  day  that  a running  charge  of  twenty 
cents  a barrel  was  paid  on  oil ; what  is  that  charge  for ; from  what 
place  to  what  place  ? 

A.  I explained  that^  in  my  testimony  and  I will  again  explain  it  if 
you  desire;  the  United  Pipe  Lines  connect  with  the  well  tankage,  that 
is  to  say,  the  tankage  built  by  the  producers;  it  may  be  a longer  or 
a shorter  distance  ; for  that  they  make  no  charge;  the  oil  is  taken  from 
fhe  wells  into  the  line,  which  means  into  this  mass  of  30,000,000  bar- 
rels; the  oil  is  made  subject  to  a charge  on  its  delivery  to  a purchaser 
from  the  line  of  twenty  cents  a barrel,  which  the  purchaser  pays  on 
the  delivery  of  the  oil  to  him,  and  that  consideration  is  for  making 
these  connections  at  the  well,  for  pumping  it  a longer  or  a shorter 
distance,  and  for  waiting,  as  you  see  it  may  be  for  one  year,  it  may  be 


1 


y 

704 

ten  years,  for  the  jiay ; that  is  to  say  these  30,000,000  barrels  of  oil, 
which  has  been  five  years  accumulating,  has  paid  nothing  for  its  con- 
nections to  the  well. 

By  Senator  Boyd  : 

Q.  The  charge  is  twenty  cents  per  barrel  from  the  wells  to  the 
tankage  ? 

A.  To  the  delivery  point,  wherever  it  may  be. 

By  Mr.  Chittenden-  : 

Q.  What  I want  to  get  at  is  whether  that  is  the  charge  for 
transporting  oil  through  these  pipe  lines  from  the  wells  to  New  York  t 

A.  No,  sir ; that  is  a separate  corporation  that  is  doing  that  business. 

Q.  Well,  what  is  this  twenty  cents  a barrel  paid  for  ? 

A.  It  is  for  making  the  connections  with  these  wells ; it  is  for  send- 
ing our  gauger  there  and  gauging  it,  and  receiving  it,  and  loading  it, 
and  transporting  it  to  the  point  of  delivery,  wherever  it  may  be,  one 
of  a dozen. 

Q.  Y^ou  say  this  is  for  transferring  it  to  the  point  of  delivery,  where- 
ever  that  may  be  ? 

A.  I say  it  is  for  all  these  considerations. 

Q.  Suppose  the  point  of'  delivery  is  New  York  ? 

A.  The  line  does  not  extend  to  New  York. 

Q.  Suppose  it  is  Bayonne  ? 

A.  It  does  not  extend  to  Bayonne. 

Q.  Where  does  it  extend  ? 

A.  I explained  that  the  limit  of  that  is  within  this  hundred  miles 
square  ; it  is  a storage  company  ; here  are  these  20,000  wells  producing 
oil,  and  men  are  going  into  the  woods  and  finding  new  districts^ 
and  wherever  they  go,  unless  some  pipe  line  comes,  they  are  perfectly 
helpless. 

Q.  Then  you  mean  that  this  charge  is  for  transporting  the  oil  from 
the  wells  to  the  tanks,  do  you  ? 

A.  I mean  that  this  charge  is  for  what  I said  it  was,  for  making 
these  connections  ; it  is  for  taking  the  oil  from  the  wells  to  the  tank- 
age and  waiting  for  tlie  money  until  the  oil  is  delivered  to  the  pur- 
chaser who  takes  it  from  the  line  ; it  covers  all  these  considerations. 

Q.  It  does  not  cover  any  transportation  from  the  tanks  to  any  other 
point  ? 

A.  I wish  to  correct  myself ; it  may  include  a very  considerable 
transportation  to  some  ])oint  of  delivery  and  it  may  not  — some  point 
of  delivery  witliin  this  hundred  miles  radius. 

C^.  Now,  that  is  the  cluirge  when  the  oil  has  got  into  the  tank  ? 


705 


A.  No,  sir ; when  the  oil  is  delivered  from  the  tank  and  goes  out  of 
the  line. 

Q.  That  is  the  charge  ? 

A.  Yes,  sir. 

Q.  What  is  the  charge  for  storage  ? 

A.  To  the  purchaser,  thirty  days  free  ; then  one  and  one-fourth' 
cents  per  barrel  per  month. 

Q.  What  is  the  charge  for  transportation  ? 

A.  Are  you  referring  to  this  company  now  ? That  is  all  that  com- 
pany does. 

Q.  I want  to  get,  if  I can,  the  cost  of  bringing  oil  from  the  oil  wells 
to  Bayonne  ? 

A.  The  charge  to  the  wells  in  New  Jersey  including  the  terminal 
charge  is  about  forty  cents. 

Q.  What  is  the  terminal  charge  ? 

A.  That  is  for  the  use  of  the  dock,  and  I think,  five  cents  a barrel. 

Q.  Well,  do  you  store  it  at  Bayonne  ? 

A.  No,  at  Bayonne,  but  we  have  tankage  at  Communipaw  if  the 
shipper  desires. 

Q.  What  is  the  charge  for  storage  there  ? 

A.  That  I don’t  know. 

Q.  What  is  the  charge  for  taking  it  from  Bayonne  to  Communipaw? 

A.  It  does  not  go  from  Bayonne  to  Communipaw  ; if  it  is  destined 
for  Bayonne,  it  goes  to  Bayonne,  and  if  it  is  destined  for  Communi- 
paw, it  goes  to  Communipaw. 

Q.  Now  please  tell  me  the  cost  to  a person  having  no  connection 
with  the  Standard  Oil  Company  of  transporting  his  oil  by  the  use  of 
these  lines  from  his  wells  to  a place  on  New  York  bay  where  he  can 
ship  it  ? 

A.  Precisely  the  same  so  far  as  I know. 

Q.  What  will  it  be  altogether  ? 

A.  Whatever  these  figures  foot  up  ; that  is  the  charge  to  any  party 

Q.  I want  you  to  put  them  together  and  give  me  the  aggregate 
amount  ? 

A.  Well,  it  is  about  sixty  cents. 

Q.  Well,  is  it  sixty  cents  now,  or  is  it  more  or  less  ? 

A.  I am  not  up  in  this  transportation,  but  my  impression  is  sixty 
cents. 

Q.  You  are  all  the  while  making  contracts  for  the  transportation  of 
oil  over  this  National  Transit  Line  ? 

A.  All  the  time  transporting  oil. 

Q.  And  making  contracts  ? 

A.  I want  to  sav  as  to  this  National  Transit  Company  and  this  pipe 
89 


70G 


line,  that  they  are  scarcely  completed  ; they  are  scarcely  in  full  run- 
ning order. 

Q.  Have  you  carried  any  oil  from  Clean,  or  whatever  the  place  is 
to  one  of  these  shipping  ports  ? 

A.  Yes,  sir. 

Q.  What  have  been  your  charges  on  that  oil  ? 

A.  I am  unable  to  state  that.  My  impression  is  that  that  would  be 
done  in  this  way,  that  a party  would  say,  What  will  you  deliver  rue 
oil  for  at  a certain  point” — 

Q.  There  are  owners  in  the  oil  fields  producing  oil  that  are  con- 
nected with  the  Standard  Oil  Company,  or  these  pipe  lines,  are  there 
not  ? 

A.  Yes,  sir. 

Q.  Now,  suppose  such  an  owner  has  got  the  quantity  of  oil  in  the 
tanks  for  which  he  has  got  to  pay  twenty  cents  a barrel,  what  will  it 
cost  him  now,  as  the  rates  of  transportation  are  to-day,  to  bring  an 
equal  number  of  barrels  of  oil  to  some  point  on  New  York  bay  . where 
he  can  ship  it  ? 

A.  The  same  as  it  cost  the  Standard  Oil  interest. 

Q.  What  does  it  cost  the  Standard  Oil  interest  ? 

A.  I say  sixty  cents. 

Q.  What  is  oil  worth  to-day  ? 

A.  Well,  that  depends  upon  the  particular  moment  you  look  at  the 
ticker  ; it  is  pretty  lively  to-day  or  was  before  I left  down  town  ; it  is 
about  88  to  90  cents. 

By  Senator  Browning  : 

Q.  What  is  that  for? 

A.  United  Pipe  Line  certificates;  that  is  to  say,  oil  in  the  custody 
of  the  pipe  line  ; now  to  get  it  you  have  got  to  add  twenty  cents  and 
forty  cents  to  bring  it  to  New  York. 

Q.  What  does  that  represent,  what  quantity  ? 

A.  Forty-two  gallons  of  oil  in  bulk. 

By  Mr.  Chittenden: 

Q.  Then  the  actual  value  of  oil  here  to-day  is  the  eighty-eight  cents 
])lus  the  sixty  cents,  is  it  not? 

A.  Yes,  sir  ; that  is  the  actual  cost. 

Q.  Now,  what  are  tlie  rates  of  transportation  by  rail  ? 

A.  I imagine  about  the  same;  I can’t  say  positively,  but  I don’t  im- 
agine they  can  get  any  more. 

How  do  tlie  rates  for  transportation  now  compare  with  the  rates 
of  tr:insj)ortation  a year  ago  ; arc  they  higher  or  lower? 


707 


A.  I think  they  are  lower,  but  I am  not  certain. 

Q.  You  used  an  expression  something  like  this,  that  the  Standard 
in  1881  ground  through  nineteen  millions  of  barrels  ; what  did  you 
mean  by  ‘‘ground  through?” 

A.  I mean  to  say  it  transported  and  refined  that  amount. 

Q.  Do  you  know  what  the  product  was  in  1881? 

A.  I do  not;  I filed  a statement  here  the  other  day  of  the  United 
Pipe  Lines  which  shows  it  approximately. 

Mr.  Chairman,  there  is  one  thought  that  occurs  to  me ; the  counsel 
asked  me  the  rate  of  storage  for  oil;  there  is  a considerable  shrinkage 
and  wastage  of  oil;  there  is  an  accumulation  of  sediment,  just  what  it 
costs  to  carry  oil,  just  what  the  loss  is  from  these  causes  we  do  not 
quite  know,  but  our  best  estimates  are  that  it  costs  from  four  to  five 
per  cent  to  carry  oil.  We  have  bought  within  the  last  thirty  days 
four  hundred  and  fifty  thousand  barrels  of  oil.  To  preserve  the  in- 
tegrity of  this  stock  before  the  tenth  of  every  month,  or  on  the  tenth, 
we  make  affidavit  as  to  this  oil,  where  it  is  and  that  it  is  in  our  pos- 
session and  also  the  obligations  against  it  ; that  is  filed 'With  the  proper 
officer  of-the  State  and  also  posted  in  our  offices.  We  are  constantly 
making  examinations;  in  cold  weather  this  oil  shrinks  and  we  lose. 
I bought  something  over  half  a million  barrels  of  oil  which  is  all  paid 
for  out  of  this  storage  charge. 

The  committee  adjourned  subject  to  the  call  of  the  chairman. 


New  York,  December  16,  1882. 

The  committee  met  pursuant  to  adjournment  at  the  Metropolitan 
hotel. 

George  Edward  Moore,  being  duly  sworn,  was  then  interrogated  and 
testified  as  follows: 

By  Senator  Botd: 

Q.  What  is  your  name? 

A.  George  Edward  Moore  is  my  name. 

Q.  Where  do  you  reside  ? 

A.  In  Brooklyn,  sir. 

Q.  What  is  your  business  ? 

A.  Cotton  broker. 

Q.  Where  is  your  place  of  business  ? 

A.  115  Pearl  street. 

Q.  Are  a^ou  a member  of  any  firm? 

A.  Yes,  sir, 

Q.  What  is  the  name  of  your  firm? 


708 


A.  G.  E.  Moore  & Co. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  I have  been  in  the  cotton  trade  a little  over  eighteen  years ; in 
the  present  firm  about  ten  years. 

Q.  Are  you  a member  of  the  Cotton  Exchange  ? 

A.  Yes,  sir. 

Q.  One  of  its  officers? 

A.  Yes,  sir  ; I am  its  secretary. 

Q.  How  long  have  you  been  secretary  of  the  Cotton  Exchange? 

A.  This  is  my  second  year.  ' 

Q.  How  long  have  you  been  a member  of  it  ? 

A.  I think  about  ten  years,  sir. 

Q.  Your  Exchange  has  requested  permission  to  have  certain  of  its 
members  offer  testimony  before  the  members  of  this  committee  ? 

A.  Yes,  sir. 

Q.  You  are  one  of  the  gentlemen  appointed  by  the  Exchange  ? 

A.  Yes,  sir. 

New  Yokk  Cotton  Exchange,  ) 
Neav  York,  .December  6,  1882.  ) 

Hon.  John  G.  Boyd,  Chairman  of  Senate  Committee,  88  and  90  Cen- 
ter Street,  City : 

Dear  Sir — I have  the  honor  to  inform  you  that  by  resolution  passed 
4th  inst.,  by  the  board  of  managers  of  this  Exchange,  the  secretary 
was  instructed  to  communicate  with  Senate  committee  now  taking 
testimony  in  regard  to  corners,  future  sales,  etc.,  and  to  request  that 
members  of  this  Exchange  be  allowed  the  privilege  of  testifying. 

It  was  further  resolved  ithat  the  president  (Mr.  M.  B.  Fielding)  ap- 
point a committee  of  ten  members,  with  the  addition  of  the  president, 
to  give  testimony  when  called  upon. 

Waiting  your  reply,  I am,  dear  sir. 

Yours  very  respectfully, 

G-  E.  MOOEE,  Secretary, 

Q.  To  lay  the  foundation  for  your  statement,  I will  ask  the  usual 
.question  embodied  in  the  resolution,  under  which  this  committee  was 
api)oiiited  ; What  is  your  opinion  in  reference  to  the  whole  system  of 
making  corners  and  dealing  in  futures,  with  reference  to  its  influence 
upon  commerce  and  its  effect  upon  the  public  welfare  ? 

A.  Gentlemen,  since  your  honorable  committee  first  began  to  take 
testimony  in  tlie  matter  of  future  sales,  corners,  etc.,  I have  watched, 
witli  a great  deal  of  care  and  attention,  the  nature  of  the  evidence 
which  lias  been  lirought  before  you,  and  it  seems  to  me,  after  such 
careful  perusal,  that  a great  deal  of  such  evidence  has  been  given  by 
men  who  either  have  no  practical  experience  of  such  business,  or  by 
men  who,  pei'haps,  at  some  time  had,  taken  a try  at  making  a fortune 


709 


without  much  work,  and  being  unsuccessful,  now  looked  on  such  busi- 
ness as  “highly  immoral.” 

Now,  gentlemen,  I propose,  as  a member  and  one  of  the  officers  of 
the  New  York  Cotton  Exchange,  to  bring  before  you  a few  facts  in 
favor  of  buying  and  selling  for  future  delivery,  and  to  endeavor  to  show 
you  how  absolutely  necessary  such  business  has  become  to  the  cotton 
interests  of  this  great  country.  In  treating  this  subject  I propose  to 
divide  it  as  follows  : 1st,  what  first  caused  the  selling  of  cotton  for 
future  delivery  ; 2d,  the  various  interests  which  such  business  now 
fosters  and  protects ; 3d,  the  gradual  rise  of  this  business,  the  im- 
mense development  it  has  attained,  and,  lastly,  a few  remarks  on 
speculation,  corners,  etc. 

And  now  as  to  my  first  division.  Before  the  cable  came  into  use, 
orders  to  bring  cotton  were  sent  from  Europe  by  steamer,  ^nd  at  that 
time  there  were  usually  not  more  than  one  to  two  steamers  per  week, 
and  consequently  the  merchant  had  from  three  to  six  days  in  which  to 
execute  his  order,  and  in  which  he  knew  it  was  impossible  that  such 
order  could  be  countermanded,  and  consequently  he  could  go  through 
the  market,  examine  the  various  lots  offered  and  make  his  purchases 
of  the  lots  best  suited  to  his  purposes  and  cheapest;  but  after  the 
cable  had  been  working  for  some  time,  the  orders  from  abroad  began 
to  come  in  an  entirely  different  form,  namely:  “We  will  give  you  so 
much  for  such  a grade,  provided  you  reply  by  cable  in  forty -eight 
hours;”  then  the  time  for  executing  the  order  got  down  to  twenty-four 
hours,  then  to  twelve  hours,  and  finally  to  two  hours,  and  sometimes 
even  less.  As  soon  as  affairs  got  into  this  state,  it  became  evident  to 
the  trade  in  New  York  that  no  buyer  could  execute  these  orders 
promptly  enough  by  going  around  the  market  and  examining  the  va- 
rious lots  offered,  but  that  some  quick  way  of  trading  and  covering  these 
orders  must  be  devised,  and  in  answer  to  this  necessity  arose  the  cus- 
tom of  trading  for  future  delivery.  At  first  these  transactions  were 
small  and  in  a very  crude  form,  calling  for  only  one  grade  of  cotton, 
and  generally  extending  over  not  more  than  fifteen  to  thirty  days,  and 
sometimes,  possibly,  sixty  days. 

At  first  the  cotton  actually  bought  on  these  contracts  was  shipped, 
but  after  a time,  it  being  found  that  the  selling  of  one  particular 
grade  resulted  in  a great  many  disputes,  the  contract  was  made  so  that 
any  of  five  grades  could  be  delivered  on  the  basis  of  middling,  addi- 
tions or  deductions  to  be  made  according  to  the  market  value  of  the 
cotton  actually  delivered ; and  as  many  times,  the  order  was  for  some 
special  grade  and  such  contract  would  not  exactly  suit,  the  mer- 
chant made  use  of  these  contracts  merely  as  a hedge  to  enable  him  to 


710 


execute  his  order  promptly,  then  went  into  the  market,  found  the  lot 
that  suited  him  perhaps  after  a week’s  search,  bought  it  and  at  the 
same  time  re-sold  the  contracts  he  had  bought,  thereby  tilling  his  order 
for  the  grade  required.  These  transactions  for  future  delivery  were  at 
first  carried  on  in  the  offices  of  the  various  brokers  and  on  the  street, 
but  as  the  business  became  larger,  it  soon  was  evident  to  the  trade 
that  it  would  be  better  to  have  one  room  in  which  these  transactions 
could  be  made,  and  in  1870  the  New  York  Cotton  Exchange  was 
formed  and  a charter  obtained  from  the  Legislature  of  this  State  (I 
shall  at  present  say  nothing  about  the  great  work  done  by  this  insti- 
tution for  the  State  of  New  York,  as  it  will  come  more  fully  under 
another  head),  and  thus  the  business  for  future  delivery  in  cotton  was 
fully  inaugurated. 

And  now  for  my  second  division,  namely,  the  various  interests 
which  this  business  fosters  and  protects.  I have  shown  you  already 
how  necessary  this  business  has  become  tq  the  merchant  executing 
orders  for  export,  and  it  has  since  developed  in  a thousand  ways  in 
this  direction,  until  I may  safely  say  that  the  whole  cotton  business 
of  Europe  hinges  on  the  prices  of  futures  in  the  New  York  market, 
and  the  transactions  which  at  first  counted  up  only  a few  thousand 
bales  now  reach  millions  a year ; and  this  style  of  business  is  inter- 
woven into  every  branch  of  the  cotton  and  cotton  goods  trade  ; the 
American  or  East  Indian  buyer  wants  a Manchester  manufacturer  to 
supply  him  with  a certain  style  of  goods  which  he  manufactures  to  be 
delivered  next  fall  ; the  manufacturer  immediately  goes  to  his  broker 
and  says,  what  will  you  sell  me  fiveh  undred  or  one  thousand  bales  of 
American  cotton  for,  such  as  I use,  to  be  delivered  at  such  a time  ; ” the 
broker  has  his  dispatches  from  New  York  and  knows  within  a few  hun- 
dredths of  alcent  what  he  can  buy  at,  and  he  names  his  price ; the  manu- 
facturer accepts  and  sells  his  goods  to  the  buyer,  a cable  is  sent  to  New 
York  to  buy  500  or  1,000  bales  for  that  particular  month,  a reply  is  re- 
ceived by  cable  and  the  whole  transaction  is  closed ; the  broker  then 
writes  by  mail  to  his  agent  telling  him  the  particular  grade  he  wants, 
and  instructing  him  to  buy  the  500  or  1,000  bales  wherever  he  can  get  it 
cheapest,  either  at  Galveston,  New  Orleans,  Savannah,  etc.,  and  as  soon 
as  bought  to  close  out  the  futures  and  render  him  a statement  of  the 
whole  transaction.  You  can  see  from  this  one  instance  how  this  style 
of  selling  facilitates  business,  and  enables  various  people  to  close  legiti- 
mate transactions  quickly.  I could  multiply  instances  like  this  by  the 
thousand,  and  could  show  you  how  it  permeates  all  branches  of  the 
cotton  export  trade  and  makes  transactions  possible  without  much,  if 
any,  risk  of  loss,  in  fact,  furtliering  legitimate  trade. 

'Die  next  branch  of  tlic  Inisinessto  wliich  this  future  selling  became 


711 


of  use  was  the  “commission  trade;”  before  the  commencement  of  this 
future  business,  the  commission  mercliant  making  advances  on  con- 
signments from  the  South  had  no  way  of  protecting  himself  in  case 
the  market  was  declining  except  by  selling  the  actual  cotton  in  open 
market ; this  could  sometimes  be  done  to  arrive  if  he  happened  to 
have  what  are  called  ship  samples  sent  from  the  South,  but  very  often 
he  would  not  have  even  these,  and  then  he  would  have  to  wait  until 
the  cotton  actually  arrived,  had  gone  into  store  and  been  sampled,  and 
between  the  time  of  shipment  and  the  time  the  cotton  was  ready  for 
sale,  the  market  might  have  gone  down  several  cents,  and  he  would 
have  reclamations  which  he  probably  would  never  be  able  to  collect  ; 
1 myself  had  an  experience  in  this  line,  which  has  always  impressed 
me  fully,  it  was  in  the  year  1807  I think  ; the  market  oj)ened  in 
September  at  about  twenty-five  cents  and  dropped  by  December  to 
fifteen  cents ; I was  salesman  for  one  of  the  largest  commission  houses 
then  in  this  city;  we  were  receiving  large  consignments  every  day  and 
could  hardly  sell  a bale ; we  were  getting  dispatches  from  our  cor- 
respondents begging  us  to  sell  their  cotton  and  could  not  do  it,  and 
we  saw  large  reclamations  staring  us  in  the  face  ; how  different  the 
story  now  ; if  a merchant  is  doubtful  about  the  market  all  he  has  to 
do  is  to  step  into  the  Exchange  and  in  fifteen  minutes  he  can  at  a 
difference  of  possibly  2-100  to  3-100  of  a cent  per  pound  close  out  his 
whole  interest  and  feel  happy  and  contented;  thus  you  see  future 
selling  is  a great  safety  valve  to  the  commission  business. 

Shortly  after  the  war,  the  planter  occupying  the  upland  or  northern 
belt  of  the  cotton  States  woke  up  to  the  fact  that  he  had  to  im23rove 
his  mode  of  cultivation  and  use  more  manure  to  make  cotton  planting 
pay;  this  demand  for  manures  of  various  sorts  gave  rise  to  a new 
branch  of  trade  known  as  the  guano  or  phosphate  trade ; at  first  the 
planters  bought  agreeing  to  pay  a certain  price  for  same,  as  soon  as 
that  crop  was  gathered,  but  after  a time  the  planters  being  unwilling 
to  take  the  whole  risk  of  the  price  of  cotton  for-  six  or  eight  months 
ahead,  the  form  of  the  contract  changed,  and  a dealer  agreed  to  deliver 
to  the  planter  as  much  guano  as  he  needed  and  take  in  payment  so 
many  pounds  of  cotton  for  each  ton  of  guano  to  be  delivered  by  the 
planter  in  the  following  November  and  December;  it  then  became 
necessary  for^the  guano  dealer  in  order  to  prevent  his  having  to  specu- 
late for  six  or  eight  months  on  the  price  of  cotton,  perhaps  on  thou- 
sands of  bales  (as  some  of  these  concerns  did  a very  large  business), 
to  find  some  way  of  disposing  of  his  cotton  for  delivery  in  the  follow- 
ing November  and  December,  and  thereby  cover  himself  and  make  his 
transaction  a legitimate  one,  and  so  he  turned  to  New  York  and  made 


713 


use  of  the  futures  of  tlic  New  York  Cottou  Exchange,  tlius  covering 
himself,  and  the  sales  under  this  head  have  for  several  years  ranged 
between  1,000,000  and  3,000,000  bales  yearly,  thus  fostering  and  pro. 
tecting  another  great  and  necessary  branch  of  the  trade. 

And  now,  gentlemen,  we  come  to  our  own  spinning  and  manufactur- 
ing industry.  Before  the  introduction  of  the  future  business  a 
manufacturer  was  obliged  to  buy  a large  stock  of  actual  cotton.  If  he 
had  the  money  to  pay  for  it  himself,  he  lost  the  interest  on  it,  and  if  not, 
he  was  obliged  to  borrow  money  at  a high  rate  of  interest  to  pay  for  it. 
These,  together  with  the  expense  of  storage,  loss  in  weight,  etc.,  ate  up 
a large  portion  of  his  profit  and  obliged  him  in  many  instances  to  get 
advances  at  a ruinous  rate  on  his  goods  to  enable  him  to  carry  on  his 
business,  but  now  he  can  come  to  New  York,  and  through  his  broker 
buy  future  contracts  to  cover  his  consumption  for  as  many  months  as 
he  may^  think  best,  by  depositing  a margin  of  $250  to  $500,  on  each 
one  hundred  bales  bought,  thereby  saving  the  interest,  loss  in  weight, 
and  expenses  he  would  have  had  to  lose  had  he  bought  actual  cotton, 
and  leaving  him  the  bulk  of  his  money  on  which  to  run  his  business  ; 
and  then  as  he  wants  the  cotton  he  can  instruct  his  broker  to  buy  the 
grade  he  uses,  and  sell  out  a like  amount  of  futures.  By  this  means 
also  a manufacturer  can  make  a contract  for  his  production  six  or 
twelve  months  ahead  and  at  once  cover  this  transaction  and  niake.it 
a regular,  legitimate  one  without  the  slightest  essence  of  speculation 
about  it,  and  I can  tell  you  this  is  being  done  more  and  more  every 
year  and  is  becoming  a very  important  item  in  general  business. 

I will  say  very  little  of  how  useful  thisstyle  of  business  is  to  the  large 
planter,  enabling  him  to  obtain  a remunerative  price  for  this  prospect- 
ive crop  as  soon  as  planted. 

I could  go  on  and  cite  thousands  of  instances  where  this  style  of 
trading  is  of  immense  importance,  but  having  shown  you  how  neces- 
sary it  has  become  to  the  exporter,  the  commission  merchant,  the 
guano  trade  and  the  manufacturing  interest,  I propose  to  have  it 
there  and  not  trouble  you  further. 

And  now  we  come  to  the  thirdjdivision  of  my  argument,  namely,  the 
growth  of  this  business  and  the  benefits  to  New  York.  I stated  in 
my  opening  that  the  New  York  Exchange  was  chartered  in  1870.  It 
commenced  its  business  on  September  1st,  in  that  year,  a little  over 
eleven  years  ago.  The  by-laws  and  rules  under  which  the  business 
was  at  first  commenced  were  very  crude,  but  as  cases  have  arisen, 
chaMges  and  additions  have  been  made  until  now  the  contract  em- 
braces in  its  delivery  every  merchantable  grade,  and  we  have  books 
of  by-IawH  and  imlcs  which  cover  and  provide  for  every  case  that  can 
])OHHibly  arise.  We  have  tribunals  for  the  settlement  of  all  difficultie 


713 


arising  between  members,  and  I have  no  hesitation  in  saying  that  we 
have  a code  of  laws  as  perfect  as  human  foresight  can  provide. 

With  regard  to  the  increase  of  business  in  the  first  twenty  months, 
September,  1870,  to  May  31,  1872,  the  sales  of  futures  were  5,000,000 
bales  ; for  year  ending  May  31,  1873,  6,300,000  bales  ; for  year  ending 
May  31,  1874,  6,000,000  bales  ; for  year  ending  May  31,  1875,  8,000,- 
000  bales;  for  year  ending  May  31,  1876,8,000,000  bales;  for  year 
ending  May  31,  1877,  10,000,000  bales;  for  year  ending  May  31,  1878, 
12,500,000  bales  ; for  year  ending  May  31,  1879,  20,500,000  bales;  for 
year  ending  May  31,  1880,  36,700,000  bales;  for  year  ending  May  31, 
1881,  26,700,000  bales  ; for  year  ending  May  31,  1882,  32,700,000 
bales. 

You  will  see  from  this  that  in  eleven  years  the  business  has  increased 
five  fold.  The  adoption  of  this  style  of  trading  has  enabled  us  to  en- 
courage the  shipment  to  New  York  of  large  quantities  of  actual  cotton 
that  would  otherwise  not  come  here-  and  we  have  handled  in  the  last 
eleven  years  an  average  of  a little  over  six  hundred  thousand  bales  per 
year.  But  this  shows  a very  small  portion  of  the  business  done  in  ac- 
tual cotton  by  New  York  merchants,  as,  by  means  of  this  hedging  and 
covering  by  futures,  they  control  the  business  on  the  bulk  of  the  crop 
raised  in  this  country,  and  all  these  transactions,  futures,  spots.  South- 
ern purchases,  etc.,  bring  money  to  New  York  in  the  shape  of  com- 
missions and  made  it  the  center  of  the  world  for  the  cotton  trade. 

And  now  we  come  to  the  last  division  of  my  subject,  namely,  specu- 
lation in  corners,  etc,  I,  of  course,  cannot  deny  that  there  is  a good 
upal  of  sneculation  in  this  business,  but  what  business  is  free  from 
speculation,  and,  when  you  come'  down  to  the  actual  question,  where 
does  business  end  and  speculation  commence  ? Is  not  all  business  more 
or  less  speculation  ? When  a dry  goods  man  sends  his  agent  to  Europe 
to  buy,  does  he  not  speculate  on  the  chance  of  some  particular  style  of 
goods  being  the  fashion  the  next  season  and  selling  well  ? Does  not 
the,  grocer,  when  he  buys  his  stock  of  goods,  speculate  on  the  chance 
of  customers  coming  to  buy  them  at  an  advance,  and,  because  he  may 
have  his  stock  in  his  store,  is  he  less  of  a speculator  than  the  man  who 
contracts  for  its  delivery  at  some  future  time  ? Is  not  the  builder 
who  tenders  for  a contract  a speculator  for  future  delivery,  for  he  cer. 
tainly  has  not  the  brick  and  stone  and  mortar,  but  expects  to  buy 
them  at  a price  to,  make  a profit  ? I tell  you,  gentlemen,  this  age  of 
telegraphs  and  cables  and  quick  communications  between  the  various 
parts  of  the  world  has  made  this  quick  way  of  trading  a necessity,  and 
the  idea  that  this  is  gambling,  any  more  than  any  other  business,  is 
nothing  but  an  old  fogy  notion  worthy  of  fifty  years  ago,  when  .men, 
who  were  members  of  the  British  Parliament,  and  supposed  to  have 


714 


sense,  got  up  and  spoke  against  granting  a charter  to  the  first  railway 
because  it  would  frighten  the  cattle  so  that  they  would  never  get  fat. 
The  popular  motto  of  this  better  half  of  the  nineteenth  century  is 
‘‘  Perfect  freedom  to  trade  in  any  form.”  If  a man  makes  a mistake, 
it  is  no  one’s  but  his  own  fault,  and  he  is  i^unished  enough  by  the 
money  he  loses. 

And  so  with  regard  to  corners.  It  has  become  the  custom 
of  the  newspapers  and  a great  many  people  lately  hold  up  to 
opprobrium  any  person  who  bought  any  of  the  great  staples  and 
insisted  upon  having  it  delivered  to  him  when  due.  Now  why,  in  the 
name  of  all  conscience,  should  he  be  held  up  to  scorn  ? He  has  thought 
Avell  of  it,  has  contracted  to  receive  it  at  a certain  time,  and  when  that 
time  comes  is  willing  to  pay  for  it.  AVhy  should  he  be  hooted  any 
more  than  the  grocer  who  buys  his  stock  ? I tell  you,  gentlemen,  he 
is  not  the  one  that  is  most  in  the  wrong,  but  it*  is  the  man  who  goes 
and  sells  other  people’s  property  in  which  he  has  not  an  atom  of  inter- 
est and  jirobably  never  will,  but  hopes  by  depressing  it  unlawfully  to 
force  the  real  owner  to  sell  at  a decline,  and,  when  he  fails  to  meet  his 
contract,  instead  of  acting  like  a man  and  admitting  a fault  in  his 
judgment,  becomes  very  righteous  and  commences  to  howl  about  the 
immorality  of  the  business.  I have  no  compassion  for  him  but  can 
only  say,  serves  him  right.” 

Thanking  you  for  your  kindness  in  listening  to  me  I now  close. 

Q.  Are  such  transactions  as  you  have  referred  to  in  the  last  part  of 
your  remarks  frequent  ? 

A.  Which  transactions  ? 

Q.  Persons  selling  ]3roperty  which  belongs  to  somebody  else  ? 

A.  Very  often  they  do,  sir. 

Q.  That  you  will  understand  is  the  evil  we  desire  to  remedy.  This 
committee  does  not  attack  legitimate  dealing  in  any  way.  Now 
are  those  transactions  of  frequent  occurrence  in  the  Cotton  Exchange? 

A.  Well,  that  I could  not  say,  sir,  because  it  is  impossible  to  find 
out  about  these  transactions. 

Q.  Can  they  actually  occur  on  the  floor  of  the  Cotton  Exchange 
without  the  members  knowing  of  it  ? 

A.  Well,  tlie  trouble  is  this:  A man  gets  an  order  from  north, 
south,  east  or  west,  to  sell  a thousand  bales  of  cotton.  That  comes 
from  his  correspondent.  lie  does  not  know  whether  that  man  has  the 
cotton,  or  whether  he  anticipates  getting  it  from  some  planter  in  pa}^- 
iiieiit  of  debts  or  any  thing  like  that ; so  that  it  is  an  impossibility 
almost  to  find  out  and  divide  the  regular  from  the  irregular  business. 

(2.  Do  the  rules  of  the  Cotton  Exchange  favor  any  such  transac- 
tion ? 


I 


715 


A.  No,  sir,  the  rules  of  the  ^Cotton  'Exchange  are  these  ; the  con- 
tract specifies  that  the  seller  shall  deliver  45,000  pounds  of  cotton  in 
grades  running  from  ^‘strict  ordinary”  to  “ fair,”  which  cover  all  the  mer- 
chantable grades  of  cotton,  and  he  is  obliged  to  deliver  that  cotton  or 
to  get  somebody  else  to  deliver  it  for  him,  provided  the  buyer  requests 
the  delivery,  which  is  always  required  in  one  form  or  another.  There 
is  only  one  way  in  which  no  delivery  occurs,  and  that  is,  if  A sells  B 
a contract,  subsequently  B sells  a similar  contract  to  C,  0 to  D,  D to 
E,  and  then  finally  in  some  transaction  on  the  floor  D sells  to  A;  that 
makes  what  is  called  a ring  settlement,  and  the  delivery  order  is  sent 
from  A through,  and  it  comes  back  to  him  and  the  deliveries  are  made 
under  that,  although  no  cotton  actually  passes. 

Q.  Are  those  sales  conducted  by  the  medium  of  certificates  ? 

A.  They  are  conducted  by  the  medium  of  what  are  called  transfer 
orders  — orders  on  the  warehouse  or  transferable  notices.  It  is  the 
shape  of  a notice  that  ‘^on  such  a day  we  will  deliver  to  you  45,000 
pounds  in  accordance  with  our  contract  of  such  a date.”  The  Cotton 
Exchange  recognizes  no  settlement  of  diflereuces. 

Q.  They  do  not  ? 

A.  No. 

Q.  And  you  have  no  committee  for  that  purpose  ? 

A.  No,  sir. 

Q.  You  speak  of  the  grading  of  the  cotton.  Willyou  please  explain 
how  cotton  is  graded  ? 

A.  Well,  there  is  quite  a number  of  grades  of  cotton.  The  grad- 
ing commences  at  the  grade  of  “ordinary,”  which  is  not  usually  con- 
sidered a merchantable  grade.  It  is  a very  low  style  of  cotton  and  very 
irregular.  It  is  called  ordinary  from  its  irregularity.  It  has  sand  in 
it  and  low  cotton  and  is  mixed.  The  lowest  grade  recognized  is  ordi- 
nary” cotton.  This  is  not  included  in  the  contracts,  because  of  its  be- 
ing an  irregular  grade.  The  first  grade  recognized  by  a contract  is 
that  of  “strict  ordinary;”  then  comes  “good  ordinary,”  then  “strict 
good  ordinary,”  then  “ low  middling,”  then  ‘‘  strict  low  middling,”  then 
“middling,”  then  “good  middling,”  then  “ strict  good  middling,” 
then  “middling  fair,”  and  finally  “fair,”  which  is  the  highest  recog- 
nized grade.  Then  there  are  grades  of  stained,  “good  ordinary 
stained,”  which  is  a mixed  grade  and  is  not  recognized  on  the  con- 
tract. It  ranks  the  same  as  ordinary  cotton,  only  that  the  cotton 
is  stained.  Then  comes  “strict  good  ordinary  stained,”  which  is 
received  on  contracts;  “low  middling  stained,”  “middling  stained.” 
The  “ stained”  does  not  run  any  higher  than  “middling.” 

Q.  Are  all  .your  transactions  conducted  by  grade  or  by  sample  ? 

A.  Well,  there  are  two  styles  of  business  — one  called  the  future 


710 


business,  which  is  based  on  the  grade  of  middling,”  but  allowing  all 
these  grades  from  ordinary”  to  ^^fair,”  and  from  strict  good  ordi- 
nary stained  ” to  middling  stained,”  to  he  delivered  at  their  relative 
values  according  to  the  daily  quotations  issued  by  the  Exchange.  For 
instance,  if  I sell  you  a a contract  on  the  basis  of  middling  ” and  I 
deliver  you  low  middling  cotton  on  it,  I have  to  accept  for  that  day 
seven-sixteenths  of  a cent  per  pound  less  than  the  price  in  the  con- 
tract; or  if  I deliver  you  “good  middling”  cotton  which  is  a grade 
higher  than middling,”  3^ou  have  to  pay  me  one-quarter  of  a.  cent 
per  pound  more  than  the  contract  price,  and  so  on  with  the  various 
grades  above  and  below. 

Q.  Do  you  deal  in  futures  in  your  foreign  transactions  ? 

A.  Very  largely,  sir.  Tney  have  become  a very  necessary  item  in 
foreign  transactions. 

Q.  And  you  also  adopt  the  system  of  dealing  in  futures  in  your  pur- 
chases from  planters  ? 

A.  Yes,  sir. 

Q.  These,  you  say,  are  necessary  in  order  to  facilitate  the  cotton 
trade  ? 

A.  Yes,  sir,  on  account  of  the  quick  communication  there  is  now. 

Q.  These,  then,  you  deem  legitimate? 

A.  Decidedly,  sir. 

Q.  As  of  course  the  members  of  this  committee  do.  You  are  aware, 
however,  that  there  are  certain  illegitimate  transactions  conducted  by 
persons  in  the  cotton  business,  are  you  not  ? 

A.  Well,  I don’t  know  that  I w’ould  call  them  illegitimate.  Now  the 
cotton  trade  has  been  different  from  the  grain  trade.  In  the  cotton 
trade  since  the  Exchange  has  been  started  we  have  had  five  of  what 
has  been  designated  by  the  public  as  “ corners,”  but  these  so-called 
corners  liave  not  lasted  more  than  fifteen  or  at  the  outside  thirty  days; 
and  during  the  time  of  the  existence  of  those  corners  the  legitimate 
trade  of  the  market  could  buy  cotton  at  the  regular  market  value  — 
that  is  way  below  the  pnce  of  the  contracts  for  the  particular  month 
that  was  supposed  to  be  cornered ; that  is,  that  during  the  time  of 
the  existence  of  this  fight  between  the  men  who  were  short  and  those 
who  wore  long  of  the  market,  I,  as  a broker,  could  fill  any  orders  for 
8])inning  or  for  export  at  the  regular  legitimate  price  of  cotton  and  it 
never  affected  the  legitimate  business. 

Q.  It  did  not? 

A.  No,  sir,  not  during  the  existence  of  these  corners,  because  the 
olijeet  seemed  to  be  to  ])unisli  the  man  who  had  sold  this  cotton  at  a 
low^r  price*  tlian  tlie  owners  of  it  were  Avilling  to  sell  it. 

Q.  How  wen*  those  corners  lu’ouglit  about? 


717 


A.  Well,  I suppose  the  origin  of  them  was  that  some  parties  think- 
ing that  cotton  would  be  lower  at  the  tim  - had  gone  to  work  and  sold 
it  without  having  it ; I suppose  that  is  the  origin  of  it. 

Q.  Then  the  selling  by  these  parties  of  goods  tliat  they  did  not  pos- 
sess was  the  cause  of  these  corners  and  all  the  evils  that  resulted  from 
them  ? 

A.  Well,  I do  not  know  that  any  evils  resulted  from  them,  sir,  be- 
cause to  those  regularly  engaged  in  the  legitimate  trade  it  caused  no 
evils,  but  the  man  who  suffered  was  the  man  who  sold  what  he  had 
not  goj:. 

Q.  Then  you  disapprove  of  such  transactions  as  that? 

A.  I disapprove  of  a man  selling  a large  quantity  of  stuff  he  has  not 
got,  but  I do  not  see  exactly  how  you  are  going  to  divide  that  from 
the  legitimate  business,  because  when  a man  offers  you  500  bales  on 
the  floor  of  the  Cotton  Exchange,  you  cannot  go  up  and  swear  him 
that  he  has  got  the  cotton  to  sell  against;  you  have  got  to  take  it  as  a 
legitimate  transaction. 

Q.  But  suppose  you  afterward  discover  that  he  has  committed  that 
offense  ; would  it  not  be  well  to  have  a law  by  which  he  could  be  pun- 
ished in  order  to  guard  against  such  transaction  ? 

A.  I have  a very  different  opinion  on  that  subject  from  most  people, 
sir.  I consider 'that  in  this  age  no  restriction  should  be  put  upon  a 
man’s  buying  or  selling  any  thing  that  he  wants  to. 

Q.  Whether  it  exists  or  not  ? % 

A.  If  he  chooses  to  sell, selling  something  that  he  has  not  got  and  does 
not  get  that  in  time  to  deliver  it,  I consider  that  he  is  punished  enough 
by  having  to  pay  out  his  money.  That  is  my  idea  about  it.  I think 
that  in  this  age  there  ought  to  be  perfect  liberty  to  a man  to  trade,  to 
buy  or  sell,  or  contract  for  future  delivery,  or  to  do  any  thing  he  likes 
in  that  way.  I think  it  is  a necessity  of  the  age. 

Q.  Then  would  you  brand  the  selling  of  goods  which  a man  doesn-ot 
possess  and  has  no  expectation  of  possessing  as  a dishonorable  act? 

A.  I do  not  know  that  I would,  because  I may  be  able  to  see  farther 
ahead  than  some  men  ; I may  be  able  to  see  a time  coming  when  I 
think  certain  goods  will  not  be  worth  the  value  that  they  are  now ; I 
may  see  a time  coming  when  I think  that  stocks  may  not  be  w'orth  the 
value  that  they  are  now;  they  may  be  very  high,  according  to  my  idea, 
and  I may  be  willing  on  my  judgment  to  agree  to  deliver  those  things 
at  a certain  future  time. 

Q.  Taking  a risk  ? 

A.  Taking  a risk,  a fair  business  judgment  risk. 

Q.  W^ould  you  not  consider  that  as  a game  of  chance  ? 


718 


1 


■ A.  Not  at  all,  sir,  any  more  than  I would  consider  buying  a house  on 
Fifth  avenue  at  the  present  prices  tliey  are  asking  for  thorn,  because  I 
think  it  is  the  biggest  chance  in  the  world  that  you  will  have  to  sell  it 
out  at  fifty  per  cent  before  long. 

Q.  What  was  the  volume  ot  sales  on  the  Exchange  during  the  year 
1881  ? 

A.  That  is,  we  count  from  the  Ist  of  September,  1880,  to  the  31st  of 
May,  1881;  that  is  the  business  year;  the  cotton  year  is  from  the  1st 
of  September  to  the  1st  of  September,  but  we  count  from  the  31st  of 
May  to  the  31st  of  May  in  our  Exchange  here,  because  that  is  the  time 
we  elect  our  officers  ; but  the  cotton  year  is  from  the  1st  of  September 
to  the  1st  of  September  ; during  1881  the  sales  were  20,700,000  bales. 

Q.  Were  any  of  those  fictitious  sales  ? 

A.  Well, that  is  something  I could  not  answer  you,  sir;  I presume 
some  of  them  were. 

Q.  Have  you  any  idea  what  proportion  were  fictitious  ? 

A.  No,  sir,  I have  not,  and  I will  tell  you  the  reason  why  you  can- 
not arrive  at  that ; as  I explained  in  my  statement,  there,  for  instance, 
there  are  several  large  export  houses  in  this  city  ; during  the  months 
of  July  and  August  spinners  in  Europe  and  Great  Britain  will  begin 
to  try  to  make  arrangements  for  the  delivery  of  the  cotton  for  the 
next  season,  during  the  months  of  October,  November,  December, 
January  and  so  on,  and  they  will  make  bids  to  the  agents  of  these 
houses  in  Liverpool  and^  Bremen  and  Amsterdam  and  those  various 
places  for  shipments  for  certain  months;  those  export  houses  will 
come  into  this  market  and  they  will  buy  October,  November,  Decem- 
ber and  January  deliveries  to  the  extent  that  their  agents  have  sold  to 
these  spinners  on  the  other  side;  now,  when  the  time  ‘Comes  around 
for  the  shipment  of  those  cottons,  they  sometimes  can  buy  cotton 
cheaper  in  the  Southern  ports  — very  often  — especially  in  November 
and  December  — and  consequently  instead  of  receiving  the  cotton  sold 
to  them  on  these  Octobers,  Novembers  and  Decembers,  they  buy  cot- 
ton in  the  South  and  sell  as  fast  as  they  buy  a 100  bales  in  the  South, 
they  sell  a 100  bales  on  these  contracts  here  to  close  them  out,  and  in 
that  way  and  in  all  different  branches  this  business  is  multiplied  very 
much. 

f^.  What  are  the  transferable  markets  with  which  you  do  business  ? 

A.  AV'ell,  we  do  business  with  Liverpool,  Bremen,  Amsterdam,  and 
numbei-l(*ss  interior  towns  on  the  continent. 

(}.  Wbth  Lnro))0  alone  ? 

A.  (boioa  and.  Barcelona. 

G.  1 >o  you  do  any  bnsim'ss  with  Asia  or  Africa  ? 

A.  Well,  that  is  done  more  in  the  shape  of  goods,  sir. 


719 


Q.  Sending  manufactured  goods  ? 

A.  Sending  manufactured  goods  ; the  principal  manufacturing,  you 
see,  is  done  on  the  continent  and  in  England  for  the  other  side,  and 
then  of  course  we  rank  very  high  as  a manufacturing  country  here 
now.  ^ 

Q.  Do  you  depend  entirely  upon  American  production  for  your  raw 
material  ? 

A.  Well,  American  cotton  is  what  is  called  a happy  medium  ; it  is 
the  best  manufacturing  cotton  grown  in  the  world;  it  is  neither  too 
short  in  staple  nor  too  long  in  staple  ; there  are  other  countries,  such 
as  Egypt,  that  raise  a long  staple  cotton  ; Brazil  raises  long  staple  cot- 
ton, and  then  East  India  raises  a short  staple  cotton  which  is  not  so 
well  suited  and  does  not  make  as  good  a class  of  goods  and  is  not 
nearly  so  valuable  as  American  cotton. 

Q.  Do  you  trade  in  any  of  the  foreign  productions ; that  is  to  say. 
do  you  import  foreign  products  ? 

A.  No,  sir  ; we  are  merely  engaged  in  the  buying  and  selling  of 
cotton  ; the  cotton  either  goes  to  the  mills  here  or  to  some  of  the  ports 
abroad. 

Q.  Is  it  entirely  American  cotton  ? 

A.  Yes,  sir. 

Q.  One  man  selling  what  he  has  not  got  and  never  expects  to  have 
and  another  man  buying  what  he  knows  does  not  exist  and  never  ex- 
pects to  receive  — what  would  you  call  such  transactions  ; how  would 
you  designate  them  ? 

A.  Well,  I don’t  know  that  men  do  that,  sir. 

Q.  Suppose  they  do  ; what  would  you  designate  them  ? 

A.  Well,  I don’t  know,  I am  sure. 

Q.  Assuming  that  certain  men  carry  on  business  of  that  kind  ? 

A.  All  men,  as  I understand  it,  when  they  buy  an  article  buy  it  with 
the  intention  of  re-selling  it  again. 

Q.  That  is  your  understanding  ? 

A.  Yes. 

Q.  I do  not  imply  that  you  know  any  thing  about  these  transactions, 
but  we  have  had  evidence  produced  before  us  to  show  that  they  do  ex- 
ist ; suppose  that  such  transactions  do  take  place  ; what  is  your  opin- 
ion in  regard  to  them  ? 

A.  I don’t  know  exactly  what  you  mean. 

Q.  Suppose  one  class  of  men  engaged  in  business  make  contracts  for 
certain  goods  which  they  never  expect  to  receive  and  which  they  do 
not  know  exist  — 

A.  That  they  do  not  know  exist  ? 


720 


Q.  Yes. 

. A.  I never  heard  of  such  a thing. 

Q.  The  purely  speculative  system  of  dealing,  as  I understand  it,  is 
done  in  that  way  ? 

A.  No,  sir  ; not  with  us  ; when  a man  buys  cotton  in  our  Exchange 
he  is  bound  down  by  his  contract  that  he  must  receive  and  pay  for 
it, unless  he  passes  that  on  to  somebody  else,  who  receives  and  })ays  for  it. 

Q.  I do  not  mean  to  be  understood  that  I suppose  that  this  does 
exist  in  your  Exchange  — Ido  not  know  that  it  does  — but  I simply  ask 
you,  supposing  such  a state  of  things  did  exist,  how  would  you  desig- 
nate such  transactions  ? 

A.  I don’t  know  how  I would  designate  them,  sir. 

Q.  Would  they  be  legal  or  illegal  ? 

A.  I don’t  see  any  objection  to  a man  buying  any  thing  that  he 
wants  to  buy ; as  I stated  before,  I think  there  ought  to  be  perfect 
freedom  in  that;  that  is,  if  a man  chooses  to  buy  an  article  on  his 
judgment,  no  matter  if  it  is  to  be  delivered  to  him  five  years  from 
now,  he  has,  I think,  a perfect  right  to  do  so. 

Q.  Suppose  he  never  expects  to  receive  it  ? 

A.  How  can  he  ? The  man  that  buys  an  article  must  expect  that 
unless  he  sells  it  out  it  will  be  tendered  to  him. 

Q.  But  taking  the  purely  speculative  view  of  it,  suppose  he  buys 
that  by  certificate  and  expects  to  sell  that  by  certificate  again  without 
the  transfer  of  any  of  tlie  material  ? 

A.  A certificate  is  a transfer  of  the  material,  sir,  if  you  mean  a cer- 
tificate of  so  many  bushels  of  wheat  in  an  elevator,  or  a certificate  of 
so  many  bales  of  cotton  in  a warehouse  — a warehouse  receipt;  he 
either  has  to  pay  for  that  when  it  is  tendered  to  him,  or  he  has  to  pass 
it  to  somebody  else  who  pays  for  it. 

Q.  You  know  that  certain  sales  take  place  which  are  known  as  ficti- 
tious sales  ? 

A.  We  have  a very  strong  rule  against  any  fictitious  sales  in  our 
market,  sir. 

Q.  Do  you  know  that  such  transactions  take  place  ? 

A.  I do  not  know  it. 

(2.  Supposing  such  sales  do  take  place,  how  would  you  characterize 
them  ? 

A.  Well,  wc  would  very  soon  put  it  down  if  any  fictitious  sales  were 
rei)orted  in  our  Exchange. 

Q.  I am  assuming  that  sucli  sales  do  take  place;  what  is  your  opin- 
ion as  to  the  moral  effect  of  such  sales  ? 

A,  I do  not  know  how  to  answer  that,  sir. 

<2.  Would  you  ap[)rovo  or  disappovo  of  them? 


721 


r ' 


A.  I certainly  should  not  approve  of  a man  coming  to  me  and  say- 
ing, ‘^1  will  give  you  so  much  for  so  many  hundred  bales  of  cotton 
deliverable  in  such  a month,  and  we  will  settle  at  whatever  the  value 
of  that  cotton  is  when  that  delivery  comes  around;”  that  is  not 
business;  it  is  merely  a settlement  of  differences;  that  we  do  not 
recognize. 

Q.  Would  you  call  that  gambling  ? 

A.  I should  not  call  it  legitimate  business,  not  by  any  means. 

Q.  Would  you  call  it  gambling? 

A.  No,  sir;  I look  on  gambling  as  a different  thing;  Ido  not 
give  the  general  sense  to  the  word  gambling  ” that  is  given  to  it  now- 
a-days. 

Q.  How  do  you  understand  it  ? 

A.  I consider  that  it  is  playing  games  of  chance. 

Q.  That  is  the  system  of  sj^eculation  that  we  have  just  referred  to, 
isn’t  it  ? 

A.  No,  I don’t  think  so. 

Q.  Then  you  do  not  see  any  evil  existing  in  the  present  state  of 
business  transactions  whether  they  are  fictitious  sales  or  real  ? 

A.  I don’t  see  any  thing  in  the  present  way  of  doing  business.  As 
I said  before  I think  th  -t  there  ought  to  be  perfect  freedom  for  a man 
to  sell  or  contract  to  deliver  or  contract  to  receive  any  thing  he  chooses 
in  the  shape  of  any  merchandise,  provided  he  is  willing  to  do  so  on  his 
judgment.  I don’t  look  on  it  as  any  more  gambling  than  the  dry 
goods  man  or  the  grocery  man'  or  anybody  else  buying  his  stock  of 
goods. 

Q.  Are  you  aware  that  certain  institutions  known  as  bucket-shops 
exist  in  the  city  of  New  York  ? 

A.  Well,  I have  heard  so,  sir.  I have  never  been  in  any  of  them 
and  could  not  tell  you  where  they  are  located. 

Q.  But  from  hearsay  you  know  that  such  institutions  exist  ? 

A.  What  they  call  bucket-shops.  In  our  Exchange  we  do  not  recog- 
nize any  trade  under  100  bales  on  the  floor.  I have  heard  that  there 
are  places  where  men  can  trade  in  five  and  ten  bale  lots  of  cotton  or 
any  thing  else. 

Q,  What  is  your  opinion  in  regard  to  those  institutions  ? 

A.  Well,  I don’t  know  any  thing  about  those  ; I have  never  had  any 
experience  with  them. 

Q.  I do  not  ask  from  your  personal  knowledge  but  from  what  you 
have  heard  of  them,  and  supposing  that  they  do  exist  as  they  have 
been  represented  to  you,  what  do  you  think  of  them  ? What  is  their 
influence  upon  society  and  upon  commerce  — upon  the  public  ? 

A.  Well,  I should  say  that  they  were  of  very  little  use  to  commerce; 
rather  a detriment  than  any  thing  else,  such  institutions  as  that. 

91 


722 

Q.  How  would  you  characterize  such  a mode  of  business  as  is  con- 
ducted in  such  places  ? 

A.  Well,  to  tell  you  the  truth  I do  not  know  how  that  business  is 
conducted.  I have  never  taken  the  trouble  to  inquire.  I have  never 
had  any  thing  to  do  with  them,  and  have  never  taken  the  trouble  to 
inquire  how  chat  business  is  done  there,  so  that  I don’t  really  know. 

Q.  What  was  the  volume  of  the  production  of  cotton  last  year  in 
the  United  States  ? 

A.  About  5,450,000  bales. 

Q.  And  what  was  the  amount  of  future  sales  ? 

A.  32,700,000. 

Q.  And  the  whole  production  ? 

A.  About  5,450,000. 

Q.  What  were  the  transfers  on  the  floor  of  the  Cotton  Exchange  ? 

A.  The  handling  of  spot  cotton  in  the  market  was  about  000,000  of 
bales  — in  this  market. 

By  Senator  Browning  : 

Q.  Then  all  the  business  that  was  done  on  the  floor  of  the  Cotton 
Exchange,  embracing  32,000,000  odd  bales,  was  on  the  basis  of  the 
600,000  bales  ? 

A.  Ho,  sir,  excuse  me ; it  was  on  the  basis  of  the  American  crop. 
These^'transactions  come  from  all  the  world  ; they  come  from  Europe, 
a great  number  of  them,  and  come  from  all  over  this  country.  How- 
a-days  almost  every  transaction  made  in  cotton,  dry  goods,  or  any 
thing  else,  futures  are  made  use  of  as  a hedge. 

Q.  That  is  just  exactly  as  the  committee  understand  ? 

A.  Are  made  use  of  as  hedges.  For  instance,  if  a man  wants  to 
execute  an  order  he  has  got  to  buy  futures,  and  then  afterward  buy 
the  actual  cotton  and  sell  out  those  futures.  That  duplicates  the 
transaction. 

Q.  lie  buys  it  and  then  hedges  against  the  transaction  as  soon  as 
possible,  doesn’t  he  ? 

A.  lie  does  it  to  cover  a legitimate  transaction. 

By  Senator  Boyd  : 

Q.  Wbat  do  you  mean  by  hedging  ? 

A.  I^'or  instance,  if  I have  an  order  for  500  bales  from  Liverpool, 
to-day,  of  middling  cotton,  naming  the  price  which  they  will  give  me, 
provided  I answer  that  dispatch  in  two  hours,  it  is  an  utter  impossi- 
bility for  me  to  go  into  the  market  and  buy  these  500  bales  of  that 
^Kirl.icailar  grade  and  make  the  arrangement  for  it  — buy 
it.  and  trade  on  it  inside  of  two  hours;  but  I go  into  the 
Excliange,  and  I find  tliat  December  deliveries  are  $?10.32,  or  some- 


723 


thing  like  that,  and  I make  my  calculation  because  $10.32  is  based  on 
middling,  which  is  the  grade  I want.  I make  my  calculations  on  that 
basis  and  what  the  expenses  of  freight  and  such  things  are,  to  see 
whether  I can  meet  their  order.  If  I can  make  a commission  on  that 
order,  I immediately  buy  the  500  bales  of  December  cotton  and  cable 
over  that  the  order  is  executed,  because  I have  bought  500  bales  of 
middling  basis.  I then  have  plenty  of  time  to  go  around  the  market ; 
I do  not  care  how  the  market  fluctuates  then,  because  I have  covered 
my  transaction  — I have  bought  my  cotton.  But  that  particular  cot- 
ton on  that  contract  may  not  suit  me,  because  1 might  get  strict 
ordinary,”  I might  get  stained,”  and  I want  500  bales  of  ‘‘  middling.” 
So  I go  out  into  the  market ; I go  to  brokers’  offices,  and  at  last  I find 
the  cotton  that  suits  me— 500  bales  of  ""middling”  cotton.  The 
seller,  myself  and  the  broker  get  together.  We  arrange  on  the  price 
for  that  cotton,  and  I buy  it  to  fill  my  order  on  the  other  side.  I 
immediately  step  across  the  street  into  the  Exchange,  and  I sell  out 
again  the  500  bales  of  futures  which  I have  bought,  because  I have 
bought  the  cotton,  and  I know  that  my  transaction  is  closed.  Con- 
sequently that  order  for  500  bales  mates  a trade  of  a thousand  bales 
on  the  Exchange.  You  get  my  idea,  don’t  you  ? 

Q.  Yes. 

A.  It  necessitates  trading  on  the  Exchange  in  double  the  amount  of 
the  actual  cotton  which  is  shipped. 

Q.  How  many  transactions  do  you  know  of  having  occurred  in  re- 
gard to  one  quantity  of  cotton  without  any  actual  delivery  ? 

A.  How  is  that,  sir  ? 

Q.  How  many  transactions  in  regard  to  a quantity  of  cotton  with- 
Dut  any  actual  delivery  do  you  know  of  having  occurred  ? 

A.  I could  not  really  tell,  sir;  because  transactions  are  so  interwoven 
vith  each  other  that  I have  no  way  of  telling  it ; I am  merely  a broker, 
md  transactions  merely  come  through  me ; lam  not  able  to  tell  how 
nuch  is  delivered  because  I may  get  an  order  for  a man  to  sell  a thou- 
iand  bales  for  him,  and  when  he  comes  to  buy  that  cotton  in  after  he 
■ells  his  cotton,  that  he  has  sold  against,  he  may  give  another  broker 
he  order  to  buy  it  in,  and  I will  not  know,  because  the  business  is 
iivided  among  a lot  of  brokers;  the  very  difficulty  I see  in  it,  I don’t 
ee  how  in  the  name  of  conscience  you  are  ever  going  to  separate  the 
'ad  from  the  good,  or  how  you  are  ever  going  to  legislate  in  such  a 
^ay  that  you  can  separate  the  bad  from  the  good  ; I look  on  it  just 
ke  every  thing  in  this  world  — that  we  have  got  to  take  the  bad  with 
be  good,  because  there  is  a great  deal  of  good  in  it,  a great  deal  that  is 
bsolutely  necessary  to  the  business  of  this  country. 

Q.  Don’t  you  think  it  is  the  duty  of  the  people  through  their  Legis- 


724 


latrure  to  endeavor  to  suppress  any  hc\d  that  may  exist,  as  you  have  de- 
scribed it  ? 

A.  Yes ; but  the  question  in  my  mind  is  whether  it  is  bad ; I doubt 
it  very  much  ; I think  it  is  straining  morality  very  much  to  say  that 
this  is  bad  ; you  might  as  well  say  the  same  thing  of  a man  that  takes 
a contract  to  pave  a street  at  a future  time,  for  which  he  may  not  at 
that  moment  have  the  stone ; he  may  not  have  the  workmen,  and  he 
may  not  know  what  wages  he  will  have  to  pay  the  workmen  ; but  he 
goes  and  sends  in  a tender  for  the  paving  of  the  street ; ho  is  a specu- 
lator in  futures  because  he  has  not  the  stone,  he  has  not  the  men;  I 
do  not  look  on  this  as  any  more  immoral  — in  fact  I do  not  look  on  it 
as  immoral  at  all. 

Q.  By  what  law  is  the  natural  value  and  price  of  cotton  fixed  ? 

A.  Well,  its  production  and  consumption,  sir. 

Q.  Does  not  intermediary  speculation  tend  to  enhance  its  price  be- 
yond its  natural  value  ? 

A.  ^o,  sir  ; I think  that  since  the  war,  if  any  thing,  it  has  had  a ten- 
dency to  decrease  the  value  taken  on  the  average. 

Q.  Decrease  the  price  ? 

A.  Decrease  the  value  of  the  article  — decrease  the  price  of  the  arti- 
cle ; I think  if  any  of  you  gentlemen  will  take  the  trouble  to  look  at  the 
fluctuations  of  any  of  the  great  staples  before  this  species  of  buying 
and  selling  came  into  vogue,  you  will  find  that  the  fluctuations  have 
been  very  much  more  severe  and  greater ; of  course,  I do  not  say  that 
at  times  by  over  production  or  less  production,  prices  will  not  rise  or 
go  down  — that  is  the  natural  course  of  events  — but  what  I say  is,  if 
you  will  take  an  average  of  ten  or  twelve  years  since  this  species  of 
business  has  been  in  vogue,  and  take  ten  or  twelve  years'  average  pre- 
vious to  that — say  previous  to  the  war,  because  during  the  war  there 
was  very  little  done  in  this  business  — you  will  find  that  fluctua- 
tions have  not  been  nearly  so  violent;  this  business  has  more  of  the 
tendency  to  keep  prices  on  a level  plane. 

Q.  What  system  of  business  do  you  refer  to  ? 

A.  This  future  sales  business  and  purchase  business. 

Is  there  any  thing  else  you  would  like  to  offer  to  the  committee  ? 

A.  No,  sir;  if  the  committee  wishes  to  ask  me  any  thing,  I will 
answer. 

./allies  (/.  Jiloss,  being  duly  sworn,  was  then  interrogated  and  testi- 
licd  as  follows  : 

iiy  S(Miator  lioYi)  : 

< ).  Wluu-c  <1<)  you  reside  ? 


/ 


^725 


I 


' A.  New  York, 

j Q.  What  is  your  business  ? 

I A.  Cotton  merchant. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  I have  been  in  the  cotton  business  during  my  entire  business 
career.  I have  been  a principal  for  seven  years. 

Q.  Where  is  your  place  of  business  ? 

A.  123  Pearl  street. 

Q,  Are  you  a member  of  a firm  ? 

A.  I am  — Gwathney  & Bloss. 

Q.  As  I have  been  informed  by  letter  under  a resolution  of  your  Ex- 
change, certain  members  of  the  Exchange  were  directed  to  appear  be- 
fore this  committee  ? 

A.  I believe  so. 

Q.  I am  informed  that  you  are  one  of  the  gentlemen’  ? 

A.  Yes,  sir. 

Q.  In  order  to  lay  the  foundation  for  your  statement  I will  ask  you 
the  ordinary  question,  What  is  3^our  opinion  with  'reference  to  the 
whole  system  of  making  corners' and  dealing  in  futures  with  reference 
to  its  eflect  upon  commerce  and  its  influence  upon  the  j^ublic  welfare  ? 

A.  As  to  the  matter  of  future  deliveries  — that  part  of  the  question 
, — I think  it  is  beneficial.  As  for  corners,  never  having  been  inter- 
ested in  them,  I perhaps  am  not  a very  competent  witness. 

Q.  From  what  you  know^  from  hearsay  and  observation  would  you 
be  in  favor  of  the  system  of  making  corners  or  opposed  to  it  ? 

A.  I should  not  be  in  favor  of  it. 

Q.  Do  you  think  it  is  detrimental  to  the  public  welfare  ? 

A.  I do  not  think  it  really  affects  the  public  very  much,  if  any. 

Q.  Then  why  should  you  be  opposed  to  it  ? 

• A.  For  the  reason  in  its  smaller  effect,  perhaps  on  the  few  that  may 
possibly  be  unfortunate,  it  is  detrimental,  but  the  larger  proportion 
that  perhaps  may  be  sufferers  are  not  open  possibly  to  a great  deal  of 
sympathy. 

Q.  You  know  that  the  system  of  dealing  in  futures  is  divided  into 
the  legitimate  system  of  doing  business  in  that  way,  and  the  purely 
speculative  system  ? What  is  your  opinion  as  to  the  purely  specula- 
tive system  of  dealing  in  futures  ? 

A.  W ell,  I think  that  they  are  so  blended  together  that  it  is  veiy 
difficult  to  separate  them  ; I think  that  perhaps  that  part  which  is 
called  purely  speculative  plays  such  a part  as  to  be  considered  really 
a benefit  rather  than  an  injury,  from  the  fact  that  those  that  may  l^e 
considered  as  the  ones  that  play  that  part  are  really  in  the  position  in 
a sense  of  middle-men,  and  they  therefore  make  a very  much  larger 


7^6  , 


number  that  are  trading  thau  would  be  the  case  if  there  was  no  one 
interested  but  the  man  that  was  at  one  extreme  end  — we  will  say  tlio 
planter  — and  the  consumer  at  the  other  extreme  end,  and  in  the  in- 
terim we  will  say,  a Southern  broker  and  a merchant  in  New  York, 
and  a broker  in  New  York  and  a broker  at  tlie  consuming  point  and 
finally  it  reaches  the  consumer.  We  will  say  in  New  York  there  are 
a very  large  number  that  act  in  that  middle  capacity,  some  of  whom 
may  get  or  lose  larger  or  smaller  amounts  ; but  the  effect  of  the  large 
number  trading  is  to  make  an  evener  tone  of  market,  and  subject  the 
person  who  is  buying  in  the  first  place  to  pay  a less  price,  and  per. 
haps  prevent  the  person  who  is  selling  from  exacting  a higher  price. 
So  as  a matter  of  fact,  although  there  are  a great  many  that  come  in 
to  get  a small  commission,  they  come  in  to  produce  a beneficial  result. 

Q.  What  is  its  moral  effect  upon  the  business  community  and  upon 
the  community  generally  ? 

A.  I think  no  worse  really  or  as  a matter  of  fact  than  any  other 
species  of  business. 

Q.  You  speak  from  experience  merely  as  a cotton  broker  not  from 
any  experience  you  have  had  as  a speculator  in  stocks  or  grain  ? 

A.  No,  from  my  experience  as  a cotton  merchant  entirely. 

Q.  Is  there  any  thing  else  you  would  like  to  state  to  the  committee  ? 

A.  No,  sir. 

By  Senator  Browkiitg  : 

Q.  Do  you  have  what  is  called  a settlement  day  ? 

A.  No,  sir. 

Q.  Do  you  recognize  option  sales  as  legitimate  in  the  Cotton  Ex- 
change ? 

A.  Well,  there  is  nothing  that  is  designated  by  that  term  that  I am 
aware  of.  We  have  contracts.  They  are  sometimes  perhaps  errone-: 
ously  so  called  as  I have  heard  it  argued,  but  they  are  not  options  as 
a matter  of  fact. 

The  Chairman  here  read  the  following  telegram  from  Mr.  Talmage : 

“Brooklyi^-,  N.  Y.,  Dec.  16,  1882. 

Senator  John"  G.  Boyd,  599  Broadway  : 

Thanks  for  the  invitation  but  I am  so  occupied  I cannot  coma 
Have  been  absent  or  would  have  answered  your  letter. 

T.  DeWITT  talmage.’’ 

John  (J.  Welch  recalled: 

By  Senator  Boyd  : 

Q.  You  are  rec.alled  to  make  some  statement  in  relation  to  thetesti- 


727 


mony  given  by  certain  representatives  of  the  Standard  Oil  Company. 
Please  go  on  and  make  such  statement  ? 

A.  I want  to  make  a statement  as  I spoke  about  further  on  the  sub- 
ject of  corners,  etc.,  in  general  which  I have  said  something  about.  I 
have  a few  lines  here  which  I will  read,  calling  attention  to  it. 

Kegular  or  legitimate  dealing  is  in  buying  a commodity,  or  its 
paper  representive,  and  holding  it  for  a rise  or  for  the  income  that  can 
be  drawn  from  it  or  from  both,  and  in  selling  a commodity  or  its 
paper  representative  in  view  of  a depreciated  value  the  seller  believes 
it  may  have,  whether  the  depreciation  comes  from  a decline  in  the 
price  of  the  article  itself  or  from  a cessation  or  decrease  of  income,  or 
from  both  these  causes.  The  paper  representative  here  referred  to  is 
a stock,  bond,  warehouse  receipt  or  something  of  the  kind  and  not  a 
mere  agreement  of  an  individual  or  a company  to  make  a future  de- 
livery of  the  article.  Within  this  definition  of  legiMmate  dealing  there 
is  room  for  speculation,  but  it  cannot  go  outside  of  the  bonds  of  the 
quantity  of  the  article  itself. 

With  the  short  sale,  a class  of  dealings  commences  that  it  is  not 
unfair  to  call  illegitimate.  With  short  sales  no  bonds  can  be  put 
' upon  transactions.  A year’s  product  can  be  handled  every  day,  as  is 
now  frequently  the  case  with  petroleum.  And  the  result  is  what  is 
called  over-trading,  and  then  follow  corners,  panics,  bankruptcies 
embezzlements,  ruin,  insanity  and  suicide.  Take  away  short  sales  and 
the  w'hole  superstructure  of  commercial  gambling  will  fall  to  the 
ground.  It  is  generally  regarded  even  by  those  most  closely  related 
to  it  as  gambling.  Treat  short  sales,  the  act  of  the  seller,  not  the 
purchaser,  as  gambling  before  the  law,  put  a dealer  in  such  a position 
that  he  may  be  forced  to  prove  before  the  law  that  what  he  sells  repre- 
sents a commodity  in  actual  existence  or  in  process  of  creation,  and 
the  problem  is  solved.  Thousands  of  men  who  haunt  Exchanges  will 
have  to  go  to  productive  industries,  to  their  immense  benefit  and  that 
of  the  community  in  which  they  live,  and  an  immense  advance  will 
be  made  toward  an  avoidance  of  an  excess  of  poverty  and  an  excess  of 
millions. 

I will  illustrate  that  in  petroleum  as  one  case.  New  wells  are  a 
great  cause  of  fluctuation  in  petroleum.  A man  may  have  very  early 
knowledge  of  the  prospect  of  a well  which  may  be  largely  productive  ; 
he  may  own  the  well  or  he  may  get  a knowledge  in  regard  to  it  prior 
to  others.  He  rushes  to  the  telegraph  office.  He  can  send  a telegram  , 
to  half  a dozen  Exchanges  telling  them  all  to  sell  for  him  a hundred 
thousand  barrels.  He  has  no  oil.  That  is  a short  sale.  Other  dealers  or 
other  operators  are  watching  the  brokers  closely  who  receive  this  order, 
land  knowing  them  to  be  operators  of  importance  they  see  that  these  sales 


728 


are  being  forced  on  the  market,  and  they  rush  in,  and  there  is  a panic  in 
the  market  at  once.  There  is  an  enormous  amount  of  short  sales 
— perhaps  a million  barrels  of  short  sales  — created  upon  the  news  of 
one  well.  Well,  then  it  is  found  out  that  a large  amount  of  short  in- 
terests need  oil,  and  they  rush  in  and  buy,  and  the  market  will  go  way 
up  beyond  where  it  was  before  that  well  was  struck.  If  the  man  that 
had  that  early  information  had  the  oil  which  he  sold,  it  would  be  well, 
and  it  would  not  have  these  bad  elfects  ; but  his  rushing  his  orders  to 
sell  entails  all  these  evil  consequences,  which  come  from  short  sales. 
We  had  a eulogy  passed  yesterday  upon  the  Standard  Oil  Company, 
in  wdiich  they  appeared  in  a way  that  they  have  never  done  before,  I 
believe.  They  had  an  opportunity  to  appear  before  the  Ilepburn  in 
vestigating  committee  of  1880,  and  every  means  was  used  to  bring 
them  there,  but  they  failed  to  appear  mostly,  and  the  few  that  did 
appear  failed  to  give  any  information ; but  they  are  taking  the  tack 
now  of  making  some  statements  — 

Senator  Brownin'G  — If  you  are  going  to  give  this  committee  any 
additional  testimony  we  are  willing  to  hear  it,  but  we  will  not  permit 
criticism  of  any  witness’s  testimony. 

The  Witness  — He  made  a very  general  statement. 

Senator  Browning  — That  is  our  affair.  If  you  have  any  thing  to 
sav  that  will  contradict  what  they  said  we  wdll  be  glad  to  hear  it. 

The  Witness  — I will  endeavor  to  coniine  my  remarks  simply  to 
contradictions  of  testimony  bearing  upon  points  which  they  stated. 
They  stated,  for  one  thing,  that  nothing  could  be  said  against  the 
Standard  Oil  Company  in  its  relations  to  the  public.  I will  state  that 
there  are  a great  many  things  which  can  be  said.  The  one  thing 
which  they  have  worked  for  more  distinctively  than  any  thing  else  is 
for  the  purpose  of  absorbing  the  petroleum  business  and  making  it  a 
non-competitive  business.  The  word  non-competitive  ” describes  their 
condition  better  than  any  other.  That  developed  itself  quite  early  in 
their  history.  My  acquaintance  extends  back  quite  intimately  with 
the  petroleum  business  to  1872.  We  had  then  in  the  oil  country, 
where  I was  living  at  that  time,  and  where  I have  lived  most  of  the 
time  since,  an  intense  excitement,  which  went  through  the  country  on 
finding  that  there  was  a scheme,  in  the  name  of  the  South  Improve- 
ment Company,  for  the  purpose  of  controlling,  by  that  company,  the 
transportation  of  petroleum  out  of  the  region.  There  were  exciting 
• meetings  held  at  Titusville,  Oil  City,  and  Franklin,  through  a series 
of  weeks.  Tliere  Avas  intense  indignation  shown,  and  the  result  of  it 
was,  the  tiling  was  carried  to  Ilarrisburgh  and  carried  to  Washington, 
and  Die  charter  of  the  South  Im])rovement  Company  was  repealed  and 
then-  was  a congressional  investigation.  The  contract  Avhicli  tlie  Soutli 


729 


Improvement  Company  had  with  all  railroads  leading  out  of  the  country 
was  to  the  effect  that  this  South  Improvement  Company  should  have 
rates  of  freight  tliat  no  other  company  liad.  Points  upon  that  were 
produced,  particularly  before  the  Hepburn  committee,  whicli 
rendered  all  competition  impossible,  and  in  consequence  of  this 
there  was  this  wave  of  indignation  and  excitement  went  through  the 
oil  country.  Well,  that  thing  was  squelched.  But  the  thing  as  we 
learned  afterward  by  official  papers  which  came  out  subsequently  — 
we  learned  that  the  spirit  of  that  thing  was  carried  out.  They  ren- 
dered the  business  substantially  non-competitive.  They  wiped  out  op- 
posing corporations  and  they  got  the  business  into  their  own  hands. 
After  these  papers  came  out  with  regard  to  the  South  Improvement 
Company,  I do  not  remember  especially  any  thing  of  an  official  nature 
bearing  consecutive  dates,  until  a correspondence  which  was  developed 
by  the  investigation  in  Pennsylvania  came  out  between  the  Standard 
Oil  Coinjmny  and  the  Pennsylvania  Eailroad  Company.  The  vice- 
president  of  the  Standard  Oil  Company  dates  a letter  from  Philadel- 
phia to  Mr.  Scott,  then  president  or  vice-president  of  the  Pennsyl- 
vania railroad. 

By  Senator  Brownin'G. 

Q.  What  year  was  that? 

A.  That  was  in  1876.  This  correspondence  was  in  the  fall  of  1876. 
He  states  what  they  want  — that  they  want  rates  which  no  other 
company  nor  body  of  men  can  have  unless  — they  give  a qualifying 
phrase  which,  under  the  circumstances,  meant  nothing  because  it  was 
utterly  impossible  for  anybody  to  have  a large  business  under  the  cir- 
cumstances— but  the  qualifying  phrase  was  that  they  were  to  have 
rates  ten  per  cent  under  anybody  else’s  rates,  unless  these  other  parties 
brought  them  a business  that  would  pay  them  the  same  net  profit,  and 
which  of  course  was  absurd,  and  which  meant  nothing  except  as  a 
sort  of  saving  clause  and  which  was  pure  buncombe.  The  contracts 
were  produced  between  the  Erie  Eailroad  Company  and  the  New  York 
Central  Eailroad  Company  by  which  leases  all  the  facilities  of 
these  railroad  companies  were  turned  over  to  the  Standard  Oil 
Company  and  they  took  a toll  at  those  places  of  receiving  oil  from  all 
oil  that  was  received.  I think  it  was  ten  per  cent  or  ten  cents  a bar- 
rel — something  to  that  effect.  Well,  theivYhere  was  another  devel- 
opement.  It  was  testified  before  that  committee  that  they  gave  the 
Standard  no  lower  prices  on  rates.  Mr.  Blanchard  dwelt  upon  that 
very  considerable ; but  it  was  shown  on  that  investigation  that  there 
was  a corporation  known  as  the  American  Transfer,  which  was  one  of 
the  brotherhood  of  the  Standard  Company,  that  received  a commission 
on  oil  which  they  furnished  to  these  railroads.  Well,  now  the  Amer- 


730 


icaii  Transfer  was  the  connecting  link  between  the  United  Pipe  Lines 
and  the  oil  country  and  the  railroads.  At  Olean,  which  was  an  im- 
portant loading  point,  this  connecting  link  amounted  to  less  than  a 
mile.  At  Salamanca  it  amounted  to  several  miles.  At  Oil  City,  it 
amounted  to  a few  hundred  feet.  But  here  was  the  American  Trans- 
fer Company  standing  between  the  railroads  and  the  tanks  that  held 
the  oil  in  store,  and  there  was  where  the  rebate  went  to  ; it  went  into 
their  hands.  And  the  American  Transfer  Company  writes  a letter 
which  came  out  in  evidence,  to  Mr.  Cassett,  an  officer  of  the  Penn- 
sylvania Eailroad  Company,  stating  that  they  had  had  twenty  cents  a 
barrel  rebate  and  wanted  the  same  from  him,  which  he  conceded* 
Now  the  point  has  been  to  get  those  advantages,  and  getting  those 
advantages  which  they  have  succeeded  in  doing,  it  has  been  perfect  1\- 
easy  for  them  to  build  up  this  immense  business  and  this  immencjc 
concern  which  they  say  is  not  a monopoly. 

By  Senator  Boyd  • 

Q.  You  desire  to  show  that  the  Standard  Oil  Company,  as  it  at  the 
present  time  exists,  is  a vast  corner  on  the  oil  trade  ? 

A.  Corner  is  a very  general  term ; I don’t  think  much  of  the  word 
“ corner ; ” it  is  not  a corner  at  all ; they  have  absorbed  the  business  and 
they  have  been  able  to  go  ahead  with  confidence  ; there  is  a great  deal 
said  about  their  boldness  in  proceeding ; they  have  understood  their 
relations  with  transportation  all  the  time  and  they  have  been  able  to 
go  ahead  with  confidence ; the  other  interests  could  get  scarcely  any 
hearing  with  the  railroad  men.  Vanderbilt  said  in  his  testimony  that 
complaints  with  regard  to  the  Standard  Oil  Company  came  in  one  ear 
and  went  out  the  other;  every  thing  favored  them  in  getting  it,  and 
in  getting  this  immense  business  it  has  been  easy  for  them  to  hold  it 
Now  they  have  made  the  claim  that  all  this  immense  improvement 
which  has  taken  place  in  the  oil  business  in  the  shape  of  sending  oil 
to  all  parts  of  the  world  and  the  systematized  shape  in  which  it  is 
got,  has  come  from  their  enterprise  and  energy  and  ability  and  capital, 
and  all  that  sort  of  thing.  Well,  now,  I think  they  are  very  illogical 
there,  because  they  draw  conclusions  which  the  facts  do  not  justify; 
they  have  no  riglit  to  claim  that. 

Senator  Browning  — You  are  drawing  conclusions  from  the  testi- 
mony wliicli  I tliink  it  is  the  province  of  the  committee  to  do.  I 
dem’t  tliink  it  is  proper  to  attempt  to  prejudice  the  committee. 

'The  Witness  — I aim  not  to  make  criticism  ; I am  stating  what 
their  jiosition  was. 

S(Miator  I>ROWNiNt;  — You  are  simply  drawing  conclusions  from  the- 
t('-lim()ii\ , 


731 


The  Witness  — I prefer  not  to  do  that. 

Q.  We  cannot  have  an}'  criticism  or  conclusion  from  the  testimony, 
but  any  facts  which  may  be  interesting  to  the  public  you  may  state. 

A.  Very  well.  Having  the  possession  of  the  railroad  transportation 
as  they  did  it  was  very  easy  for  them  to  absorb  the  pipe  line  interest 
in  the  oil  country,  because  they  could  say  from  what  pipe  line  they 
would  take  oil,  and  the  pipe  line  that  did  not  have  a customer  for  its 
oil  fell  into|the  hands  of  the  Standard  very  soon,  and  one  more  source 
of  competition  was  wiped  out.  Their  position  was  that  they  had  con- 
ferred a great  benefit  in  making  the  storage  of  oil  general.  It  no 
doubt  is  a good  thing  to  have  the  storage  of  oil  general,  but  that  thing 
was  developing  in  other  forms  and  would  have  developed  no  doubt 
without  their  intervention,  but  they  took  up  the  business. 

Q.  Now  what  effect  has  all  this  had  upon  the  public  interest? 

A.  It  has  destroyed  a great  many  individual  enterprises  in  the  oil 
trade  which  would  have  gone  on  successfully  if  they  had  not  had  to 
compete  not  only  with  firms  in  the  oil  business,  but  with  railroad 
capital  in  affording  the  Standard  facilities  in  moving  oil  which  others 
did  not  have  ; the  manipulations  of  the  Standard  are  a very  interesting 
thing,  and  I could  say  a great  deal  upon  that  subject. 

Q.  You  have  had  personal  cognizance  of  all  those  things  ? 

A.  I have  observed  them  closely  for  a great  many  years;  they  claim 
not  to  manipulate  the  crude  market;  that  is  a thing  that  is  out  of 
sight  because  the  business  is  done  on  the  Exchanges  where  there  are 
millions  of  barrels  traded  in  every  day ; they  are  the  people  who  make 
the  prices  of  the  refined  oil  and  they  are  most  arbitrary  from  day  to 
day,  and  from  week  to  week  without  any  reference  to  the  condition  of 
the  crude  market  or  the  condition  of  the  refined  market ; they  may 
put  the  price  up  a cent  or  two  a gallon  or  take  it  off  that  much  ; it  is 
very  detrimental  to  the  oil  interests  in  Europe ; there  are  certain 
reasons  why  they  have  an  interest  in  doing  that  which  I could  go 
into  if — 

Q.  Be  as  brief  as  possible  ? 

A.  Well,  the  refine  market  has  an  influence  upon  the  crude  market, 
and  by  depressing  the  refine  market  it  has  a tendency  to  depress  the 
crude  market,  and  puts  them  in  good  shape  to  buy  crude  oil ; then 
when  they  w'ant  to  sell  refined  oil  by  holding  up  refined,  it  helps  sus- 
tain the  crude  and  it  helps  them  in  making  their  sales  for  future 
delivery  in  Europe;  then  there  is  the  opposition  company,  the  Tidewater 
Company  ; it  is  supposed  or  is  a matter  of  inference  in  the  trade  that 
they  depress  and  raise  the  refined  market  with  a view  to  injury  to  the 
Tidewater  Company  which  for  three  years  has  been  struggling  against 
them. 


732 


Q.  Is  there  auy  thing  else  ? 

A.  I have  made  a brief  statement ; it  is  not  necessary  to  go  into 
particulars  as  I know  of. 

Henry  Ward  Beecher  called  and  examined ; 

By  Senator  Boyd  : 

Q.  What  is  your  name  ? 

A.  Henry  Ward  Beecher. 

Q.  Where  do  you  reside  ? 

A.  124  Hick  street,  Brooklyn. 

Q.  You  are  a minister  of  the  gospel  ? 

A.  I am.  , 

Q.  How  long  have  you  been  such  ? 

A.  Between  forty  and  forty-five  years. 

Q.  What  is  your  opinion  in  relation  to  the  whole  system  of  making 
corners  and  dealing  in  futures  in  any  commodity  with  reference  to  its 
effect  upon  commerce  and  its  influence  upon  the  public  welfare  ? 

A.  It  would  depend  a good  deal  upon  what  the  corners  are  and  who 
make  tlieni  ; I don’t  see  that  there  is  any  special  difference  between 
making  a corner  as  it  is  made  on  the  street  almost  every  day  of  the 
j^ear  and  making  it  once  in  one  or  five  years  by  combination  ; that  is 
to  say,  the  moral  quality  is  substantially  the  same ; I hold  that  a man 
who  is  long-headed,  Avho  foresees  and  judges  accurately,  has  an  advan- 
tage over  his  neighbor,  and  it  is  not  accounted  immoral  for  him  to  use 
that  advantage  because  he  is  individually  better  equipped  for  the  busi- 
ness, and  it  inheres  in  him  by  a law  of  nature  that  he  has  a right  to 
the  whole  of  himself  legitimately  applied  ; now  these  corners  are 
generally  made  by  simply  a combination  of  individuals  or  a magnified 
individual  ; they  employ  their  sagacity  and  foresight,  and  by  com- 
bined power  they  make  bargains  which  happily  they  almost  always  lose ; 
but  it  stands,  it  seems  to  me,  on  the  ground  of  morals,  very  nearly  or 
})recisely  the  same  thing;  I regard  the  age  in  which  Ave  live  as  the  age 
of  combination  — not  any  longer  so  much  politically  that  is  in  classes 
combining,  but  in  commerce,  and  that  vast  masses  of  money  directed  and 
used  by  the  combined  Avisdom  of  the  ablest  men  are  steadily  gaining  an 
ascendency  over  individual  thrift ; how  bad  it  is  or  how  good  is  another 
question  ; but  it  is  only  the  carrying  out  on  a large  scale,  as  I see  it,  of 
lliat  Avhich  is  alloAved  on  a smaller  scale  in  all  commercial  communities; 
and  that  question  follows  the  laAv  of  nature  ; it  is  the  struggle  for 
exisiene-f*  in  a ncAV  srdiere  and  under  neAV  combinations,  and  the  Aveak 
go  uii':(’i-  and  tin*  strong  go  forward  ; as  regards  the  details  of  the 


733 


matter,  I never  bought  nor  sold  a bushel  of  oats  or  corn  except  for  my 
horse,  and  he  never  was  damaged  by  it  nor  I either. 

Q.  Do  you  understand  the  system  of  dealing  in  futures  ? 

A.  I suppose  I do  in  a general  way  ; it  is  a part  of  my  profession  — 
to  deal  in  futures. 

Q.  What  is  your  opinion  with  regard  to  the  moral  effect  of  the 
system  as  carried  on  in  commercial  circles  in  purely  speculative  trans- 
actions ? 

A.  When  it  is  done  properly  I think  very  well  of  it,  and  when  it  is 
done  poorly  I think  very  poorly  of  it ; there  are  two  ways  of  dealing 
in  futures ; one  is  dealing  in  realities,  and  the  other  dealing  in  risks 
and  chances;  I have  heard  it  sometimes  said,  that  a man  sells  what  he 
has  not  got;  I don’t  think  that  is  true  in  ordinary  cfese§,at  all ; a man 
sells  a chance  or  he  sells  a risk  ; of  course  a man  may  sell  what 
does  not  exist,  but  as  I understand  it,  that  is  not  the  matter 
that  takes  place  in  commerce;  now  if  twenty  men  or  two  men, 
or  one  man,  looking  at  the  state  of  the  nation  here,  at  the  crops  here', 
at  the  possible  contingencies  and  risks  of  climate,  the  condition  of 
Europe,  in  other  words,  taking  all  the  elements  that  belong  to  the 
world  into  consideration,  is  sagacious  enough  to  prophesy  the  best 
course  of  action  on  it,  and  he  comes  out  right,  I don’t  see  why  it  is  not 
legitimate ; and  if  that  is  done  by  one  man,  I don’t  see  why  twenty 
men  should  not  put  their  heads  together  and  do  it,  and  if  it  is  done 
rightly  I don’t  see  why  it  does  not  conform  to  the  average  laws  of  com- 
merce ; but  then  a great  many  are  inconvenienced  by  it ; I think  Mr. 
Vanderbilt  said  that  his  inconvenience  lay  in  this  : — that  he  some- 
times‘had  not  enough  and  sometimes  had  too  much  freight;  it  is  a 
mere  question  of  inconvenience  ; it  does  not  concern  the  public  at  all; 
it  belongs  to  all  kinds  of  business  ; it  is  a part  of  the  friction  of  busi- 
ness ; if  it  raises  the  price  of  grain,  it  can  only  be  temporary  ; in  this 
country  the  production  of  the  country  and  acreage  increase  every  year 
and  the  productive  power  partly  by  emigration  and  partly  by  the  nat- 
ural increase  of  our  country  is  such  that  it  is  almost  impossible  that 
there  should  be  either  a famine  or  so  near  to  it  as  to  amount  to  any 
'very  great  inconvenience  more  than  for  a few  brief  months  ; as  a per- 
manent state  of  things,  I don’t  see  that  it  is  necessary  at  all  that  there 
should  be  any  very  great  mischief  arising  out  of  it ; the  question  of  ab- 
solute justice  is  entirely  another  matter;  if  you  would  ask  me  what 
would  be  the  gospel  doctrine  on  the  subject,  I should  say  that  you  are 
all  wrong  from  the  top  to  the  bottom  of  society  ; there  is  no  man  that 
loves  his  neighbor  as  himself ; no  man  is  willing  to  lend  his  in- 
telligence or  skill  or  even  make  an  average  of  it  among  any  num- 
ber of  persons ; I am  speaking  of  it  now  with  reference,  not 
to  the  absolute  justice,  but  with  reference  to  that  acknowl- 


734 


edged  justice  which  is  the  substance  of  ordinary  commerce ; and  l' 
don’t  see  any  special  difference' between  what  are  called  corners  and 
futures  and  so  on,  except  the  magnitude  of  it  — I don’t  see  any  dif. 
ference  in  moral  quality  between  them  and  the  ordinary  transactions 
of  men  where  one  is  long  headed,  and  another  is  short  headed  and 
so  short  in  the  pocket  too;  as  to  the  mischiefs  and  inconveniences,  I 
have  never  yet  seen  any  business  carried  on  without  more  or  less  in- 
convenience on  the  right  or  on  the  left,  or  somewhere ; the  opera- 
tion being  very  large,  the  incidental  disturbance  may  be  quite 
large,  but  also  the  benefits  are  quite  large,  for  it  is  not  to  be  de- 
nied that  in  the  unfolding  of  civilization  combination  is  doing  a 
great  many  things  that  are  desirable  to  be  done,  and  if  it  is  hindering 
some,  it  is  helping*  others;  you  cannot  manipulate  individually  man 
by  man  as  you' can  by  a large  corporation  ; you  cannot  do  with  a hand- 
ful of  money  what  you  can  do  with  a million  of  money;  and 
there  are  great  benefits  on  that  side ; so  far,  therefore,  as  a 
mere  commercial  judgment  is  concerned,  I don’t  see  that  there 
is  any  great  ground  for  any  thing  more  than  special  complaint;  if 
combinations  are  doing  wu'ong,  that  special  combination  may  be 
wrong,  but  take  the  system  and  I don’t  see  but  what  they  all  stand  to- 
gether. 

Q.  What  ought  to  regulate  the  standard  of  prices  of  all  commodities  ? 

A.  Well,  sir,  there  is  a minor  regulation  of  supply  and  demand, 
but  I don’t  think  that  that  determines  it  as  a general  thing  ; niy  im- 
pression is  that  the  quantity  and  quality  of  brain  applied  to  the  production 
of  an  article  is  the  fundamental  reason  for  the  up  and  tlie  down;  those  pro- 
ductions that  can  be  produced  with  the  least  thought  and  most  bone  and 
muscle  are  the  lowest  ordinarily  ; there  will  come  in  incidentally  things 
that  disturb  that  principle,  conflicting  laws  ; the  things  that  require  the 
most  thought,  combination  of  thought,  skillfulness  of  thought 
and  touch  are  of  the  highest  value;  generally  they  serve  the  highest 
interests  of  society,  and  the  law  of  price  is  the  law  of  brains. 

Q.  Has  not  the  fact  that  nature  produces  all  necessar  y commodities 
for  the  sustenance  of  life  something  to  do  in  the  estimation  of  the 
value  of  those  things^  besides  the  amount  of  brain  used  in  their 
production  ? 

A.  Well,  the  more  nature  does  for  a man  the  less  he  has  need  for 
his  own  brains,  and  the  cheaper  things  ought  to  be  therefore. 

td.  d’ake  the  article  of  bread-stuffs  for  instance  ; they  result  from 
tin;  soil,  from  the  atmospliere  and  from  various  other  law's  and  causes 
controlled  entindy  by  the  Deity;  should  not  the  settlement  of  the 
pric('8of  these  things  take  into  consideration  those  important  facts? 

A.  'I'hcy  do  not  dejxmd  any  more  upon  natural  laws  than  carving  a 
staiitc  or  j)ainting  a picture:  the  fact  that  the  air  nourishes  all  things 
that,  gi-ow  and  that  the  soil  co-operates  is  simply  this,  that  men  have 


735 


learned  to  ride  the  laws  of  nature  ; but  the  artist  has  to  use  his  tools, 
he  has  to  know  the  nature  of  stone,  he  has  to  learn  their  natural  forms 
and  curves,  and  he  is  in  a more  subtle  way  employing  the  laws  of  na- 
ture than  the  farmer  or  any  producer  of  fruits,  vegetables,  seeds  o- 
any  thing  else ; the  whole  thing  comes  to  this,  that  no  man  can  pro- 
duce any  thing  by  his  own  will ; but  human  will  put  with  ascertained 
laws  can  produce  any  thing,  and  it  is  the  natural  law  after  all  that  is 
working  for  him,  whether  it  is  in  high  art,  or  anatomy,  or  mechanics,  or 
agriculture,  or  any  thing  else,  and  one  man  has  no  more  right  to  claim 
any  more  allowance  because  it  is  nature  than  another;  it  is  just  as 
much  nature  in  one  case  as  m the  other. 

Q,.  You  admit,  however,  that  the  consumer  is  entitled  to  the  pos- 
session of  all  the  products  of  nature  at  their  natural  values  ? 

A.  If  there  was  any  thing  of  that  kind  labeled  on  a field  of  wheat 
or  on  other  food,  what  the  natural  value  was,  I should  feel  as  though 
I had  a basis  to  stand  on  ; but  I do  not  understand  what  natural  value 
is. 

Q.  We  would  like  to  have  your  opinion  as  to  the  natural  value  of  a 
field  of  wheat  ? ‘ 

A.  Well,  sir,  to  a very  considerable  extent  there  is  one  practical 
form  that  is  theoretically  urged,  and  urged  also  as  a general  principle, 
namely,  that  the  amount  of  cost  is  the  primary  fact  in  developing  the 
value  ; that  is  an  incidental  fact,  but  I do  not  think  it  is  the  primary 
one,  and  to  determine  what  was  the  natural  value  of  wheat*  you  would 
have  to  determine  what  the  value  of  wheat  is  that  nobody  had  touched 
except  nature  ; the  value  of  wheat  is  how  far  you  have  got  to  carry  it ; 
the  value  of  wheat  is  how  much  freight  you  have  got  to  pay  for  carry- 
ing it ; the  value  of  wheat  is  how  much  has  been  raised  in  all  the 
counties  of  the  State  besides  yours ; all  these  go  into  the  value  ot 
wheat;  it  is  not  simply  who  plowed  and  who  sowed;  in  the  complex 
condition  of  civilization,  there  is  no  possibility  of  going  back  to  any 
affirmative  or  alphabetic  laws  of  nature  which  shall  determine  values 
that  are  themselves  the  children  of  a thousand  interplaying  influences 
and  causes  that  affect  value;  the  value  of  a gorgeous  silk  dress  can- 
not be  determined  by  its  proportional  use  of  the  capital  of  the  manu- 
facturer, nor  by  the  handicraft  of  the  man  that  produces  it,  provided 
that  silk  dress  should  come  to  the  city  of  New  York,  and  was  the 
finest  that  was  ever  made,  and  was  so  fine  as  that  anybody  that  got  it 
would  have  a rare  treasure ; the  value  of  that  dress  is  what  all  the  fools 
in  New  York  would  be  willing  to  pay  for  it  in  order  to  have  the  best 
dress  there  ever  was  in  the  world;  one  man  may  say,  if  $100,000  is 
offered  for  it,  I am  better  able  to  give  him  $^00,000  for  it  than  that 
man  is  $*100,000  ; another  puts  up  against  him  until  by-and-by  it  may 


736 


cost  1500,000,  simply  because  it  is  absolutely  unique;  now  there  is 
vast  extravagance  in  that ; it  is  not  because  that  becomes  an  object  oi 
Talue  ; the  vanity,  or,  as  you  may  call  it,  taste,  Avhich  is  synonymous, 
very  often,  of  persons  determines  largely  the  value;  how  much  pleas- 
ure will  it  confer  upon  me  — that  is  the  value  of  things  ; the  value  of 
my  place  at  Peekskili  to  the  railroad  company  would  be  perhaps  ten; 
to  me  it  is  $10,000  ; they  would  value  it  simply  on  account  of  its 
mechanical  qualities,  I on  account  of  its  art  qualities  and  its  relation 
to  the  sentiment  and  to  the  love  of  nature;  my  birds  are  worth  more 
than  all  the  hen-coops  in  creation  to  me;  but  in  manufactured  articles 
and  articles  of  production  and  ordinary  things,  I say  that  the  general 
law  is  a law  that  has  to  play  in  an  atmosphere  that  more  or  less  modi- 
fies it,  sometimes  retrenching,  sometimes  extending,  but  the  general 
law  is  the  quantity  of  brains  and  the  quality  of  them  — the  kind  of 
brains  that  are  employed  in  the  production  of  it  and  the  relation  of 
the  production  to  the  corresponding  st3de  of  grain  in  those  that  buy 
it ; it  is  a mental  and  not  a natural  or  physical  question,  and  that 
becomes  more  and  more  eminent  the  higher  you  go  up;  that  is  to 
say  in  the  mere  operation  of  producing,  the  value  is  little  enhanced  in 
that  way;  in  the  intermediate  — in  manufacturing  — it  is  increased 
but  not  always  to  a very  great  extent ; the  artisan  does  not  get  as 
much  for  his  work  as  the  artist  ; the  artist  works  with  a finer  head  for 
finer  heads  and  there  you  get  the  highest  value;  and  when  you  come 
to  what  is  called  a fancy  price  the  value  lies  wholly  in  the  imagination 
and  not  in  any  physical  or  absolute  wants  of  man  in  society. 

Q.  AVhat  is  your  opinion  of  any  system  of  speculation  intermediary 
between  the  producer  and  consumer  which  tends  to  enhance  the  price 
of  the  necessaries  of  life  unnecessarily  ? 

Well,  now  that  is  a question.  The  word  ^^unnecessarily  ” changes 
the  whole  aspect  of  the  question.  In  our  condition  of  civilization  we 
must  have  middle-men  — intermediaries.  A man  makes  his  chairs 
and  his  bureaus  ; another  man  has  warehouses  and  he  stores 
them  for  him  and  that  adds  a little  ; and  the  railroad  takes  them  up 
and  carries  them  to  some  distant  point  where  there  are  purchasers  for 
them  and  tiiat  adds  a little  more  ; and  somebody  has  got  to  receive 
them  at  the  end  of  the  route  and  sell  them,  and  that  adds  a little  bit 
more.  And  how  much  is  just  right  — exactly  right  — is  one  of  those 
wondering  questions  that  will  require  a hundred  considerations  to  de- 
termine it.  But  supposing  it  is  determined  that  a man  is  very  greedy^ 
or  a combination,  and  that  they  do  permanently  inflict  society  ; there 
Is  no  question  I suppose  — certainly  not  in  the  law  of  morals  — that 
it  is  wi-ong,  as  all  sellishness  is  wrong.  But  a great  deal  of  that  which 
is  called  interniediary  is  only  so  in  a useful  sense. 


737 


I 


Q.  I take  it  of  course  you  refer  to  the  transporteraiid  the  legitimate 
dealer  ? 

A.  Yes. 

Q.  But  where  a system  of  illegitimate  speculation  — 

A.  What  is  illegitimate  speculation  ? 

Q.  It  has  been  designated  by  witnesses  here  as  that  system  of  specu- 
lation by  which  men  buy  and  sell  a commodity  a great  many  times  for 
the  simple  purpose  of  making  a little  upon  it  each  time  and  thereby 
adding  to  its  general  cost  ? 

A.  I don’t  see  but  that  should  regulate  itself,  for  a man  cannot  sell 
a commodity  of  universal  repute  a great  many  times,  and  all  the  time 
increase  the  value,  any  more  than  two  boys  can  swop  jack-knives  and 
each  of  them  make  money  out  of  the  other. 

Q.  Well,  these  men  do  make  money  ? 

A.  They  do  not  make  it  except  in  an  illusory  sense “ You  may  say 
they  make  money,  but  they  may  be  viewed  as  the  man  who  sits  down 
at  a table  and  is  about  to  eat  of  a dish,  and  down  it  goes.  The  men 
that  go  into  Wall  street,  I am  told,  come  out  very  quick  and  never 
carry  out  as  much  as  they  take  in.  My  observation  is,  that  the  men 
who  speculate  in  that  sense  are  never  up  to  the  business  they  have  got 
in  hand  ; they  are  always  too  slenderly  endowed.  In  the  condition  of 
the  community  itself,  in  the  condition  of  the  seasons  and  in  the  supply 
and  demand  required  over  large  spaces,  we  are  carrying  on  that  propo- 
sition where  it  is  a mere  question  of  pounds  and  tons — every  business 
man  is  carrying  it  on  ; but  when  you  carry  it  on  on  a continental  scale 
it  requires  a class  of  faculties  that  are  vouchsafed  to  very  few  men  in 
this  world,  and  men  that  are  speculating  on  chances  are  the  pioneers 
that  run  before  civilization  and  open  the  w^ay  for  men  of  larger  no- 
tions and  perish  in  doing  it.  A man  makes  an  invention  and  it  is 
said  he  is  poorly  paid.  He  has  run  before  his  time,  he  has  to  pay  the 
penalty  that  always  follows  a man  that  runs  before  his  time.  Another 
man  comes  after  him  and  takes  his  machine  and  introduces  it  and  be- 
comes a millionaire  ; and  people  mourn  over  it.  But  that  is  only  what 
has  been  and  always  will  be  I suppose.  That  man  dies  and  what  has 
he  reaped  ? He  may  have  reaped  nothing  but  grumbling,  but  he 
ought  to  remember  this,  I have  been  poorly  paid  but  millions  of  men 
will  be  better  off  than  if  I had  not  done  this.”  The  man  that  goes 
into  the  street  and  gambles,  who  speculates  without  introducing  any 
new  elements  or  adding  any  new  values,  is  punished  that  he  dies  as  the 
fool  dieth.  But  how  are  you  going  to  check  it  without  checking  com- 
merce, I don’t  see.  It  as  inevitable  as  an  affection  is ; you  might 
as  well  pass  a law  that  a man  should  never  be  otherwise  than  just  at 
93 


738 


equipoise  in  his  family  ; lie  never  should  feel  cross  because  the  colfee 
wasiiH  strong,  never  should  come  down  except  in  the  most  sociable 
manner.  Well,  how  are  you  going  to  get  at  it. 

Q.  What  is  your  opinion  of  a man  that  does  not  try  to  cultivate 
those  faculties  ? 

A.  Well,  I should  say  that  he  didn’t  go  to  the  right  meeting 

Q.  What  is  your  opinion  of  his  moral  status  ? 

A.  Well,  men  live  on  such  a low  status  at  large  that  I don’t  suppose 
it  makes  very  much  difference  — a little  more  or  less  of  that? 

Q.  I would  like  you  to  answer  categorically,  what  is  your  opinion 
of  his  moral  status  ? 

A.  If  you  will  give  me  a definite  instance  I will  tell  you,  but  you 
are  asking  a generic  question  where  the  special  unit  would  sometimes 
be  one  way,  and  sometimes  the  other.  If,  for  instance,  a man  had 
come  to  a jiinch  in  his  affairs  where  he  thought  by  going  into  the  street 
and  doing  as  other  men  did  he  could  save  his  family  from  poverty  and 
save  all  which  stood  related  to  them  and  exalt  them  higher,  his  motive 
might  be  right, but  yet  the  mode  by  which  he  undertook  to  carry  out  that 
might  be  wrong.  I should  not  jucpge  him  as  I would  another  man  thac 
went  there  from  avarice  and  burning  greed;  he  had  enough,  didn’t 
need  any  more,  a man  careless  of  justice  and  equity  among  men,  who 
in  his  greediness  sought  to  swallow  every  thing  and  he  came  to  grief. 
I should  say  he  ought  to  come  to  grief  and  that  that  was  a punish- 
ment for  his  immorality.  I don’t  thick  that  all  these  troubles — I say 
this  confidentially  — I don’t  think  that  all  these  troubles  are  half  as 
immoral  as  church  fairs  are  where  they  have  lotteries  and  gambling 
carried  on  under  the  sanctity  of  religious  forms  because  they  are  edu- 
cating the  conscience  of  the  young  under  the  sanction  of  religion  to 
that  which  is  radically  evil  in  all  its  after  elements  ; they  begin  at  the 
root.  And  yet  the  thing  is  done  I think  less  than  it  used  to  be ; but  there 
is  very  little  conscience  yet  in  the  community  at  large  on  that  subject. 

Q.  Admitting  that  such  a system  of  gambling  exists  in  cliurches  or 
on  Wall  street  or  in  the  city  of  Chicago  or  elsewhere,  wdiat  is  your 
opinion  of  such  a state  of  things  ? 

A.  Well,  I think  it  is  very  disastrous  indeed  to  morals  — very  dis- 
astrous ; not  merely  in  the  nature  of  the  transaction  but  in  the  con- 
ditions into  which  it  throws  men  where  they  will  be  tempted  more  than 
they  will  be  able  to  bear.  I hold  that  there  is  no  man  that  lives  on 
the  face  (d’  the  earth  who  cannot  be  broken;  and  there  is  no  man  so 
gf)od,  virtuous,  })ure,  u])right,  so  every  way  right,  that  he  cannot  be 
broken  down,  and  that  is  the  meaning  of  the  Lord’s  prayer  when  it 
says,  “ Ijtiad  us  not  into  temptation.”  It  is  very  uncertain  who  is 
going  to  (auiic  oul  or  how  they  are  going  to  come  out?  Of  course  one 


739 


man  may  not  be  broken  by  any  money;  you  might  pile  all  the  money 
on  the  globe  before  him  and  it  would  not  amount  to  a snap  of  }^ur 
thumb;  it  might  be  through  the  medium  of  ambition  that  the  temp- 
tation would  come.  Another  man  might  be  tempted  not  through 
money  or  through  ambition  but  through  his  affections.  You  might 
persuade  a man  from  the  side  of  his  kindness  to  do  things  that  he 
ought  not  to  have  done.  Taking  the  whole  range  of  motives  though 
some  men  might  be  tempted  easily,  there  are  a great  many  men  that 
could  not  be  tempted  except  in  a certain  single  line;  but  when  you 
strike  that  line  and  make  the  temptation  and  the  opportunity  and  the 
immunity  strong  before  him,  I don’t  suppose  there  is  any  man  that 
could  not  be  broken  down.  ’Washington  could  not  be  bribed  but  he 
swore  like  a trooper.  I have  been  brought  up  to  suppose  that  that 
was  not  in  keeping  with  the  law. 

Q.  Now  suppose  that  a system  exists  in  commercial  circles  or  in 
other  circles  by  which  men  combine  for  the  purpose  of  cornering  the 
productions  of  the  country,  and  holding  them  there  until  people  are 
compelled  to  pay  them  such  a price  atiove^  the  natural  value  as  they 
nsk,  and  that  that  price  is  far  above  the  natural  value;  what  is  your 
opinion  of  such  an  act  as  that  morally  ? 

A.  Well,  there  can  be  but  one  opinion  if  it  is  coming  back  to  a 
natural  value.  I will  put  it  in  shape;  suppose  for  instance  at  the 
time  of  the  great  battle  of  G-ettysburgh  where  40,000  men  lay  wounded 
and  dead,  it  so  happened  that  one  man  in  New  York  got  possession  of 
all  the  surgical  instruments  that  could  be  got  here  for  the  next  two 
months  say,  and  that  he  also  got  possession  of  all  those  medicines  that 
were  indispensable  for  the  hospitals  of  the  country,  and  he  should 
hold  them  until  they  had  gone  uji  to  such  a price  as  to  be  outside  of 
the  reach  of  the  profession;  I think  that  man  ought  to  be  damned. 
There  is  a case  which  is  not  in  lines  at  all  of  ordinary  affairs. 
The  great  law  of  humanity  comes  in  there  and  mere  money  matters 
have  no  right  to  interfere  with  it.  It  might  be  a man  could  make 
money  in  burking  folks  on  the  street  and  selling  them  to  the  hospital 
for  dissection  and  pleading  that  it  was  to  increase  the  knowledge  of 
mankind,  but  there  is  a law  of  mankind  that  no  such  collateral  inci- 
dent has  a right  to  tamper  with. 

Q.  What  is  your  opinion  of  the  man  or  class  of  men  who  will  cor- 
ner the  wheat:  of  the  country  or  the  oats  or  corn  of  the  country  in  such 
a way  as  you  have  suggested  in  the  hypothetical  case  of  one  person 
getting  possession  of  all  the  surgical  instruments  and  medicines 

A.  If  it  were  a possible  thing  that  a man  could  grip  the  loaf  and 
see  men  hungering  and  suffering  and  he  held  on  to  it,  I should  con- 
sider that  he  was  an  atrocious  public  criminal  and  there  ought  to  be 


740 


sonp  form  of  law  that  could  meet  him,  but  I don’t  tliihk  that  is  a 
supposable  case  in  this  country.  We  own  all  the  latitudes  and  all  the 
longitudes,  and  pretty  much  all  the  climates,  and  one  thing  olTscts 
another.  There  is  no  famine  that  is  going  to  spread  co-extensive  all 
over  the  land  ; therefore,  your  question  is  not  a fair  question  because  it 
may  make  inconvenience,  but  very  seldom  can  it  amount  to  any  thing 
more  than  inconvenience  — disturbance. 

Q.  It  has  been  testified  before  this  committee  that  by  reason  of  cor- 
ners in  pork  and  in  wheats  the  price  of  pork  jjer  barrel  had  been  in- 
creased, I think,  double? 

A.  For  how  long  a period  ? That  is  a very  important  element. 

Q.  For  a certain  period ; at  any  rate  the  price  had  been  increased ; 
and  also  by  corners  in  wheat  the  price  of  flour  per  barrel  had  been  in- 
creased, thereby  compelling  the  consumer,  the  ])oor  man  or  the  rich 
man,  to  pay  more  than  what  he  \YOuld  have  had  to  pay  for  it  had  these 
corners  not  been  made  ; now  what  is  your  opinion  of  the  action  of 
men  engaged  in  making  sueh  corners  ? 

A.  Well,  if  it  is  carried  to  such  an  extent  as  to  induce  general  suf- 
fering it  has  transcended  the  law  of  propriety  in  business.  Ko  form 
of  business  is  to  be  allowed  which  in  its  general  tendency  and  results 
is  inhuman.  The  sanctity  of  man  is  a limit  to  the  exercise  of  all  busi- 
ness. The  emergencies  in  which  life  is  to  be  destroyed  or  property 
wasted  are  very  different  from  the  emergencies  of  commerce,  where  it 
is  merely  a question  whether  a man  shall  have  a little  more  or  less 
money.  For  the  welfare  of  the  Constitution  and  the  country,  a nation 
may  destroy  life  and  may  destroy  property,  but  the  cause  of  the  ’de- 
struction of  it  is  supposed  to  stand  connected  with  maintenance  of 
every  thing  that  is  valuable  in  society.  But  in  commerce  it  is  not  so ; 
it  is  a mere  question  of  more  or  less  property,  and,  under  such  con- 
sideration, commerce  has  no  right  to  be  inhuman. 

Q.  .Sui)posing  in  the  natural  course  of  events  that  a man  can  buy 
his  loaf  of  bread  for  eight  cents,  or  Ids  barrel  of  flour  for  four  dollars  ; 
that  combinations  of  capitalists  or  wealthy  individuals  set  to  work  and 
purchase  up  the  large  mass  of  the  produce  of  the  country,  and  by  that 
means  compel  men  to  pay  instead  of  four  dollars  for  one  barrel  of 
Hour,  six  dollars,  and  for  one  loaf  of  bread  instead  of  eight  cents,  nine 
cents,  would  that  thing  be  an  immoral  and  dishonest  transaction  ? 

A.  Well,  it  might  or  it  might  not.  If  it  was  on  the  way  to  some- 
tiling  better  by-and-by  by  which  a man  could  buy  his  loaf  of  bread  for 
six  cents,  I should  say  that  the  present  suffering  was  very  well  to  be 
h(»rne  for  the  sake  of  larger  relief  by-and-by.  Nowin  combinations 
tlicre  are  almost  invariably  disturbances,  hut  combinations  that  look  at 


'41 


a later  period  to  a much  larger  benefit  to  the  community  than  they  had 
before,  while  they  are  disturbing  and  on  the  way  by  friction  produce 
trouble,  yet  in  the  contemplation  both  of  the  men  that  do  it  and  of 
the  men  that  judge  about  it,  where  they  are  preparing  the  way  for  a 
much  better  state  of  things  they  are  justifiable,  just  as  the  doctor  is 
justifiable  in  giving  the  bitter  medicine  for  the  sake  of  sweeter  health. 

Q.  But  where  these  persons  do  not  go  into  these  transactions  with 
the  view  of  bettering  the  condition  of  men  but  simply  with  the  view 
of  enriching  themselves,  how  would  you  designate  it  there  ? 

A.  Well,  sir,  it  is  very  difficult  for  you  to  make  a distinction  in  such 
matters  as  that.  There  may  be  cases  in  which  everybody  will  say  it  is 
outrageous,  and  then  there  will  be  cases  in  which  nobody  would  say 
that,  and  yet  you  cannot  draw  the  line  between  one  and  the  other. 
You  know  that  some  things  are  in  the  hands  of  selfish,  indifferent, 
cruel  and  inhuman  men  ; you  will  see  another  class  of  men  doing 
what  is,  when  you  come  to  analyze  it,  nearly  the  same  thing,  but  they 
do  not  come  under  rebuke  and  men  justify  it  in  the  code  of  commerce. 

Q.  We  ask  your  opinion  as  a Christian  minister  concerning  these 
transactions  ? 

A.  I regard  you  know  all  commerce  while  it  is  doing  a great  deal  of 
good  at  the  root,  it  is  selfishness.  All  these  forms  in  which  a man  is  build- 
ing himself  up  at  the  expense  visibly  of  his  fellow  men  are  I regard  as 
condemnable  morally.  But  as  I understand  the  scope  of  your  question 
it  is  the  relative  morality  and  such  as  a Legislature  even  would  under- 
stand. 

Q.  Now  admitting  that  evils  exist  from  the  system  which  prevails 
of.  dealing  in  futures  and  making  corners,  what  remedy  would  you 
suggest  for  such  evils  ? 

A.  Well,  the  best  thing  that  can  be  done  by  a public  assembly  is 
comparatively  little.  Laws  are  very  little  help  to  morality.  You 
have  got  to  get  your  morality  first,  and  then  you  can  maintain  a law. 
Yo  law  ever  made  much  morality.  My  theory  you  know  is  that  the 
man  has  got  to  be  born  again  and  his  neighbor  too,  and  his  neighbor — 
in  other  words,  that  society  has  got  to  build  itself  up  on  a much  higher 
level  than  in  its  hitherto  civilization  it  has  thought  of.  I hold  that 
men  are  animals  in  the  lower  and  higher  tier  of  civilization,  and  that 
society  has  been  built  up  on  an  animal  foundation.  I hold  that  men 
have  got  to  come  up  on  the  social,  moral  and  religious  faculties  of  the 
soul,  and  a gradual  reorganization  has  got  to  take  place  in  society 
following  these  faculties  in  the  human  soul.  When  I hear 
socialists  and  all  this  class  of  men  finding  complaint  — and  there 
are  millions  of  reasons  for  complaint  all  over  the  world  in  every  nation. 


742 


on  the  globe  — but  when  they  think  they  are  going  to  change  it  by 
changing  the  laws  of  commerce  and  changing  the  wages  question,  or 
the  legislation,  it  seems  to  me  perfect  nonsense ; what  we  want  is 
that  a man  should  not  be  self-indulgent  ; we  want  him  to  become  vir- 
tuous and  benevolent;  you  never  can  make  society  what  it  ought  to 
be  as  long  as  you  allow  all  the  great  organizations  of  society  to  stand 
on  the  basis  of  the  animal  faculties ; it  is  slow  work,  but  I think  we 
will  get  it  in  the  course  of  a million  years. 

Q.  Is  it  your  opinion  that  such  an  investigation  as  this  tends  to  en- 
lighten the  public? 

A.  As  this  ? 

Q.  Yes? 

A.  Yes,  sir,  very  much  indeed  ; it  has  enlightened  me  a good  deal ; 
I have  read  more  of  Mr.  Vanderbilt  and  Mr.  Jay  Gould  than  they  will 
ever  read  of  me  ; I think  it  would  not  be  a bad  thing  for  you  to  come 
down  once  a year  ; I think  you  would  do  more  good  than  you  do  up 
there;  you  are  handicapped  up  there. 

Q.  With  the  continual  laying  of  such  doctrines  before  the  public 
society  certainly  cannot  help  but  be  benefited  ? 

A.  Well,  sir,  if  they  want  more  of  them,  Plymouth  church  has  ah 
ways  got  an  extra  seat. 

Q.  Are  there  any  other  suggestions  that  you  would  like  to  make  to 
the  committee  ? 

A.  I have  none ; my  amazement  was  that  I was  sent  for  at  all. 

By  Senator  Browj^ing  : 

Q.  Do  I understand  that  we  are  both  invited  to  Plymouth  Church  ? 

Both  of  you  ; ask  for  the  pastor’s  pew  ; I never  had  any  thing 
to  do  with  commerce;  I never  bought  or  sold  stock  — yes  I did 
twice;  I bought  the  first  stock  at  400  and  sold  it  for  100  ; I thought 
it  was  a good  stock  to  lay  up,  but  I found  it  good  to  lay  down  ; I 
bought  one  other  stock,  thinking  I had  laid  up  for  my  children,  but 
that  slumped  from  under  me  and  I quit  that  entirely;  I know  noth- 
ing of  corners  except  in  the  general  way  in  which  every  good  citizen 
studies  the  times  in  which  he  lives. 

Tliomas  S.  Preston  called  and  examined: 

liy  Senator  Boyd  : 

Where  do  you  reside  ? 

A.  110  East  Pwelftli  street. 

(2-  Von  are  ])astor  of  Saint  Ann’s  Catholic  Church  ? 

A.  \dcar-G(‘neral  of  tlie  diocese. 

G.  What  is  your  opinion  concerning  the  whole  system  of  making 
corners  and  dealing  in  futures  with  reference  to  its  effect  upon  com- 
merce and  its  influence  uj)on  the  public  Avelfare  ? 


A.  Well,  I don’t  consider  myself  to  have,  perhaps,  deeply  studied 
the  subject.  My  impression  is  that  it  is  all  against  the  good  of  society; 
that  it  is  immoral  in  its  effect.  I should  agree  with  the  first  clause  in 
in  this  preamble;  I think  that  the  cornering  of  grain  and  other  com- 
modities, which  is  now  a prominent  feature  of  modern  business  trans- 
actions, does  enhance  the  price  of  articles  of  prime  necessity,  does  in- 
terfere with  legitimate  business,  and  does  foster  a spirit  of  gambling. 
That  would  be  my  impression.  I am  told  also  that  there  is  a great 
deal  of  business  done  where  there  is  nothing  to  be  bought  or  sold  ; that 
there  is  a great  deal  of  selling  on  the  Exchange  of  stock  and  other 
things  — articles  of  commerce  — that  really  do  not  exist:  that  the 

O V ^ 

broker  has  nothing  to  sell  ; and  it  seems  to  me  that  it  does  — 1 know 
it  does  because  I have  been  told  by  persons  in  business  — it  does  in- 
terfere with  legitimate  business.  It  oppresses  men  who  are  not  will- 
ing to  go  into  that  kind  of  speculation.  It  seems  to  me  that  there 
ought  to  be  some  way  of  regulating  it.  I don’t  know  what  it  is ; I 
saw  an  article  in  the  Xew  York  Tribune  this  morning  which  expresses 
my  own  opinion  very  well  indeed  with  regard  to  it — that  there  ought 
to  be  some  way  by  which  a law  could  be  made  to  affect  the  sale  of  things 
which  have  no  existence.  It  seems  to  me  that  the  price  of  a thing  has 
some  value  of  its  own, that  the  cost  of  production,  supply  and  demand, 
legitimately  considered,  ought  to  establish  the  cost  of  an  article;  that 
it  ought  not  to  be  thrown  into  the  vortex  of  speculation  and  be  made 
whatever  certain  wealthy  men  see  fit  to  make  it.  I really  believe  that 
our  system  of  business  in  Yew  York  for  the  last  few  years  has  become 
more  unhealthy  and  illegitimate  than  it  used  to  be.  At  the  same  time 
I only  sneak,  you  know,  from  what  I have  heard ; I know  nothing 
about  it  myself  personally. 

Q.  But  as  a Christian  minister  ? 

A.  I deprecate  it,  and  I should  be  glad  if  there  was  any  way  to 
check  it.  I think  there  must  be  admitted  a certain  amount  of  chance  ; 
1 see  no  difficulty  in  that.  A risk  is  of  value;  a man  has  a right  to 
sell  a risk  which  is  of  value;  but  there  is  a certain  limit  to  that,  and 
because  there  must  be  a risk  of  profit  or  loss,  I do  not  see  why  men 
should  be  allowed  to  sell  tlffngs  which  have  no  existence,  or  to  manu- 
facture a price  with  no  real  foundation  beneath  it,  except  that  a 
wealthy  man  is  able  to  force  a certain  article  to  a certain  price  by  his 
money. 

Q.  Then,  by  reason  of  this  system  of  speculation,  the  price  of  bread- 
stuffs  has  increased  beyond  their  natural  value  ? 

A.  ft  would  seem  to  me  so. 

Q.  You  would  regard  that  as  a great  public  evil  and  a moral 
wrong  ? 


744 


A.  I would  ; but  it  seems  to  me  that  legislation  ought  to  Ijo  able  to 
touch  it  in  some  way. 

Q.  Have  you  any  suggestion  which  would  enable  the  committee  to 
arrive  at  some  conclusion  in  regard  to  the  best  system  of  legislation  to 
be  adopted  ? 

A.  AVell,  really,  I don’t  think  I am  sufficiently  instructed  on  that 
point.  Legislators  would  be  better  able  to  tell  what  would  reach  it. 
The  Tribune  suggested  this  morning  that  some  law  could  be  made,  and 
certainly,  that  there  was  no  injustice  in  making  a law  preventing  a man 
selling  what  had  no  existence.  It  seems  to  me  that  wise  and  ]n'udent 
legislators  could  devise  something  hy  which  business  could  be  pre- 
vented from  going  out  of  its  legitimate  sphere.  I don’t  consider  myself 
competent  to  say  exactly  what  would  be  best,  but  I know  that  business 
is  very  differently  conducted  now  from  what  it  used  to  be.  Things 
used  to  be  simple  in  my  younger  days,  and  the  value  of  a thing  would 
be  regulated  by  supply  and  demand,  and  tlie  cost  of  production,  but 
now  the  value  of  so  many  things  is  purely  fictitious,  that  when  it  comes 
to  affect  articles  which  are  a necessity  of  life,  I tliink  it  becomes  a st  - 
rious  evil  in  the  community.  I have  been  told  by  a gentleman,  a mer- 
chant in  the  grain  business,  that  the  grain  business  is  entirely  differ- 
ent now  from  what  it  used  to  be  in  former  days.  This  gentleman  has 
been  a merchant  in  the  grain  business  for  a great  many  years.  He 
tells  me  that  pretty  much  all  the  grain  business  is  done  by  buying  and 
selling  options,  futures,  etc.,  so  that  the  actual  sphere  of  buying  and 
selling  for  real  consumption  is  very  small. 

Q.  Compared  with  the  number  of  fictitious  sales  ? 

A.  Compared  with  the  number  of  fictitious  sales. 

Q.  And  as  a teacher  of  morals,  you  have  no  hesitation  in  express- 
ing denunciation  of  such  a system  ? 

A.  I have  not ; I think  it  wrong  and  I think  it  injurious  to  the 
community.  The  evil  of  gambling,  which  is  prevented  by  the  laws  of 
the  State,  effects  a good  deal  of  injury,  but  sometimes  it  seems  to  me 
that  this  gambling  on  a larger  scale  produces  more  injurious  results 
It  very  often  beggars  those  who  are  innocent  holders  of  stocks  or  other 
))roperty,  and  wlio  ought  not  to  suffer,  because  they  have  not  in  any 
way  been  concerned  in  the  speculation.  And,  of  course,  wealthy  men 
can  command  the  ])roperty  of  others;  they  can  make  the  property  of 
others  wliatever  they  ])lease  in  its  value.  There  are  evils,  of  course,, 
which  never  can  l)e  remedied,  I suppose,  unless  you,  as  the  gentleman 
said  here,  just  now,  go  down  to  the  foundation  of  morality;  but  I 
lliink  society  has  a right  to  legislate  against  an  evil  which  threatens 
its  own  pro8])erity. 

Have  you  any  furtlier  suggestions  to  offer  to  the  committee  ? 


745 


A.  ^o,  I think  that  is  about  all  I know  on  the  subject. 

Recess. 

Gustave  GoWieil  called  and  examined  * 

By  Senator  Boyd  : 

Q.  What  is  your  name  ? 

A.  Gustave  Gottheil. 

Q.  Where  do  you  reside,  Doctor  ? 

A.  681  Madison  avenue,  New  York. 

Q.  You  are  a clergyman  ? 

A.  Yes,  sir. 

Q.  Connected  with  what  church  ? 

A.  With  the  Temple  Emanuel  in  Fifth  avenue  and  Forty-third  street 

Q.  How  long  have  you  been  pastor  of  that  church  ? 

A.  About  ten  years. 

Q.  What  is  your  opinion  in  reference  to  the  whole  system  of  making 
corners  and  dealing  in  futures  in  grain  and  other  merchantable  com- 
modities, with  reference  to  its  influence  upon  commerce  and  its  effect 
upon  the  public  welfare  : that  is,  from  your  standpoint  ? 

A.  Well,  with  regard  to  commerce  I don’t  know  that  I am  compe- 
tent to  speak,  having  very  little  experience  in  that  line ; my  people 
are  to  a great  extent  engaged  in  commerce,  but  I only  take  a very  rare 
notice  of  what  is  doing  down  town  ; I have  to  deal  with  their  other 
interests,  and  probably  only  feel  the  state  of  the  market  when  I come 
10  ask  for  subscriptions  to  charities  or  such  like  ; I can  therefore  say 
nothing  with  regard  to  that ; but,  from  a moral  point  of  view,  I am 
certainly  strongly  opposed  to  all  kinds  of  gambling  and  to  all  trades 
in  things  that  are  not  really  sold  ; if  I am  to  take  the  standpoint  of 
the  Ancient  Hebrew  law,  it  would  be  altogether  illegal  — such  trade  ; 
on  the  Talmudic  ground,  it  would  be  simply  treated  as  ordinary  gamb- 
ling, and  any  man  engaged  in  such  trading  would  be  disqualified  from 
acting  as  a judge,  or  even  testifying  as  a witness  ; not  only  those  who 
do  engage  in  it,  but  those  who  assist,  such  as  clerks,  or  notaries,  in 
any  such  transactions,  would  also  be  liable  to  a fine,  on  the  public 
ground  that  it  is  wrong  to  put  a stumbling-block  in  the  way  of  the 
blind  — misleading  people,  or  helping  them  to  mislead  others;  of 
course  that  law  has  ceased  to  have  any  practical  value  for  us,  as  we  ac- 
cept and  live  entirely  under  the  laws  of  the  country  where  we  reside, 
l)ut  its  moral  aspect  and  its  ethical  teachings  are  still  a source  of  our 
religious  light,  and  we  try  to  bring  it  to  bear  upon  the  actual  require- 
ments of  the  day  ; I hold  all  kinds  of  gambling,  especially  in  articles 
94 


746 


which  form  the  necessaries  of  the  iriullitude,  is  very  sinful^  knowing 
from  my  experience  and  my  labors  amongst  the  poor  liovv  hard  it  falls 
upon  them  and  how  difficult  it  is  to  procure  the  necessaries  from  the 
high  prices  which  rule  in  the  market  ; and  I further  tliink  tliat  the 
vast  accumulation  of  properties  in  individual  hands  by  means  of  this 
kind  of  corners  and  futures  is  in  itself  a very  strong  proof  of  a hurtful 
influence.  It  is  natural  that  a great  many  young  people  who  start  in 
business  should  be  misled  by  the  reports  of  the  fortunes  accumulated 
through  these  handlings  of  corners,  and  not  knowing  the  dangers,  are 
easily  led  into  trying  the  same  as  far  as  their  means  permit  them,  and 
very  often  make  a false  start  in  business-life  from  which  it  is  very  dif- 
flcult  for  them  to  extricate  themselves  afterward. 

Q.  Do  you  think  it  is  the  duty  of  the  people,  through  their  Legisla- 
ture, to  attempt  to  find  a remedy  for  these  evils,  and,  if  possible,  to 
pass  an  act  prohibiting  or  su])pres3ing  them  ? 

A.  Well,  I have  not  unlimited  confidence  in  such  an  action,  as  I 
knoAV  from  experience  in  other  fields  of  moral  endeavor,  that  legisla- 
tive interference  is  insufficient  to  eradicate  an  evil  so  deep-seated,  and 
so  wide-spread  as  this  is,  and  having  found  such  eloquent  and  weighty 
advocates  as  it  has  done  here.  But  I also  hold  that  the  people, 
through  their  legislators,  are  bound  to  try  their  utmost  tojcheck  it 
and  not  to  let  it  go  entirely  uncontrolled.  A legislative  enactment 
will  certainly  do  something  toward  stopping  the  evil,  or  at  all  events 
confining  its  evil  effects  to  narrower  limits.  The  very  fact  thiit  the 
Legislature  stamps  a certain  action  as  illegal  must  necessarily  pro- 
duce an  effect  somewhere,  and  will  help  other  agencies  of  another 
character  — will  support  their  efforts.  If  we,  for  instance,  from  the 
pulpit  can  point  to  the  code  of  law  in  support  of  what  we  teach  on 
moral  or  religious  grounds,  it  is  certainly  a great  help  to  us. 

Q.  Then  you  think  that  any  thing  that  tends  to  educate  the  masses 
of  the  people  concerning  the  existence  of  such  evils  and  warning 
them  against  the  disastrous  results  is  beneficial  to  the  communit}"  ? 

A.  I think  so,  decidedly,  although  there  will  always  be  people  who 
know  how  to  circumvent  the  law.  Still,  as  I have  said,  there  are 
others  who  will  take  warning  and  be  restricted. 

Q.  '’Idien  do  you  think,  as  you  have  referred  to  that  subject,  that 
it  is  the  duty  of  the  press  and  the  pulpit,  and  in  fact  of  every  good 
citizen,  to  use  their  influence  for  the  suppression  of  the  evils  resulting 
fi-oin  the  ])ractice  of  making  corners  and  dealing  in  futures  ? 

A.  I certainly  think  so,  and  as  far  as  I am  concerned,  I have  never 
failed  from  tlu!  pulpit  to  warn  the  })eoi)le  against  it. 

Q.  D.'imbling  in  any  form,  whether  it  be  in  stocks,  bread-stuffs,  cot- 
ton, ])etrol(mm  or  cards,  yon  consider  to  bo  equally  reprehensible  and 
injnrions  (o  the  i)nblic  V 


747 


A.  Decidedly  so.  I would,  however,  make  a distinction  between 
: things  that  affect  the  masses  of  the  people  directly,  such  as  bread- 

; stuff  and  oil  and  cotton  which  does  so  in  a very  remote  degree.  It  is 

very  little  that  the  workingman  has  to  pay  more  for  his  clothing,  if 
cotton  rules  higher  or  lower ; it  does  not  affect  him  so  directly.  This 
: I would  only  object  to  on  the  moral  ground,  but  the  speculation  in 

grain  and  such  like,  I think  also,  is  to  be  objected  to  on  the  ground  of 
■;  humanity,  and  on  the  ground  of  the  great  social  struggles  that  are  now 

[ occupying  the  minds  of  all  thinking  men,  and  sooner  or  later  will 

i press  to  the  foreground,  and  we  shall  have  to  find  an  answer, 

r Q.  Our  civil  and  common  law  to  a very  great  extent  is  based,  is  it 
[ not,  upon  the  rnaxims  and  mandates  uttered  by  the  Hebrew  law- 
[ giver  ? 

I A.  I think  so  ; in  fact  Bunson,  a great  authority  in  England,  says 
distinctly  that  the  English  law  is  very  largely  derived  from  the  ancient 
I Mosaic  law  and  resembles  it  very  much  in  many  of  its  main  features. 

; Q.  And  can  you  at  present  recollect  any  instance  where  the  Hebrew 
law-giver  denounces  such  practices  as  we  have  been  speaking  about,  to- 

■ wit,  making  corners  and  dealing  in  futures  and  illegal  speculation  ? 

A.  Well  the  fact  is  that  the  Mosaic  legislation  was  not  intended  for 
a trading  people,  but  for  an  agricultural,  and  the  only  reference  to  a 
E matter  of  that  kind  is  in  the  distinction  made  between  the  inhabitant 
I of  Palestine  and  the  stranger;  it  was  forbidden  to  take  any  interest 

■ not  only  from  the  fellow  Israelite,  but  from  any  one  who  took  up  his 
permanent  abode  within  the  limits  of  the  country,  and  loans  could  only 

J be  made  as  a matter  of  charity,  not  as  a matter  of  mercantile  specula- 
; tion  ; the  institutions  of  the  Seventh  year  of  Rest  and  the  Fiftieth  year 
of  Release  made  loaning  of  capital  for  the  mere  sake  of  deriving  inter- 
I est  almost  impossible  — certainly  not  an  advantageous  speculation; 

i whilst  those  who  lived  outside  the  country,  if  they  wished  to  have  any 

: benefit  of  the  capital,  they  had  to  pay  interest  ; but  any  thing  beyond 

‘ a limit  where  a term  is  used  which  denotes  eating  away  — devouring  — 

} that  means  an  interest  which  devours  the  capital  — was  strictly  pro- 

. hibited  ; so  that  I believe  on  Mosaic  grounds,  corners  and  dealing  in 
r futures  would  have  been  an  impossibility  ; as  I have  said  the  Talmudic 

;■  law  is  far  more  explicit  ; at  that  time  trade  was  very  largely  developed 

■ in  Palestine  and  they  had  their  enactments  accordingly,  but  they  were 
very  strict  and  explicit  in  dealing  in  certain  things  ; a man  was  neither 
allowed  to  buy  nor  to  sell  them  ; and  they  stated  that  very  reason  — 
because  the  price  of  an  article  may  grow  more  or  less  and  therefore 
create  unexpected  losses  or  gains  which  they  considered  unrighteous ; 
that  was  very  distinct. 

Q.  Do  you  recollect  any  special  denouncement  of  the  practice  of 
withholding  the  necessaries  of  life  ? 


748 


A.  Oh,  yes  ; that  we  have  distinctly  in  Proverbs  — that  the  curse  of 
the  people  will  fall  upon  such  people;  that  is  very  distinct ; the  iavv 
shows  great  humanity  on  all  sides  for  the  poor  and  the  needy  allowing 
them  for  instance  to  go  in  fields  and  gather  the  ears  or  the  gleanings  ; 
then  in  Palestine  every  poor  man  in  the  time  of  harvest  was  permitted 
to  go  into  any  orchard  or  vineyard  and  eat^  his  fill  without  let  or  hin- 
drance on  the  part  of  the  owner ; in  fact  pauperism  in  our  sense  of  the 
word  never  existed  in  Palestine ; it  could  not ; the  law  reads  in  this 
way  — I am  speaking  now  of  the  Rabbinical  law:  ‘^Although  at  pres- 
ent gone  down  in  his  estate  he  is  still  a child  of  Abraham ; his  title  to 
his  parental  inheritance  remains  intact  and  at  the  year  of  his  release 
he  will  enter  upon  his  estate  as  before  ; ” then  the  pledge  taking  might 
perhaps  come  in  here ; it  was  not  permitted  to  take  the  garment  of 
the  poor  as  a pledge  longer' than  during  the  daytime;  at  night  the 
taker  of  a pledge  had  to  restore  it  because  it  was  at  the  same  time  his 
cover  for  the  night ; and  in  collecting  a debt  the  owner  was  not  per- 
mitted to  go  into  the  house  or  ask  a pledge;  he  was  not  permitted  to 
go  into  the  house  so  as  not  to  put  the  father  to  the  blush  in  the  pres- 
ence of  his  own  household ; he  had  to  wait  outside  until  the  father 
brought  it  to  him. 

Q.  Is  there  any  thing  else  that  you  would  like  to  offer  ? 

A.  Nothing  more,  Mr.  Senator. 

Archibald  Montgomery,  being  duly  sworn,  was  then  interrogated, 
and  testified  as  follows: 

By  Senator  Botd  : ^ 

Q.  Where  do  you  reside  ? 

A.  49  Tompkins  place,  Brooklyn. 

Q.  What  is  your  business 't 

A.  Exporter  of  grain. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  Since  1847;  thirty-five  years. 

Q.  Are  you  a member  of  any  firm  ? 

A.  The  firm  is  Montgomery  Brothers,  No.  1 State  street. 

Q.  Are  you  a member  of  the  Stock  Exchange  ? 

A.  No,  sir. 

il.  Have  you  ever  been  a member? 

A.  No,  sir;  tlie  Produce  Exchange. 

(^.  You  arc  a member  of  the  Produce  Exchange  ? 

A.  V(!B,  sir  ; 1 liave  been,  since  its  foundation. 

(2-  Please  state  to  the.  committee  your  opinion  concerning  the  whole 
flyslem  of  making  corners  and  dealing  in  futures,  with  reference  to  its 
‘ (feet  uj)on  commerce  and  its  inlluencc  upon  the  public  welfare  ? 


740 


A.  I have  very  strong  views  on  that  subject ; I think  it  is  very  dis- 
astrous in  every  aspect  and  to  every  interest,  more  especially  to  me- 
chanics and  the  laboring  classes,  upon  whom  the  burden  ultimately 
falls;  there  is  one  redeeming  point  in  this  trading  which  I think  is 
perfectly  legitimate,  and  that  is  dealing  in  futures  under  proper  rules 
and  regulations,  either  of  the  Exchanges  or  the  legislators ; I notice 
* that  most  of  those  who  have  appeared  before  you,  so  far  as  it  has  come 
under  my  observation,  all  desire,  which  is  natural,  that  the  Legisla- 
ture should  not  interfere  with  thes  Eexchanges;  like  most  individuals, 
they  think  they  can  manage  it  better  themselves  than  by  any  legislation ; 
I beg  to  differ  a little  with  them  ; from  a cursory  glance  at  the  evi- 
dence whicii  has  been  given  me,  taken  before  your  committee,  both 
here  and  at  Buffalo  and  elsewhere,  I take  it  that  there  is  but  one 
opinion  on  the  evil  effects  of  this  selling  what  you  have  not  got,  from 
which  the  whole  evil  rises  ; selling  what  you  have  not  got,  if  you  can 
stop  that,  you  stop  corners  and  you  stop  all  this  gambling  in  the  staff 
of  life  ; trading  in  futures  legitimately  is  almost  an  absolute  necessity' 
at  the  present  day  ; it  certainly  is  a great  facility  to  business  both  from 
the  w^est,  to  the  east,  and  from  the  east  to  foreign  ports,  and  if  you 
can  only  by  the  Legislature  or  through  the  Exchanges  have  these  sales 
for  future  honafide,  and  a man  will  be  prohibited  from  selling  what  he 
has  not  got,  then  the  evil  is  remedied  at  once ; like  all  other  good 
laws  there  are  always  some  men  to  break  them ; there  is  a law  against 
murder  and  a law  against  many  other  evil  things,  but  we  find  men 
every  day  breaking  them ; what  we  want  is  just,  honorable  judges,  and 
when  those  men  are  brought  forward  that  they  will  punish  them ; be- 
cause I see  some  parties  arguing  that  gambling  laws  are  broken,  it  is  no 
reason  in  my  mind  that  good  laws  should  not  be  made  and  carried 
out  ; I will  not  take  up  your  time,  gentlemen,  the  committee  and  the 
reporters  must  all  be  very  tired  of  this  investigation.  I still 
feel  a deep  interest  in  and  am  ready  for  legitimate  business,  but  not  for 
this  gambling  business  ; the  deal  which  I have  heard  referred  to  so 
frequently,  called  the  Keene  deal,  which  I always  understood  was 
Jesse  Hayt  & Co/s  deal,  I am  more  familiar  with  than  with  the  recent 
corners,  for  the  reason  that  it  impressed  itself  on  my  mind,  having 
suffered  very  severely  from  the  effects  of  it ; if  you  gentlemen  choose, 
you  can  examine  the  correspondence  at  that  time  which  I have  here, 
which  will  revive  the  matter  in  your  mind  ; it  is  quite  fresh  in  mine ; 
you  will  see  a letter  there  addressed  to  the  president.  Colonel  Hincken, 
who  appeared  before  you,  to  call  a meeting  at  that  time  to  endeavor  to 
find  some  remedy,  but  he  declined  to  do  so;  now  I have  been  enligh- 
tened by  the  testimony  of  the  last  two  days  of  such  men  as  Vanderbilt, 
Gould  and  Mr.  Beecher,  etc.,  and  when  I find  that  such  men  as  they 


750 


cannot  suggest  any  remedy,  it  makes  me  doubt  my  own  ability,  and  I 
do  not  come  with  so  much  confidence  here  to  suggest  a remedy  as  I 
should  have  done  a few  days  ago,  submitting  to  tlieir  judgment ; I 
wfill,however,just  take  one  moment  and  refer  to  the  evidence  of  a gentle- 
man who  appeared  before  your  committee  at  the  last  meeting  in  No- 
vember, and  an  old  friend  and  neighbor  of  mine,  Mr.  Alexander  E. 
Orr,  a gentleman  for  Avhom  I have  the  highest  respect,  both  for  his 
intelligence,  his  perseverance  and  his  indefatigable  ness  ; whatever  he 
undertakes,  he  undertakes  with  an  honest  purpose  and  carries  it 
through;  but  I find  that  accidentally  I have  no  doubt  he  has  in  the 
figures  made  a slight  mistake  which  I will  endeavor  to  point  out;  I 
think  you  have  got  a copy  of  his  testimony  ; if  you  will  kindly  turn  to 
page  29  and  refer  to  the  bottom  he  says:  ‘^The  export  of 
wheat  and  flour  taken  together  during  the  crop  year  1879  and  1880 
(Mr.  Pierce’s  corner)  was  the  largest  ever  made  before  or  since  in  the 
history  of  the  United  States;”  I would  not  have  referred  to  this  so 
particularly  gentlemen,  but  “ ever  made  ” is  in  italics,  putting  emphasis 
upon  it;  “ yet  Mr.  Pierce  would  have  you  believe  that  the  grain  that 
year  was  held  above  the  reach  of  export  and  that  the  ships  were  tied 
up  to  the  docks,  waiting  cargoes  in  consequence;  ” that  is  a fact,  they 
were  ; I know  it;  ^^to  show  that  the  movement  was  not  confined  to 
the  city  of  Ne\^York  I give  the  values  of  the  bread-stuffs  in  currency 
of  the  United  States ;”  now,  gentlemen,  I will  simply  ask  you  to  open 
this  book  at  page  410  (referring  to  a copy  of  the  Annual  Report  of  the 
New  York  Produce  Exchange)  which  is  the  same  authority  he  quotes 
from  — our  statistician  ; he  works  at  it  day  and  night ; the  only  excuse 
he  has  for  working  day  and  night  is  that  he  is  an  old  bachelor;  page  410 

Q.  You  read  now  from  the  rules  or  by-laws  of  the  Produce  Exchange  ? 

A.  I am  reading  from  the  statistics  which  Mr.  Orr  has  referred  to 
as  to  the  exports  and  average  prices. 

Q.  An  extract  from  — 

A.  From  this  year’s  report,  1881;  this  is  official;  Mr.  Orr,  in 
referring  to  this  matter,  puts  the  export  as  being  the  largest 
either  before  or  since  up  to  this  time.  I know  it  is  pierely  an 
error  of  whoever  he  has  intrusted  it  to,  but  what  I wish  to  call  your 
attention  to,  gentlemen,  is  the  fact  that  in  the  first  four  months  of 
that  crop  year  to  wliich  he  refers,  eighty  million  bushels  were  exported 
from  this  country  ; the  following  four  months,  by  reason  of  the 
advance  from  110  to  100,  it  resulted  in  an  export  of  only  about  thirty 
millions  the  following  four  months,  when  they  had  to  loosen  their 
grij)  a litile  — could  not  hold  on  — it  increased  fifty  per  cent  from  the 
))n‘vions  four  months  about.  Tluit  is  all  T have  got  to  say  on  that.  I 
liavc  great  luvsilatiou,  gentloimm,  in  criticizing  anything  of  Mr.  Orr’s, 
f)Ut  this  is  a very  impui-tant  subje(;t,  and  1 am  sorry  that  we  differ  in 


751 


our  conclusions  and  conceptions,  and  therefore  I would  pass  it  over 
without  criticiziug  it  at  all,  but  here  he  comes  on  page  Si8,  and  also 
quotes  from  this  same  book  — and  which  this  book,  verifies — the 
figures  are  entirely  correct  — commencing  with  September,  1879,  wheat 
lOOf,  ranging  up  to  130,  September,  October,  November  and  Decem- 
-ber.  The  range  is  absolutely  correct  as  taken  by  our  statistician 
from  the  books;  but  they  do  not  quite  explain  it  thoroughly  ; that  is 
to  say,  he  gives  a range  of  109  to  160,  but  he  does  not  give  you  the 
average.  That  109  was  the  first  of  the  month,  and  it  kept  continually 
going  up  until  it  got  to  130.  It  kept  going  up  with  slight  fluctuations 
from  the  first  of  October  — it  went  down  from  the  28th  to  the  31st  — 
and  for  four  months  it  kept  continually  going  up  so  that  the  average 
is  a great  deal  more  than  you  would  imagine  by  taking  the  average 
from  the  extremes.  That  was  on  the  upward  turn.  On  the  downward 
turn  it  was,  of  course,  the  reverse.  Now  as  regards  the  statement 
that  ships  were  not  interfered  with  — however  I do  not  care  to  quote 
any  more.  I will  state  this  without  fear  of  contradiction  from  any  one 
— that  on  this  occasion  of  the  Keene  deal  or  Hoyt  deal,  as  I crJl  it 
trade  was  entirely  demoralized  and  the  merchants  put  at  their  mercy 
I think  a merchant  w'ho  provides  for  the  future  as  I have  heard  so  well 
spoken  of  to-day,  either  by  superior  judgment  or  by  knowledge  from 
others,  or  any  w^ay  in  which  he  can  get  it,  is  perfectly  justified  in  look- 
ing into  the  future  and  having  any  advantage  that  may  legitimately 
arise  from  it,  but  if  they  continue  the  present  mode  of  doing  busi- 
ness, it  is  only  a question  of  time  when  we  will  not  have  a merchant 
in  the  United  States  in  the  commercial  line  — there  will  'be  nothing 
but  a nation  of  gamblers.  Now  there  is  just  one  point  that  I would 
like  to  make,  and  that  is  this : that  the  power  at  Albany  or  at  Wash- 
ington — because,  gentlemen,  I was  nearly  forgetting  a point  I would 
like  to  state  — I hardly  think  it  w'ould  be  fair  to  legislate  at  Albany  to 
control  the  business  of  New  York  unless  the  National  Legislature  a, 
Washington  can  put  all  the  States  on  an  equality  in  that  respect, 
because  it  v7ould  naturally  drive  people  to  New  Jersey  or  somewhere 
else,  but  I do  think  the  Legislature  that  have  granted  our  Exchanges 
such  privileges  have  the  power  to  amend  or  correct  that 
power  and  I chink  there  is  a case  in  point  just  now  that  I will  just 
call  your  attention  to.  If  you  will  kindly  turn  to  Eule  32  of  the  by- 
laws which  was  read  to  you  before,  referring  to  this  corn  deal  of 
November,  and  which  is  still  unsettled  — arbitration  in  regard  to  its 
going  on  — I will  read  you  the  section  : ‘‘Eule  32,  Sec.  1.  In  case  any 
property  contracted  for  future  delivery  be  not  delivered  at  maturity 
of  contract  the  purchaser  shall  notify  in  writing  the  committee  on 
grain  of  the  failure  to  deliver,  and  the  committee  on  grain  shall  at 


1 


752 

the  next  call  publicly  read  such  notice  and  buy  in  the  grain  for  ac- 
count of  the  party  directing  the  purchase,  hut  no  unreasonable  price 
shall  be  paid  arising  from  manipulated  or  fictitious  markets,  or  un- 
usual detention  in  transportation.  Any  legitimate  loss  resulting  to 
the  buyer  shall  be  paid  by  the  party  in  default,  and  the  grain  so 
bought  in  shall  be  a good  delivery  on  defaulted  contracts  maturing 
that  day.”  Now,  gentlemen,  one  word  on  that  point.  The  corner  in 
corn  on  this  last  month,  November,  which  you  are  all  familiar  with, 
resulted  in  a settling  price  of  *^1.10.  One  gentleman  not  having  the  corn 
to  deliver  refused  to  pay  that  exorbitant  price,  knowing  that  the  very 
party  he  had  to  deliver  that  corn  to  Avas  selling  it  for  export,  and  for 
home  consumption  at  ninety  cents.  In  fact  as  he  testified  himself 
yesterday  in  almost  so  many  Avords,  he  Avas  buying  at  $1.00  Avith  one 
hand  and  selling  Avdth  the  other  at  ninety  cents  for  the  purpose  of 
squeezing  these  shorts.  And  these  shorts  deserved  it. 

But  whether  that  is  not  manipulation,  gentlemen,  I leave  it  to  you 
judge. 

Adjourned  to  December  18,  1882,  at  2 o’clock,  p.  m. 


[From  the  New  York  Herald.] 

The  Blockade  in  Bread-stuffs. 

A letter  was  addressed  yesterday  to  the  president  of  the  New  York 
Produce  Exchange  by  a leading  merchant  in  that  branch  of  trade, 
asking  him  to  call  a meeting  of  the  members  to  ventilate  and  discuss 
the  disastrous  effects  of  the  present  blockade  in  breadstuffs,  Avhich 
bears  injuriouslv  upon  many  interests.  e doubt  Avhether  such  a 
meeting  Avould  do  any  good,  although  it  Avould  be  interesting  to  hear 
the  vieAvs  of  intelligent  merchants  on  the  remarkable  crisis  and  dead- 
lock Avhich  has  so  long  existed  in  that  great  branch  of  our  commerce. 
But  the  Keene  clique  — dignified  Avith  the  pompous  name  of  a syn- 
dicate”— Avhich  holds  such  vast  quantities  of  grain  blockaded  in 
Chicago,  Avill  not  loosen  its  grip  in  consequence  of  any  remonstrances, 
however  earnest  and  indignant.  This  enterprising  and  resolute  syn- 
dicate ” did  not  ask  leave  of  the  Produce  Exchange  or  the  public  be- 
fore undertaking  its  gigantic  speculation,  and  it  Avill  turn  a deaf  ear 
to  ])rotests.  The  food-consuming  public  in  our  sea-board  cities  have 
an  interest  in  common  with  the  grain  dealers,  but  the  members  of  the 
Produce  Exchange  care  little  for  the  high  prices  paid  by  the  com- 
munity. d'lie  place  where  tlie  shoe  pinches  with  them  is  the  stagnation 
of  tlieir  own  trade;  l)ut  consumers,  of  course,  Avish  them  success  in 
any  clToi-ts  they  may  make  to  break  the  blockade.  Still,  appeals  to 
jtublie,  opinion  amount  to  nothing  in  such  a contest. 


New  York,  January  22,  1880. 


To  Edward  Hikckek,  Esq., 

President  New  York  Produce  Exchange  : 

Sir — I take  the  liberty  of  suggesting  that  you  call  an  early  meeting 
of  the  members  to  discuss  the  present  blockade  of  bread-stuffs  in  order 
that  some  remedy  may  be  found  and  trade  be  permitted  to  resume  a 
legitimate  form.  As  you  are  well  aware  of  the  various  interests 
seriously  affected  by  the  present  blockade  (their  long  patience  and 
forbearance),  I think  it  behooves  you  as  the  head  of  so  important  an 
institution  to  set  the  ball  in  motion,  and  the  result  I think  will  justify 
the  same.  There  is  a point  when  patience  ceases  to  be  a virtue,  and 
that  is  already  reached. 

With  great  respect  yours  truly, 

ARCH.  MONTGOMERY. 

New  York  Produce  Exchange,  ) 
New  York,  Jayiuary  23,  1880.  ) 

A.  Montgomery,  Esq.,  No.  1 State  Street,  Neio  York  : 

Sir  — Your  letter  of  this  day  is  at  hand.  The  Produce  Exchange 
has  never  taken  any  measures  of  the  nature  you  suggest  to  break  the 
many  corners”  that  have  occurred  in  different  articles  of  merchan- 
dise, nor  has  it,  in  my  opinion,  the  right  or  authority  to  resolve  ” 
that  holders  of  produce  have  not  the  liberty  to  hold  their  wares  for 
such  price  or  time  of  sale  they  deem  for  their  interest.  Trade  cannot 
be  regulated  by  “ resolutions,”  but  will  regulate  itself  through  the 
usual  means.  I respectfully  decline  to  call  the  meeting  you  suggest, 
and  remain, 

Your  obedient  servant, 

EDWARD  IIINCKEN,  President. 

It  is  only  to  the  laws  of  trade,  which  are  as  sure  in  their  operation 
as  the  physical  laws  of  nature,  that  the  public  can  look  for  a remedy 
in  such  a crisis.  The  Keene  clique  will  break  down  because  it  has 
miscalculated.  It  has  failed  in  forecasting  the  state  of  the  markets, 
and  must  suffer  the  consequences.  The  foreign  market  has  proved  dull 
when  they  expected  it  to  be  brisk  and  eager.  For  the  last  three  or  four 
weeks  the  grain  trade  in  England  has  been  reported  as  unusually  slack. 
There  are  large  supplies  in  store  ; also  large  supplies  affoat  bound  for 
English  ports ; but  the  demand  is  feeble  and  the  purchases  small. 
The  Mark  Lane  Express  of  January  20  says  that  ‘‘sales  are  only  prac- 
ticable at  a decline  of  a shilling  per  quarter.”  The  same  journal  says 
that  “ imports  of  foreign  wheat  have  mostly  gone  into  granary,  as  the 
95 


♦ 

I 


754 

consumptive  demand  has  been  very  inanimate,  lack  of  confidence  be- 
coming apparent.”  The  same  authority  says  that  stocks  are  increas- 
ing, not  only  in  London,  but  in  Marseilles  and  Bordeaux,  while  the 
quantity  of  wheat  afloat  still  exceeds  2,200,000  (piarters”  (17,000,000 
bushels,  a greater  quantity  than  is  now  under  blockade  in  Chicago), 
^^aiid  while  a further  decline  in  New  York  augurs  unfavorablv  for  the 
success  of  the  American  speculation  for  a rise,  the  presence  of  impor- 
tant stocks  in  the  French  port  is  sufficiently  significant.”  This  is  a 
gloomy  outlook  for  the  Keene  syndicate. 

Mr.  Keene  and  his  copartners  are,  no  doubt,  very  shrewd  men,  but 
they  are  in  a fair  way  to  repent  of  their  stupendous  speculation.  In 
making  their  calculation  they  left  out  several  important  elements.  In 
the  first  place,  they  were  misled  by  the  wonderful  activity  of  the  for- 
eign grain  trade  in  the  early  autumn  months.  They  mistakenly  re- 
garded this  as  evidence  of  a demand  which  would  continue  until  the 
next  harvest,  whereas  it  only  evinced  the  foresight  and  enterprise  of 
European  speculators,  who  promptly  purchased  wheat  in  America  as 
soon  as  it  was  known  that  the  English  harvest  would  be  deficient. 
They  made  haste  to  buy  at  once  as  much  as  they  felt  certain  they 
could  sell  at  a profit,  and  overstocked  the  immediate  market.  The 
Keene  clique  made  the  mistake  of  supposing  that  the  great  amount  of 
wheat  shipped  to  Europe  during  the  autumn  represented  a demand 
for  immediate  consumption,  when,  in  fact,  it  was  a mere  precaution 
against  a great  rise  in  American  prices,  looking  to  the  future,  and  in- 
tended to  secure  the  profits  of  the  winter  and  spring  trade  for  Euro- 
pean instead  of  American  speculators.  ' 

Another  great  miscalculation  made  by  the  Keene  syndicate  was  its 
underestimate  of  other  sources  of  supply  than  Amejica.  The  mild- 
ness of  the  early  part  of  the  winter  kept  the  Baltic  ports  open  to  an 
unusually  late  period,  and  English  trade  statistics  show  importations 
of  wheat,  from  Dantzic,  Stettin,  Hamburg,  Denmark  and  St.  Peters- 
burg, as  well  as  from  Odessa,  Trieste,  Egvpt,  Chili,  Australia  and  New 
Zealand.  The  artificial  keeping  up  of  the  price  in  America  has  simply 
had  the  effect  of  enabling  the  other  wheat  exporting  countries  to 
market  their  product.  Their  supplies  have  been  poured  into  Eng- 
land and  have  kept  down  the  price,  while  the  Keene  syndicate  has 
maintained  its  blockade  at  Chicago  in  the  vain  expectation  of  a rise 
which  has  not  come,  and  which  the  present  state  of  the  English 
juarket  shows  is  not  likely  to  take  place.  The  Chicago  “corner” 
will  necessarily  break,  and  it  is  now  a ((uestion  not  of  weeks  but  of 
days.  To  ])orrow  the  apt  word  of  the  London  Economist,  the  Keene 
operation  has  been  “isolated.”  It  could  have  been  successful  only 


755 

by  controlling  all  the  grain  marts  of  the  world.  The  isolation,” 
says  the  Economist,  “ to  which  this  operation  for  the  rise  has  been  ^ 
reduced,  suggested  the  idea  of  a silent  coalition  in  Europe  to  counter- 
act, through  isolating  it,  the  influence  of  this  association,  and  also 
through  establishing  counter  centers  of  speculation  in  the  principal 
towns  of  Europe  , where  these  influences  are  at  work.”  The  Econo- 
mist says  that  the  reported  fall  of  wheat  in  New  York  “ shows  how 
difficult  it  is  to  keep  up  artificial  prices  within  a limited  area,  and  it 
Avould  be  still  more  hazardous  to  extend  the  enterprise  further.”  It  is 
said  that  a clique  or  syndicate  has  been  organized  in  Berlin, 'making  that 
city  a center  to  work  up  the  rise  ; but  if  so,  it  evidently  amounts  to 
nothing,  considering  that  the  price  does  not  go  up  and  the  demand 
continues  slack  and  feeble.  Mr.  Keene  and  his  associates  will  make 
no  money,  but  they  will  gain  some  wisdom. 

Communities  may  safely  trust  to  the  beneficent  operation  of  the 
laws  of  trade.  When  the  supply  of  any  great  necessary  of  life  really 
falls  short  it  is  no  detriment  to  the  public  if  speculators  buy  up  all 
they  can  and  hold  it  for  higher  prices.  The  increase  of  price  dimin- 
ishes consumption  and  makes  the  scanty  supply  last  until  another 
harvest.  But  if  speculators  make  a false  estimate  of  the  proportion 
between  supply  and  demand  they  are  sure  to  pay  a heavy  penalty.  By 
retrenching  consumption  in  the  early  part  of  the  year  they  create  an 
artificial  abundance  in  the  latter  part  when  prices  go  lower  than  they 
would  have  done  if  left  to  themselves.  The  Keene  syndicate  has 
enabled  the  other  grain  exporting  regions  of  the  globe  to  market  their 
wheat,  and  when  the  sluices  are  opened  at  Chicago  there  is  likely  to 
be  a decided  decline  in  prices  in  view  of  the  large  stocks  and  moderate 
demand  in  the  principal  importing  countries.  It  will  be  found,  in  this 
instance,  that  vaulting  avarice  “ o’er-leaps  itself  and  falls  on  Tother 
side.” 


« B.” 


The  1879-80  Corher  ih  Wheat. 

Sir  — The  largest  estimated  requirements  of  the  United  Kingdom 
claimed  by  the  greatest  “ bulls  ” for  the  cereal  year  1879-80  do  not 
exceed  17,000,000  quarters  of  wheat,  say  136,000,000  bushels,  and 
even  this  amount  they  admit  may  be  greatly  reduced  by  an  average 
early  harvest  in  1880.  There  have  already  been  shipped  from  Sep- 
tember 1 to  October  25,  from  four  United  States  ports  (New  York, 
Philadelphia,  Baltimore  and  Boston)  and  from  Montreal  wheat  and 
flour  reduced  to  bushels,  23,256,000  bushels,  equal  to  139,536,012 
bushels,  for  the  year,  or  a surplus  of  3,500,000  bushels  over  the  yearly 


75G 


requirements,  and  it  must  be  remembered  New  Orleans,  California 
Portland  and  other  minor  ports  are  not  included  in  the  above  state- 
ments, as  well  as  other  foreign  nations  from  which  supplies  are  usually 
received. 

Of  course  no  one  supposes  that  the  above-mentioned  four  United 
States  ports  and  Montreal  can  continue  the  same  ratio  of  exports  dur- 
ing the  winter  months  with  the  St.  Lawrence  river  and  the  Erie  canal 
closed.  But  our  railroads  are  daily  increasing  their  rolling  stock  and 
extending  their  lines,  and  with  an  open  winter  the  present  high  prices 
to  farmers,  and  remunerative  rates  of  freight,  people  will  be  aston- 
ished at  their  capacity  when  all  the  terminal  facilities  on  the  New 
Jersey  side  are  completed,  and  cars  can  be  unloaded  without  delay 
and  at  once  dispatched  for  another  freight.  Besides,  New  Orleans, 
during  the  winter  months,  may  be  expected  to  make  good  the  loss  of 
Montreal,  judging  from  the  energy  and  enterprise  of  St.  Louis  mer- 
chants and  the  recent  improvements  of  the  Mississippi  river  by  jetties, 
etc.,  and  new  lines  of  foreign  steamers.  The  amount  of  wheat  “in 
sight  '’  is  unprecedented,  25,691,223  bushels  being  the  lowest  esti- 
mate, while  some  authorities  make  it  over  28,000,000  bushels.  In 
fact,  the  storage  capacity  of  the  different  centers  are  now  pretty  well 
taxed,  judging  by  the  stocks  held  at  various  points  and  the  large  daily 
receipts  at  Chicago,  Milwaukee,  Detroit,  and  other  receiving  points. 

It  will  be  well  for  speculators  to  bear  these  facts  in  mind.  Legiti- 
mate business  in  the  grain  market  has  been  an  impossibility  of  late, 
and  somebody  will  yet  ‘‘get  his  fingers  burnt”  if  it  is  continued. 
Other  countries  sometimes  spare  “Old  England”  some  of  their  “staff 
of  life  ” in  exchange  for  her  gold  and  goods,  althougli  I grant  that 
the  United  States  are  ahead  this  year.  But  high  prices  reduce  con- 
sumption, extend  the  sources  of  supply,  and  increase  production  the 
world  over. 

OLD  FOGY  MONTOOMEKY, 

Who  has  had  thirty-two  years’  experience. 

New  York,  Novemler  1,  1879. 

The  Grain-  Blockade  — How  it  Came  About  — A Grain-  Export- 
er’s Views. 

7b  fJie  Editor  of  the  Hercdd  : 

T\\q  fact  tliat  the  European  crops  of  last  year  were  more  or  less  de- 
ficient and  of  poor  (piality  is  indisputable.  The  shrewd  and  far-see" 
ing  Furopean  mercbants  began  buying  wheat  here  and  elsewhere  as 
(•ally  as  .June  last,  and  bought  immense  quantities  for  immediate  and 
fill  lire  deliveries  at  lowest  rates  before  we  had  any  suspicion  of  their 


757 


actual  wants,  and  when  the  truth  dawned  upon  us  they  had  already 
secured  sufficient  quantities  to  make  them,  in  case  of  need,  independ- 
ent for  months  to  come.  They  would  have  continued  to  buy  at 
gradually  enhanced  prices  but  for  our  sudden  advance  forty  to  fifty 
cents  per  bushel,  which  they  considered  unwarranted,  and  adopted 
then  the  waiting  policy.  They  freely  admitted  and  still  do  admit  that 
they  will  want  all  the  surplus  wheat  we  can  spare,  the  only  question 
being,  Who  is  to  dictate  as  to  the  rates,  Europe  or  America  ? They 
also  acknowledge  that  if  we  had  the  power  and  endurance  (which  they 
doubt)  to  hold  on  long  enough  we  would  have  eventually  the  upper 
hand. 

The  present  sudden,  needless  and  'ignominious  break,  caused  prin- 
cipally by  short  sales,  proved  the  correct  European  estimate  of  our  lack 
of  endurance,  and  Europe  will,  therefore,  l^uy  very  cautiously  until  a 
steady  and  firm  market  has  been  established  and  is  not  constantly 
swayed  by  the  action  of  bulls  and  bears.  An  approximate  estimate  by 
the  best  European  and  American  authorities  of  the  world’s  cereal  crop 
of  1879  and  its  wants  shows  that,  with  proper  economy,  there  will  be 
enough  to  go  all  round,  but  not  much  to  spare.  Our  present  prices 
are,  under  the  circumstances,  very  moderate. 

One  of  the  principal  arguments  for  lower  prices  is  the  large  visible 
supply  here  and  on  passage  to  Europe.  But  this  is  only  delusive.  The 
situation  has  not  changed  in  the  least.  The  actual  results  of  the  last 
year’s  world’s  crop  remain  the  same,  nor  have  the  estimated  wunts  di- 
minished. The  only  difference  is  that  the  high  prices  had  the  effect 
of  drawing  large  quantities  of  wheat  out  of  farmers’  hands,  trans- 
ferring same  to  warehouses  and  elevators,  and  showing  a large  visible 
supply  which  otherwise  would  still  have  remained  ii\  farmers’  hands 
invisible.  The  large  stocks,  visible  and  invisible,  will  all  be  necessary 
to  supply  the  wants  of  the  next  seven  months,  until  the  new  crop  is 
available.  The  average  prices  of  wheat  in  the  United  Kingdom  dur- 
ing 1868,  ’71,  ’72,  ’73  and  ’74  were  7s.  to  10s.  per  quarter,  equal  to  20c. 
to  30c.  per  bushel  higher  than  they  are  now,  although  their  average 
crops  during  that  period  were  12,500,000  quarters,  equal  to  100,000,000 
bushels  against  5,000,000  quarters  or  40,000,000  bushels  last  year, 
showing  that  the  present  prices  are  comparatively  low.  The  actual 
reason  why  there  is  no  export  demand  is  to  be  found  in  the  constant 
manipulations  o^^ our  markecs  by  the  so-called  ‘^clique”  or  ‘^syndi- 
cate, ” and  the  consequent  violent  fluctuations. 

As  a grain  exporter  my  bussness,  like  that  of  my  neighbors  engaged 
in  the  same  trade,  has  greatly  suffered  on  account  of  the  prevailing 
speculation ; but  I am  sure  that  as  soon  as  steady  and  firm  markets 


758 


are  established  and  maintained,  confidence  will  be  restored  and  the  ex- 
port demand  revive  on  a large  scale. 

Concerning  the  shipping  interests,  it  undoubtedly  suffers  from  the 
general  stagnation  of  the  export  trade,  not  because  bread-stuffs  are  too- 
high,  but  for  the  temporary  lack  of  European  demand.  The  moment 
the  demand  sets  in  you  will  find  the  shipping  interests  quite  ready  and 
quick  enough  to  advance  rates  of  freight  even  to  an  exorbitant  degree 
if  such  would  suit  their  purposes,  and  many  a time  the  high  rates  of 
freight  forced  holders  of  merchandise  to  lower  prices  and  even  pre- 
vented business  entirely,  so  we  need  not  put  too  fine  a point  on  this 
matter. 

In  conclusion,  I beg  to  state  that  the  natural  laws  of  trade  and  com- 
merce will  soon  put  matters  right,  and  the  transgressors  will  meet  with 
their  due  reward.  Yours  truly, 

• J.  LOUEIE. 

The  Graih  Blockade. 

New  York,  February  4,  1880. 

. To  the  Editor  of  the  Commercial  Bulletin  : 

The  public  interest  at  last  aroused  in  the  above  subject  must  be  my 
apology  for  addressing  you  — and  if  space  admits,  ask  a hearing.  I 
am  encouraged  to  do  so  from  the  fact  (which  I am  glad  to  see)  that 
your  columns  have  been  open  to  the  views  of  an  Exporter^’  (J.  Low- 
rie.  Esq.)  ; and  being  nominally  in  that  line  of  business  myself,  do  not 
view  matters  in  the  same  light  as  he  does,  though  suffering,  as  he 
admits,  in  common  with  others  in  that  branch  of  commerce.  And 
here  permit  me  to  say  that  I have  no  axe  to  grind,  not  being 
interested  ‘Mong  or  short”  one  bushel  on  this  season’s  crop.  I am  led 
to  say  this  from  his  remarks,  that  the  Press  reports  are  mostly  based 
on  information  derived  from  interested  parties  anxious  to  further  their 
own  views.” 

The  so-called  syndicate,”  as  I understand  it,  have,  no  doubt,  the 
pecuniary  ability  to  hold  as  long  as  they  may  see  fit ; but  I give  them 
credit  for  more  sagacity  than  to  suppose  they  will  continue  to'  do  so 
when  convinced,  as  they  must  soon  be,  that  it  is  a hopeless,  and,  in 
my  opinion,  an  ill-advised  operation.  Holding  grain  subject  to  heavy 
storage  and  other  expenses,  and  liable  to  get  out  of^  condition,  they 
will  find  very  dilfcrent  from  filling  their  vaults  with  bonds,  stocks,  and 
other  ])ortable  securities;  for,  as  I understand  it,  it  is  Wall  street  that 
holds  the  bulk.  The  fact  that  European  crops  last  year  Avere  largely 
<lefioient  and  of  poor  quality  none  dispute,  but  that  the  British  crop 


759 


was  only  five  (5)  million  quarters  must,  I think,  be  taken  with  a large 
grain  of  allowance.  In  his  opening  remarks,  your  correspondent 
seems  to  blame  the  Press  of  this  country  for  sounding  the  alarm  so 
early  as  July  and  pointing  to  12  a bushel  for  wheat  “ daily  and  per» 
sistently.”  If  so,  apparently  it  made  little  impression  on  the  minds 
of  exporters,  who  vied  with  each  other  in  offering  John  Bull”  mil- 
lions and  millions  of  bushels  at  the  lowest  point,  discounting  our 
bountiful  harvest,  not  only  for  immediate  shipment  but  for  months 
ahead,  which  our  British  cousins  were  shrewd  enough  to  pick  ujo  and 
stock  themselves  for  months  ahead.  And  here  I will  allow  each  exporter 
to  give  his  own  experience,  simply  remarking  that  many  were  unable 
to  fill  the  contracts  they  had  made  and  had  to  succumb,  entailing 
heavy  losses,  not  only  on  themselves,  but  on  innocent  parties,  by  such 
operations  ; selling  what  they  had  not,  and  not  sagacious  enough  to 
cover,  being  caught  on  the  advance  — a le€Son  which  I trust  all  will 
profit  by  in  the  future.  He  further  asserts  that  farmers  stopped  sell- 
ing, and  country  dealers,  instead  of  marketing  their  stock,  actually 
bought  wheat  in  Chicago.  The  simple  fact  that  warehouses  East, 
West,  North  and  South  are  full  to  overflowing  as  never  known  before, 
and  the  amount  in  sight  unprecedented,  I think  sufficient  to  upset  any 
such  theory. 

The  bulls  ” started  on  the  assumption,  and  they  had  the  figures 
of  experts  not  only  here  but  in  England,  that  the  world  was  short 
37,000,000  bushels  of  wheat  — a great  mistake  in  my  opinion,  as  I 
pointed  out  as  early  as  November  last  — while  they  are  now  willing 
to  concede  that  there  is  enough  to  go  round,  if  not  to  spare,  for  all 
purposes  ; and  at  the  end  of  the  cereal  year  it  will  be  interesting  to 
note  the  result. 

Mr.  Lowrie  (referring  to  the  decline  of  last  week)  attributes,  to  use 
his  own  words,  the  present  sudden  needless  and  ignominious  break  as 
caused  principally  by  ‘‘  short  sales,”  and  here  I must  take  issue  with 
him.  On  the  contrary,  it  was  the  natural  result  of  weak  parties  fol- 
lowing in  the  footsteps  of  the  ^^ring,”  and  unable  to  margin  up,  got 
sold  out,  the  market  not  responding  to  their  hopeful  expectations. 

Speaking  of  the  amount  in  sight,  he  says,  the  high  prices  had  the 
effect  of  drawing  large  quantities  out  of  farmers’  hands,”  etc.,  etc., 
which  I cannot  reconcile  with  his  former  statement,  that  “ farmers 
stopped  selling,”  etc.,  etc.  Perhaps  he  will  explain,  not  only  that,  but 
who  the  transgressors  are  to  which  he  refers  in  his  concluding  sen- 
tence. 

Most  unfortunate  also  has  he  been  in  alluding  to  the  years  1868  and 
1874,  when  ten  to  twenty  shillings  per  quarter  was  no  exceptional  loss 
to  importers  in  England,  as  the  writer  too  well  remembers.  Besides, 


TOO 

sir,  it  were  useless  and  most  unprofitable  to  look. back  for  ten  or  twenty 
years’  averages — the  whole  world  now  producing  wheat  and  looking 
to  Great  Britain  for  a market  ; and  in  a few  years  more  it  will  matter 
little  whether  she  raises  any  herself  or  not.  By-gone  prices  can  never 
rule  again,  unless  in  case  of  war.  With  ocean  cables  all  over  tlie  world, 
merchant  steamers  plowing  every  sea,  England  with  her  wealth  can 
always  command  ample  supplies  at  short  notice,  and,  with  an  average 
and  early  crop,  I predict  the  lowest  prices  ever  known  the  present  and 
coming  year  for  wheat.  In  conclusion,  I admit  I have  no  sympathy 
for  the  gamblers  in  the  staff  of  life,”  especially  at  the  ])resent  time, 
when  my  countrymen  in  Ireland  are  on  the  verge  of  starvation. 

One  word  for  the  shipping  interest,  which  my  export  friend  refers 
to  very  briefly  and  I fear  underrates.  With  an  abundant  harvest  and 
the  wants  of  Europe  well  understood,  it  was  cpiite  legitimate  for  ship- 
owners to  expect  reasonable  and  payable  rates  of  freight,  in  which  they 
have  been  grievously  disappointed,  and,  if  I am  not  mistaken,  will  not 
be  caught  in  the  same  trap  .again;  and  the  export  trade  may  be  seri- 
ously embarrassed  before  another  twelve  months  for  want  of  tonnage. 

In  fact  the  season  is  now  so  far  advanced  that  only  a few  of  the 
present  fleet  could  make  a second  voyage  before  the  end  of  the  cereal 
year,  and  no  appearance  yet  of  a let  upon  the  part  of  the  ^‘syndicate,” 
a point  not  unworthy  of  consideration.  I do  not  trouble  you  with  a 
long  array  of  figures  in  this  communication,  but  they  are  at  your  ser- 
vice, if  desired.  A.  MOISTTGOMERY. 


New  York,  December  18,  1882. 

The  Committee  met  pursuant  to  adjournment,  at  the  Metropolitan 
Hotel,  New  York  city. 

Dr.  Samuel  Irenaeus  Prime  called  and  examined: 

By  Senator  Boyd  : 

il.  Wliere  do  you  reside? 

A.  In  this  city,  sir. 

Q.  What  is  your  occupation  ? 

A.  I am  editor  of  the  New  York  Observer, 
il.  What  is  the  character  of  that  publication.^ 

A.  It  is  a religious  and  secular  paper  — not  sectarian  nor  denomina- 
tional, but  with  a national  circulation  among  all  denominations  of 
Christians. 

C^.  You  are  also  a member  of  the  clerical  ])rofession  ? 


761 


A.  Yes,  sir;  I am  a Presbyterian  clergyman. 

Q.  How  long  have  you  been  editor  of  the  Observer  f 

A.  With  a very  brief  interval  when  I was  secretary  of  the  American 
Bible  Society  and  the  editor  of  another  newspaper,  I have  been  editor 
of  the  Observer  nearly  forty-three  years.  I have  been  the  editor  of 
a paper  forty-one  years  without  interruption. 

Rev.  Dr.  Samuel  Irenaeus  Prime,  editor  of  the  New  Y'ork  Observer, 
admitted  that  he  had  no  practical  knowledge  of  the  commercial  and 
speculative  interests  upon  which  he  had  been  summoned  by  the  com- 
mittee to  testify.  lie  had  his  views,  however,  which  he  read  to  the 
committee,  and  which  were  as  follows:  To  agree  to  deliver  in  the 
future  coal,  grain,  stock,  or  any  other  property  at  a certain  price,  at  a 
certain  time,  is  not  necessarily  wrong,  nor  to  buy  it  at  a certain 
price  when  so  delivered;  but  when  such  transactions  are  not  based  on 
supposed  knowledge  of  the  j^robable  supply  and  demand  of  the  article 
they  partake  of  the  nature  of  gambling.  Nothing  is  more  demoral- 
izing to  bushiess  and  ruinous  to  the  community  than  the  prevalence 
of  a spirit  of  gambling,  and  whatever  encourages  or  leads  to  it  ought 
to  bo  discountenanced,  and, if  possible,  prevented.  The  practice  called 
cornering  involves  the  idea  of  secretly  controlling  the  market  so  as  to 
compel  the  seller  to  pay  a higher  price  for  the  article  he 
has  agreed  to  deliver  than  the  normal  market  price.  This  is  taking 
advantage  of  a neighbor’s  necessities,  offends  the  divine  law  of  love, 
and  is  intrinsically  immoral.  Where  this  speculation  occurs  in  bread- 
stuffs  and  necessarily  enhances  the  price  of  provisions  it  oppresses  the 
poor,  and  thus  increases  the  evil.  The  principle  of  the  thing  and  the 
practice  are  then  both  wrong.  As  to  the  possibility  of  regulating  the 
trade  by  legislation,  or  so  defining  the  various  transactions  as  to  dis- 
criminate, by  law,  between  what  is  right  and  what  is  wrong,  I am 
unable  to  speak.” 

Q.  What  is  your  opinion  concerning  the  whole  system  of  making 
corners  and  dealing  in  futures  with  reference  to  its  effect  upon  com- 
merce and  its  influence  upon  the  public  welfare? 

A.  In  answer  to  that  question,  Mr.  Senator,  I would  say  that  in 
my  judgment  To  agreq^to  deliver  in  the  future  coal,  grain,  stock,  or 
any  other  property  at  a certain  price,  at  a certain  time,  is  not 
necessarily  wrong,  nor  to  buy  it  at  a certain  price  when  so  delivered  ; 
but  when  such  transactions  are  not  based  on  supposed  knowledge  of 
the  probable  supply  and  demand  of  the  article  they  partake  of  the 
nature  of  gambling.  Nothing  is  more  demoralizing  to  business  and 
ruinous  to  the  community  than  the  prevalence  of  a spirit  of  gambling, 
and  whatever  encourages  or  leads  to  it  ought  to  be  discon tenanced, 
and,  if  possible,  prevented.  The  practice  called  cornering  involves 
96 


1 


7G2 


the  idea  of  secretly  controlling  the  market  so  as  to  compel  the  seller 
to  pay  a higher  price  for  the  article  he  has  agreed  to  deliver  than  the 
normal  market  price.  This  is  taking  advantage  of  a neighbor’s  ne- 
cessities, offends  the  divine  law  of  love,  and  is  intrinsically  immoral. 
Where  this  speculation  occurs  in  bread-stuffs  and  necessarily  enhances 
the  price  of  provisions  it  oppresses  the  poor,  and  thus  increases  the 
evil.  The  principle  of  the  thing  and  the  practice  are  then  both  wrong. 
As  to  the  possibility  of  regulating  the  trade  by  legislation,  or  so  defin- 
ing the  various  transactions  as  to  discriminate,  bylaw,  between  what  is 
right  and  what  is  wrong,  I am  unable  to  sjieak.” 

Q.  Is  there,  in  your  opinion,  doctor,  any  moral  difference  between 
the  system  of  gambling  as  it  is  conducted  with  cards  faro  banks  or 
other  games  of  chance,  or  as  it  is  conducted  in  bread-stuffs,  stocks 
and  other  commodities  in  various  commercial  centers  ? 

A.  Well,  sir,  my  knowkedge  in  regard  to  the  manner  in  which  these 
transactions  are  conducted  is  so  limited  that  I would  not  venture  to 
answer  that  question.  The  first  description  of  gambling  t know  noth- 
ing about.  I never  played  a game  of  cards  or  any  thing  else  that  you 
speak  of.  I never  saw  any  of  these  transactions,  and  as  to  the  dealing 
in  bread-stuffs  and  the  like  of  that  I do  not  know  how  those  transac- 
tions are  conducted  sufficiently  to  answer  the  question,  and  the  reason 
of  my  putting  the  answer  to  the  question  which  was  indicated  in  the 
subpcena  which  I received  in  that  form  was,  in  order  that  I might  dis- 
criminate as  nearly  as  I could  in  relation  to  the  right  and  wrong  of 
the  thing. 

Q.  So  far  as  you  have  any  knowledge  of  the  existence  of  such  an 
evil  as  gambling  what  is  your  opinion  in  regard  to  it  ? 

A. Well,  sir, that  I think  in  treating  of  these  transactions  anything  that 
partakes  of  the  nature  of  gambling  is  demoralizing  and  disastrous, 
and  if  the  law  undertakes  to  legislate  in  regard  to  morals,  that  it 
ought  to  do  every  thing  in  its  power  to  discourage  these  things. 

Q.  Is  there  any  thing  further  you  would  like  to  offer  to  the  com- 
mittee upon  tliis  subject? 

A.  Nothing  at  all,  sir. 

(2.  What  is  your  opinion  concerning  traifsactions  wherein  sellers 
offer  for  sale  and  actually  do  sell  goods  of  which  they  are  not  pos- 
sessed ? 

A.  My  first  point  that  T made  was  with  reference  to  that.  I think 
it,  is  not  accurate  to  speak  of  that  as  selling;  it  is  an  agreement  to  sell. 
'I'liont  is  notliing  necessarily  wrong  for  a man  to  agree  to  deliver  goods 
that  lie  has  not  at  present  in  possession.  For  instance,  my  coal 
dealer  agrees  to  deliver  me  my  coal  in  the  autumn  at  a certain  price ; 
he  tak(5S  the  risk  of  the  market  iiriceat  that  time  and  I depend  on  him 


703 


to  do  so ; he  delivers  it  to  me  ; he  might  not  have  a ton  of  coal  in  his 
yard  at  the  time  when  he  made  the  agreement  to  deliver  it  to  me ; I 
hold  that  transaction  to  be  entirely  moral  and  justifiable;  I agree  to 
give  him  a price  but  it  may  be  that  the  price  at  that  time  would  be 
considerably  lower,  but  I am  held  to  my  agreement  to  pay  him  what  I 
agreed  to  do. 

Q.  Then  do  you  not  think  that  the  risk  assumed  by  one  of  the  con- 
tracting parties  in  such  a transaction  to  a certain  extent  a game  of 
chance  ? 

A.  Yes,  it  may  be  and  that  is  my  second  point  that  I make  precisely. 

Q,  Then  that  being  the  case  what  is  your  opinion  concerning  that 
aspect  of  it  ? 

A.  That  is  gambling;  as  I said  where  the  transaction  is  not  founded 
upon  a supposed  knowledge  of  the  supply  and  demand  it  partakes  of 
the  nature  of  gambling  and  is  of  course  immoral. 

Q.  Do  the  evil  influences  of  gambling  also,  so  far  as  you  are  aware, 
permeate  all  classes  of  society  ? 

A.  I do  not  know  what  class  of  society  it  does  not  permeate. 

Q.  And  the  results  of  such  transactions  are  injurious  to  all  classes 
of  the  community  ? 

A.  I think  so,  to  the  very  last  degree. 

Q.  Whether  these  transactions  be  in  bread-stuffs,  in  faro  banks,  in 
cards,  stocks  or  other  commodities  ? . • 

A.  It  makes  no  difference ; it  might  be  a fair  in  the  church. 

Q.  What  is  your  opinion  of  it,  taking  that  view  ? 

A.  I regard  them  as  immoral,  the  transactions  which  take  place  at 
church  fairs,  and  the  raffling  at  a patriotic  fair,  or  a pious  fair,  I re- 
gard as  wicked  ; they  are  unlawful  in  the  State  of  Yew  York. 

Q.  The  whole  system  of  such  transactions  is  entirely  wrong  in  your? 
opinion  ? 

A.  Radically  wrong. 

S.  0.  D.  Van  BoJcl-elin  recalled : 

By  Senator  Browning: 

Q.  Have  you  brought  with  you  to-day  the  charter  of  your  company? 

A.  Yes,  sir,  I have  sir,  (Producing  a paper.) 

Q.  I see  that  you  were  incorporated  under  the  general  laws  ? 

A.  Yes,  sir. 

Q.  On  the  22d  day  of  November,  1881? 

A.  That  paper  shows  the  date. 

Q.  And  have  you  been  in  business  since  that  date  ? 

A.  Yes,  sir. 

Q.  Now  will  you  explain  to  the  committee  how  you  do  business? 


764 


A.  We  receive  through  the  Western  Union  Telegraph  Company  the 
quotations  — 

Q.  How  do  you  receive  them  through  the  Western  Union  ? 

A.  By  the  ticker,  sir  ; they  transmit  to  us  by  their  Gold  and  Stock 
Telegraph  the  quotations  on  all  the  transactions  occurring  on  the  Board 
Trade  in  Chicago  — wheat,  corn,  oats,  pork,  lard  and  provisions  gener- 
ally — and  any  party  that  wishes  to  buy  from  us  or  sell  us  — 

Q.  Hold  on ; you  are  going  too  fast , when  the  quotations  come  in 
over  this  ticker,  do  you  mark  them  on  the  blackboard  ? 

A.  Yes,  sir,  with  the  hour. 

Q.  Every  hour  — as  often  as  there  is  a change  ? 

A.  Yes,  sir,  every  half  minute. 

Q.  As  often  as  there  is  a change  you  mark  the  difference  on  the 
blackboard  ? 

A.  Yes,  sir,  we  mark  it  on  the  blackboard;  then  if  anybody  wishes 
to  buy  from  me  or  sell  to  me  produce  at  the  quotation,  it  is  my  option 
to  make  a deal  with  him  or  not  as  I see  fit. 

Q.  In  what  lots  ? 

A.  In  lots  from  500  to  50,000  bushels  of  grain. 

Q.  And  what  margin  do  you  receive 

A.  We  receive  a cent  a bushel^ 

Q.  So  on  a lot  of  500  you  would  receive  five  dollars  ? 

A.^  Yes,  sir;  on  a lot  of  50,000,  $500. 

Q.  The  customer  makes  a contract  with  you  to  buy  corn  we  will  say, 
and  you  agree  to  sell ; the  transaction  is  closed ; now  what  further 
takes  place  ? 

A.  The  customer  makes  the  transaction  with  me  ; he  puts  up  his 
margin  and  it  is  his  privilege  to  keep  that  contract  good  as  long  as  he 
sees* fit  to  do  so  by  putting  up  further  margins;  whenever  he  ceases  to 
put  up  margins  then  the  contract  is  closed  if  the  article  goes  down  to 
his  point. 

Q.  Is  that  specified  in  the  contract  ? 

A.  Yes,  sir  ; if  he  comes  and  buys  an  article  of  me  or  sells  it  to  me, 
and  it  goes  in  his  favor,  it  is  his  privilege  to  take  from  me  one  cent  a 
bushel  or  twenty  cents  a bushel  profit  as  he  may  see  fit  ; at  any  time 
he  may  come  and  say  to  me,  ‘‘  here  is  the  10,000  bushels  of  corn 
1 bought  from  you  at  fifty  cents;’’  the  contract  shows  that; 
the  quotations  come  out  fifty-eight,  fifty-nine  or  sixty;  he  hands 
it  lo  me,  I close  it  at  sixty  and  pay  him  the  difference;  if  he  makes  a 
contracD  with  me  at  sixty  cents  and  the  market  goes  down  to  fifty-five, 
although  he  lias  got  money  with  me  that  will  carry  it  down  to  fifty,  if 
he  wants  to  close  it  at  fifty-five  I give  him  back  the  money  that  is 
there  ; the  balance  coming  to  him  it  is  his  privilege  to  close  at  any 


765 


quotation  ; he  may  make  a deal  with  me  at  three  o’clock,  and  if  he 
wants  to  close  the  transaction  at  two  minutes  past  three  I close  it 
whether  it  is  in  his  favor  or  against  him. 

Q.  What  time  does  your  Exchange  open  in  the  morning  ? 

A.  At  half-past  ten  ; as  soon  as  we  get  the  quotations  from  Chicago; 
they  open  at  half-past  nine  and  that  makes  it  half-past  ten  with  us  ; 
we  then  continue  the  business  until  about  two  o’clock  ; then  the  Chi- 
cago Board  of  Trade  take  a recess  from  one  to  two,  and  then  we  com- 
mence at  three  o’clock  again  and  keep  open  until  they  close  their  deal- 
ings there  ; they  close  at  three  or  four  with  us. 

Q.  What  is  the  average  amount  of  margin  put  up  in  your  ofiSce 
upon  contracts  ? 

A.  We  deal  in  larger  lots  of  produce  than  some  other  places  do  of 
the  same  nature  as  this,  and  our  class  of  customers  put  up  larger 
margins  than  they  do  elsewhere  ; we  take  nothing  less  than  a cent,  and 
from  that  they  put  up  two  to  five  cents  as  they  see  fit. 

Q.  What  would  be  the  average  ? 

A.  Well,  when  they  first  make  this  deal  — the  first  purchase  they 
would  make,  I suppose,  it  is  safe  to  say  that  the  average  would  be  two 
cents  ; a party  may  mark  it  up  to  five  or  ten  cents  if  it  goes  against 
them. 

Q.  Do  they  as  a rule  i 

A.  Yes,  sir ; I have  customers  that  had  their  corn  marked  up  to-day 
ten  cents  a bushel ; I have  had  them  mark  their  pork  up  as  much  as 
two  dollars  a barrel. 

a 

Q.  It  has  been  stated  by  a number  of  witnesses  that  it  is  a losing 
game  for  the  dealer ; what  is  your  experience  ? 

A.  My  experience  is  — at  least  my  own  opinion  is,  that  if  they  did 
not  make  they  would  all  stop  dealing. 

Q.  That  is  your  opinion  ? 

A.  The  Stock  Exchange  certainly  keeps  doing  work  and  we  are  not 
doing  business  for  fun  ourselves. 

Q.  I presume  not;  the  result  does  not  show  that  ? 

A.  No;  at  the  same  time,  sir  — 

Q.  I am  trying  to  get  at  how  the  customers  come  out;  do  you  find 
that  you  have  the  same  customers  day  after  day  — to-day,  to-morrow 
and  next  day  putting  up  their  margins  ? 

A.  Yes,  sir. 

Q.  And  they  win  and  lose  ? 

A.  Yes,  sir ; we  have  customers  that  have  been  dealing  in  that  place 
for  over  a year. 

1 


766 


Q.  And  do  you  think  they  come  out  about  even  in  the  end  or  do 
they  lose.? 

A.  I don’t  keep  any  account  of  the  way  they  come  out. 

Q.  I am  only  asking  for  your  opinion,  judging  by  observation  ? 

A.  Well,  I could  not  answer  as  regards  that ; I could  answer  what 
my  own  experience  has  been  in  deals  on  the  Stock  Exchange. 

Q.  What  has  your  experience  been  ? 

A.  It  has  been  that  I sometimes  had  $100,000  and  at  others  I had 
nothing;  it  has  its  ups  and  downs. 

Q.  1 have  no  doubt  of  it;  have  you  ever  heard  of  anyone  say  coming 
out  of  your  place,  I am  done  with  this  sort  of  business;  I have  tried 
it  enough  ? ” 

A.  No,  sir;  never. 

' Q.  Are  you  represented  on  the  floor  of  the  Produce  Exchange  ? 

A.  No,  sir  ; we  are  not. 

Q,  Have  no  connection  ? 

A.  Have  no  connection. 

Q.  What  class  of  people  deal  with  you  ? 

A.  Members  of  the  Produce  Exchange. 

Q.  Who  else  ? 

A.  Those  who  are  dealing  on  the  Stock  Board. 

Q.  Who  else  ^ 

A.  Those  who  are  dealing  in  grain  with  Mr.  Parks. 

Q.  Any  one  else  ? 

A.  Yes,  there  are  others ; I couldn’t  say. 

Q.  It  has  been  said  that  you  allow  minors  to  come  into  your  place 
and  bet ; is  that  true  ? 

A.  I refused  to  deal  for  minors,  sir. 

Q.  You  have? 

A.  Yes,  sir. 

Q.  They  have  come  in  ? 

A.  They  have  come  in. 

Q.  And  you  refused  to  do  it? 

A.  Yes,  sir  ; I will  not  deal  with  minors  knowingly. 

Q.  YYu  generally  try  to  judge  of  the  age  of  a person  and  when  you 
think  he  is  a minor  you  say,  “you  can’t  doibusiness  here  ?” 

A.  Yes,  sir  ; “you  cannot  do  business  here;”  I have  turned  them 
oil  invjiriahly. 

(.).  Why  have  yon  done  tlmt? 

A.  Ih'cause  I don’t  think  it  is  right  that  I should  deal  with  minors. 

Why  not? 

A.  For  myself  I believe  it  is  illegal  for  me  to  do  so  ; I believe  it  is  — 
I don’t  know. 


767 


Q.  Why  do  you  think  it  is  illegal  ? 

A.  I have  an  opinion  that  there  is  a law  against  it. 

Q.  Against  what  ? 

A.  Against  dealing  with  minors ; I know  there  is  a law  that  no 
contract  made  by  a minor  is  binding. 

Q.  Is  that  the  reason  yon  do  not  deal  with  them  ? 

A.  I don’t  deal  with  them. 

Q.  You  don’t  allow  them  to  deal  in  your  place  upon  the  principle 
that  you  would  not  want  your  own  son  to  go  into  such  a place  and 
deal ; is  that  it  ? 

A.  No,  sir. 

Q.  That  is  not  the  reason  ? 

A.  No,  sir. 

Q.  It  is  not  because  you  think  it  has  a demoralizing  effect  in  it  that 
an  older  man  can  withstand  ? 

A.  No,  sir. 

Q.  You  don’t  believe  then  that  there  is  a temptation  all  the  while 
urging  a young  man  on  to  recover  his  lost  fortune  and  to  risk  his  last 
dollar  ? 

A.  I do  not. 

Q.  What  is  the  amount  of  your  transactions  in  one  day? 

A.  That  depends  upon  the  aetivity  of  the  market. 

Q.  Take  any  one  day  ? 

A.  I suppose  our  transactions  to-day  have  probably  amounted  to 
some  500,000  bushels  of  grain. 

Q.  Can  you  give  us  any  thing  like  an  estimate — an  approximate  es- 
timate of  the  amount  of  money  that  has  passed  through  your  hands 
to  eover  those  transactions  to-day  ? 

A.  Well,  there  would  be  say  a cent  a bushel. 

Q.  Do  you  have  a commission  on  sales  also  ? 

A.  Yes,  sir. 

Q.  Then  the  quotations  coming  in  over  this  ticker  and  put  upon 
the  blackboard  govern  the  transactions  and  settle  all  the  transactions? 

A.  Entirely,  sir.  There  is  no  option  with  myself  at  all.  You  come 
to  me  and  ask  me  to  close  a deal  on  the  quotation  on  that  board  and 
if  it  is  on  time  it  closes  it. 

Q.  That  is  on  the  Chicago  quotation  ? 

A.  The  Chicago  quotation,  sir.  And  if  there  is  a quotation  put  on 
that  board  which  comes  across  the  ticker,  and  it  is  afterward  proved 
to  have  been  an  incorrect  quotation  I reinstate  or  refund  that  man. 

Q.  Your  business  is  a successful  business,  is  it  not  ? 

A.  I have  no  reason  to  find  fault. 

Q.  You  do  not  complain? 


768 


A.  I do  not  complain. 

Q.  How  many  other  houses  are  there  like  yours  in  New  York? 

A.  I do  not  think  there  is  another  like  ours  that  does  business  in 
the  large  lots  that  we  do.  There  are  two  others,  I think,  that  make 
small  deals. 

By  Senator  Boyd  : 

Q.  Who  are  the  incorporators  of  your  Exchange  ? 

A.  I can  merely  answer  that  from  this  paper. 

Q.  Well  refer  to  that  ? 

A.  (Producing  paper.)  There  is  our  license.  You  might  like  to  see 
it. 

Q.  What  is  your  cash  capital  ? 

A.  S25,000. 

Q.  Is  there  any  stock  in  the  market  ? 

A.  I don’t  know,  sir. 

Q.  What  are  the  names  of  the  incorporators  ? 

A.  John  E.  Barrow,  Jr.,  Washington  Barrow,  John  L.  Brown,  A. 
S.  Jones  and  Washington  Force. 

Q.  Where  do  these  gentlemen  reside  ? 

A.  I am  not  acquainted  with  Jones — I do  not  know  him — but  the 
Barrows,  one  resides  in  Jersey  and  one  in  New  York  city. 

Q.  Who  is  the  other  ? 

xV.  Two  reside  in  New  York  city — Brown  and  one  of  the  Barrows 
I think  this  other  Barrow  resides  in  Jersey. 

Q.  Where  do  the  others  reside  ? 

A.  I don’t  know  where  the  others  do. 

Q.  You  are  not  one  of  the  incorporators  ? 

A.  Not  one  of  the  incorporators. 

Q.  What  is  your  position  in  the  business  ? 

A.  I am  manager  of  the  Exchange  — of  the  business.  I have  con- 
trol of  making  the  trades  and  closing  them  and’  conducting  the  busi- 
ness. 

Q.  Are  tlie  incorporators  beneficiaries  of  the  business  ? Do  they 
derive  an  interest  from  the  proceeds  and  profits  ? 

A.  The  stockholders  derive  the  benefits  from  the  net  result  of  the 
business. 

Q.  Wlio  are  the  stockholders  ? 

A.  That  is  what  I cannot  tell  you.  Some  of  the  incorporators  are 
stockholders. 

Q.  How  many  stockholders  are  there  ? 

A.  I don’t  know. 

Q.  How  much  slock  have  you  issued  ? 


7G9 


A.  There  is  $25,000. 

Q.  That  is  all  there  is  in  the  market  ? 

A.  Yes,  sir,  that  is  all.  That  is  the  capital  stock. 

Q.  How  many  shares  does  that  represent? 

A.  250  shares. 

By  Senator  Boyd  : 

How  often  do  you  have  your  meeting  of  stockholders  ? 

A.  The  stockholders  have  a meeting  once  a year. 

Q.  And  there  is  a distribution  of  profits  only  once  a year  ? 

A.  I have  not  been  connected  with  it  long  enough  to  answer  that 
question. 

Q.  How  long  have  you  been  connected  with  it  ? 

A.  Since  last  August. 

Q.  When  was  it  incorporated  ? 

A.  In  November,  1881. 

Q.  Who  was  the  manager  previous  to  your  coming  into  the  con- 
cern ? 

A.  Mr.  Force. 

Q.  Where  is  Mr.  Force  now  ? 

A.  I doiTt  know,  sir. 

Q.  Please  describe  to  the  committee  in  detail  how  your  individual 
transactions  are  carried  on  from  the  time  a customer  enters  your  place 
until  he  goes  away  ? 

A.  A customer  may  come  in  and  go  out  and  do  nothing. 

Q.  He  is  not  a customer  if  he  does  nothing  ? 

A.  Well,  I suppose  you  would  like  just  to  see  the  blanks. 

Q.  Yes,  just  describe  in  detail  just  how  the  whole  thing  is  done  ? 

• A.  If  a customer  came  into  my  place  and  wished  to  buy  1,000 
bushels  of  wheat  he  would  fillup  that  blank.  (Producing  blank.) 

Q.  Please  read  the  blank  ? 

A.  It  has  a heading  here  “ Public  Produce  Exchange,  No.  blank. 
That  number  I fill  up  with  the  number  of  the  transaction  for  my  own 
reference.  I hereby  buy  from  you  wheat  (as  the  order  may  be  given 
below)  and  agree  that  if  I do  not,  without  notice,  keep  good  my 
margin  below  market  price,  as  per  quotations  posted  from  time  to 
time  on  the  blackboard  in  said  Exchange,  you  may,  without  notice, 
buy  the  wheat  for  my  account,  or  cancel  the  contract  at  any  time.  If 
my  margin  shall  at  any  time  be  entirely  exhausted,  the  contract  shall 
thenceforth  be  inoperative  and  void.  I authorize  the  proper  filling  of 
any  blanks  below  which  I may  neglect,  and  the  correction  of  any 
errors  in  price  or  time  named  in  this  order.”  That  is  the  caption. 

97 


770 


Now  comes  ^‘Nevv  York,  blank  date,  188  . According  to  above  condi- 
tions, I buy  blank  bushels  No.  "Z  spring  wheat,  at  blank  price  per 
bushel,  commissions  to  be  added  to  said  price,  for  delivery  in  blank 
month  next.”  Then  down  here  is  the  margin  that  the  man  puts  up 
and  the  time  the  contract  is  made.  Here  (indicating)  is  where  he 
signs  it.  He  hands  that  to  me  and  1 accept  the  deal  if  I see  tit  to  do 
so. 

By  Senator  Bro wiping  : 

Q.  That  is  optional  with  you  ? 

A.  Yes,  sir,  that  is  optional  with  me.  Then  I give  him  this  (pro- 
ducing another  blank)  Public  Produce  Exchange,  No.  blank.  This 
number  corresponds  with  the  contract.  sell  to  blank  so  many 

bushels  of  wheat  at  blank  price  per  bushel  for  delivery  in  blank 
month.”  Down  here  (indicating)  shows  the  margin  — shows  how  far 
that  article  is  marked  up  or  down  in  price.  That  he  takes  ; he  has 
that  in  his  possession.  At  any  time  that  he  wishes  to  close  up  he 
comes  to  me  and  I am  bound  to  close  at  the  quotation  from  the  mar- 
ket at  that  time.  There  is  no  option  with  me  as  regards  closing. 

Q.  You  are  bound  to  close  at  the  time  he  comes  and  requests  you 
to  ? 

A.  Yes,  sir,  at  the  last  quotation  on  the  board. 

Q.  Do  you  have  day  margins  ; that  is,  to  settle  on  the  closing  quo- 
tation ? 

A.  No,  sir.  That  is,  suppose  we  sell,  we  do  it  on  the  understanding 
that  we  will  deliver  to  them  in  Chicago  the  article  itself,  if  they  wish 
it,orif  they  wished  to  deliver  it  to  us,  we  will  take  it  by  their  giving  us 
due  notice.  We  are  prepared  to  receive  or  deliver  the  property. 

Q.  Is  your  place  sometimes  called  a bucket-shop  ? 

A.  I presume  it  is,  sir.  That  seems  to  be  the  appellation. 

Q.  Let  me  ask  you  if  you  have  ever  delivered  grain  ? 

A.  We  never  have  been  called  upon  to  deliver  it. 

By  Senator  Boyd  : 

().  You  have  never  delivered  any  ? 

A.  I have  never  been  called  upon  to  deliver  any.  If  a customer 
makes  a deal  with  us  for  October  wheat  we  will  say,  and  he  don’t  ^ 
coitie  in  and  close  the  deal  during  the  month  of  October  himself,  it  is 
closed  l)y  us  at  the  closing.quotation  in  Chicago  of  the  day. 

By  Senator  IBiowning  : 

(2.  Oo  you  ever  have  grain  delivered  to  you  f 

A.  No,  sir,  not  to  my  knowledge. 

Q.  Do  you  deal  in  stocks  also  ? 


771 


A.  No,  sir. 

Q.  Only  grain  ? 

A.  Only  grain  — grain  and  produce — provisions. 

Q.  What  quantity  do  you  sell  on  an  average  during  the  day  ? 

A.  Well,  we  will  sell  from  100,000  to  half  a million  bushels. 

Q.  In  a day  ? 

A.  Yes,  sir,  in  a day. 

Q.  On  an  average  ? 

A.  Yes,  sir. 

Q.  And  receive  a commission  on  each  sale  ? 

A.  Yes,  sir. 

Q.  How  much  is  your  commission  ? 

A.  Our  commission  is  an  eighth  of  a cent  a bushel  for  making  the 
deal  and  for  closing  it.  It  is  a quarter  of  a cent  for  buying  and  sell- 
ing. 

Q.  How  much  money  have  you  paid  out  in  profits  to  customers  dur- 
ing the  present  day  ? 

A.  I could  not  tell  you,  as  my  business  of  the  day  was  not  closed 
when  I left  there. 

Q.  Until  the  time  you  left  how  much  do  you  suppose? 

A.  At  the  time  I left  I should  j udge  I have  paid  out  about  $1,000. 

Q.  Up  to  the  time  you  left  how  much  money  did  you  take  in  on 
transactions  ? 

A.  I could  not  tell  you. 

Q.  Can  you  give  an  approximate  idea  ? 

A.  I have  got  no  idea. 

Q.  How  many  customers  did  you  do  business  with  during  the  day  ? 

A.  During  the  day,  up  to  the  time  of  my  leaving,  I had  made  some 
seventy-five  contracts. 

Q.  With  margins  ranging  from  what  ? 

A.  From  one  to  two  cents  a bushel,  and  from  twenty-five  to  fifty 
cents  a barrel  on  pork,  and  fifty  cents  a tierce  on  lard. 

Q.  How  many  contracts  do  you  make  on  an  average  daily  through- 
out the  year  ? 

A.  I should  say  seventy-five  to  one  hundred. 

Q.  Give  an  average  of  the  amounts  of  margins  on  these  contracts 
throughout  the  year  daily? 

A.  Well,  I should  say  from  $1,000  to  $1,500. 

Q.  You  take  that  amount  of  money  in  — margins  paid  in  ? 

A.  Yes. 

Q.  How  often  has  the  Chicago  market  fluctuated  to-day  ? 

A.  On  the  article  of  the  year  corn,  from  half-past  nine  till  one 
o’clock,  I should  think  we  received  at  least  one  hundred  fluctua-^ 
tions  in  the  market  prices. 


772 


Q.  Then  persons  doing  business  subject  themselves  to  the  chance  of 
all  these  fluctuations  ? 

A.  Yes,  sir. 

By  Senator  BROWitiN-G : 

Q.  They  are  not  subject  to  all  the  fluctuations  ? 

A.  They  are  subject  to  the  fluctuations  made  after  they  had  made  the 
deal. 

Q.  The  first  change  may  knock  them  out,  may  it  not  ? 

A.  Oh,  no;  these  fluctuations  are  an  eighth  of  a cent  a bushel;  when 
I speak  of  fluctuations  for  instance  here  is  year  corn  opening  at  48^, 
it  goes  up  to  49,  and  it  comes  back  to  48f,  and  probably  just  in  that 
little  distance  there  is  twenty -five  quotations. 

By  Senator  Boyd  : 

Q.  Are  your  commissions  taken  out  of  the  margins  that  are  put  up  ? 
A.  Unless  the  party  wishes  to  put  up  the  commissions  extra. 

Q.  When  they  are  taken  out  of  the  margin  how  do  you  reckon  or 
calculate  it  ? 

A.  If  year  corn  was  60  cents  in  Chicago  and  the  party  bought  it 
from  me  on  that  quotation  I would  charge  him  60 J cents  for  it  ; he 
puts  up  one  cent  a bushel  as  margin  and  corn  has  to  go  down  to  59^ 
before  his  margin  is  exhausted. 

Q.  Then  when  it  does  go  down  to  59^  he  is  lost  ? 

A.  He  is  lost ; but  it  is  his  option  to  come  there  and  re-margin  at 
any  time  he  sees  fit  prior  to  its  getting  to  that  point. 

Q.  But  supposing  that  he  does  not  re-margin  ? 

A.  Then  he  is  wiped  out. 

By  Senator  Browning  : 

Q.  When  he  re-margins  what  amount  is  he  obliged  to  deposit  ? 

A.  Half  a cent  a bushel  to  re-margin. 

By  Senator  Boyd  : 

Q.  Every  time  there  is  a decline  in  price  he  is  compelled  to  re- 
margin in  order  to  keep  his  contract  good,  isn’t  he  ? 

A.  Not  every  time ; and  every  time  he  is  likely  to  be  lost. 

Q.  And  supposing  in  the  end  he  loses,  who  gets  the  benefit  of  all 
that  money  lhat  he  has  put  up  ? 

A.  4Mie  Exchange. 

By  Senator  Browning  : 

Q.  TMie  Exchange  backs  its  own  transactions  ? 


773 


A.  Yes,  sir. 

By  Senator  Boyd  : 

Q.  Then  how  much  money  does  the  Exchange  take  in  daily  on  an 
average  from  such  losing  transactions  ? 

A.  We  may  take  in  $100  to-day  and  may  take  in  $500  to-morrow  or 
$1,000,  and  that  same  day  we  may  put  out  $100  of  losses  ourselves, 
or  $1,500  losses  to  those  who  are  on  the  opposite  side  of  the  market. 

Q.  What  proportion  do  the  losses  to  yourself  bear  to  the  gains  of 
yourself? 

A.  We  have  got  to  w^ait  until  the  end  of  the  year  to  tell  you  that. 
Q.  What  proportion  on  an  average  daily  ? 

A.  Some  days  we  come  out  ahead  largely,  other  days  we  will  come 
out  on  the  losing  side  largely;  I have  paid  out  profits  of  say  $1,000 
and  have  paid  out  losses  of  $1,015,  thereby  showing  I had  lost  $15 
on  the  day’s  business. 

By  Senator  Brownin’G  : 

Q.  Have  you  or  your  representatives  ever  attempted  directly  or 
indirectly  to  bear  the  market  or  bull  it  ? 

A.  We  deal  in  no  way  in  the  market  ourselves ; no,  sir. 

By  Senator  Boyd  : 

Q.  What  amounts  do  you  accept  as  deposits  on  margins  from  cus- 
tomers from  the  lowest  to  the  highest ; give  us  an  estimate  ? 

A.  Well,  we  will  accept  a cent  a bushel  on  grain. 

Q.  On  what  quantity  — how  small  a quantity? 

A.  Well,  I stated  before  that  we  dealt  in  from  500  to  50,000  bushels. 
Q.  Five  hundred  is  the  lowest  ? 

A,  Five  hundred  is  the  lowest,  and  50,000  is  the  highest,  or  20  bar- 
rels of  pork  to  500  barrels  of  pork  ; that  is  in  one  deal. 

Q.  How  do  you  obtain  your  quotations  from  Chicago  ? 

A.  By  the  Gold  and  Stock  Telegraph. 

Q.  Have^mu  correspondents  in  Chicago  ? 

A.  Well,  yes. 

Q.  Who  sends  you  the  information  in  relation  to  the  quotations? 

A.  We  get  no  information  ; the  Western  Union  wire. 

Q.  You  don’t  telegraph  yourself  ? 

A. , No,  sir. 

By  Senator  Browning  : 

Q.  This  is  the  indicator  ? 

A.  This  is  the  indicator  ; w^e  trade  on  the  Western  Union  Telegraph. 


774 


Q.  Have  yon  had  that  in  your  place  since  you  first  started  ? J 

A.  Yes,  sir.  B 

Q.  Has  there  been  any  attem})t  to  take  it  away  from  you  ? ^ 

A.  Xone  whatever  ; if  they  send  us  over  a quotation  which  looks  to  m 
be  wrong  I send  up  and  they  will  inquire  if  it  is  an  error,  and  they  I 
will  correct  it.  . | 

Q.  How  often  will  that  occur  ? J 

A.  That  may  occur  sometimes  twice  a day  or  may  occur  a dozen  f 
times  a day. 

Q.  Then  you  hold  the  transaction  good  until  you  have  got  a defi- 
nite answer  ? ' 

A.  Yes,  sir. 

Q.  You  doiTt  settle  until  you  ascertain  ? 

A.  Yo,  sir  ; I will  take  their  contracts  with  the  understanding 
that  they  are  settled  if  this  is  correct.  Many  a man  has  been  wiped 
out  by  an  incorrect  quotation. 

By  Senator  Boyd  : 

Q.  Then  you  make  no  pretense  at  all  of  selling  grain  for  delivery  ? 

A.  They  understand  they  can  have  the  grain  delivered  to  them  if 
they  wish  it. 

Q.  But  at  the  time  you  make  those  transactions  you  have  not  the 
grain  in  your  possession  ? 

A.  Xo,  I am  like  Mr.  Prime’s  coal-dealer. 

By  Senator  Brownijtg  : 

Q.  How  is  that  ? 

A.  Well,  he  seemed  to  think  that  his  coal-man  might  sell  him  coal 
and  not  have  it  to  put  into  the  cellar. 

By  Senator  Boyd  : 

Q.  You  enter  into  these  transactions,  without  having  the  grain  to  sell? 

A.  Yes,  sir. 

Q.  And  you  have  no  brokers  in  Chicago  with  whom  you  carry  on 
business,  have  you  ? ^ 

A.  Xo,  sir. 

Q.  Supposing  a man  insisted  on  the  delivery,  how  could  you 
lill  the  contract — what  means  have  you  of  filling  it  ? 

Q.  We  would  authorize  our  agents  in  Chicago  to  deliver. 

Q.  Yon  have  agents  in  Chicago  ? 

A.  Yes,  sir. 

(,>.  Who  are  those  agents  ? 

A.  Well,  wc  have  agents,  sir;  plenty  of  brokers  there  ; people  on  the 
fioor.  Seymour,  Hunt  & Co.  we  do  business  with,  in  Chicago. 


775 


Q.  You  haven’t  any  special  agent  thereto  transact  business  there  for 
you? 

A.  No,  sir. 

Q.  And  I presume  you  will  admit  that  the  transactions  carried  on 
in  your  Exchange  are  purely  speculative,  depending  upon  the  condi- 
tion of  the  Chicago  market,  as  you  obtain  information  through  the 
Western  Union  Telegraph  Company? 

A.  They  are  no  more  speculative  than  all  transactions  in  merchan- 
dise or  any  other  commodity  ; I deem  all  transactions  in  trades  peculative. 
Q.  Then  your  transactions  are  purely  speculative  ? 

A.  Not  purely  speculative  any  more  than  any  other  transactions  in 
merchandise. 

Q.  Are  they  impurely  speculative? 

A.  I don’t  think  they  are  impure;  no,  sir. 

Q.  About  what  number  of  persons  visit  your  Exchange,  in  a day,  on 
an  average  ? 

A.  I should  say  100  — 150. 

Q.  Persons  of  all  ages,  I suppose  ? 

A,  Yes,  sir. 

Q.  And  all  conditions  in  life  — females  ? 

A.  No,  sir ; we  do  not  have  any  female. 

Q.  Had  your  Exchange  any  losses  in  to-day’s  transactions  ? 

A.  We  had,  sir. 

Q.  Had  your  customers  losses,  also  ? 

A.  They  had,  sir. 

Q.  What  proportion  did  the  losses  sustained  by  your  customers  bear 
to  the  losses  sustained  by  yourself  ? 

A.  I think  we  will  come  out  behind  to-day. 

By  Senator  Bkowkixg  : 

Q.  Mr.  Van  Bokkelin,  you  keep  an  account  with  some  bank  I sup- 
pose ? 

A.  We  do,  sir. 

Q.  Do  you  know  the  balance  to  your  credit  in  the  bank  now  ? 

A.  I do  not,  sir. 

Q.  Have  you  ever  made  a dividend  to  the  shareholders  since  the 
company  was  organized  ? 

A.  Not  since  I have  been  there. 

Q.  Was  there  one  declared  before  you  went  there  ? 

A.  I have  no  knowledge  of  the  prior  business. 

By  Senator  Boyd  : 

Q.  How  often  do  your  stockholders  meet  do  you  say  ? 

A.  Once  a year. 


776 


Q.  You  have  not  attended  any  of  their  meetings  ? 

A No,  sir  ; our  annual  meeting  is  in  January. 

Q.  Has  the  next  meeting  of  your  stockholders  been  called  yet  ? 

A.  It  has  not,  sir. 

• Q.  Where  is  your  place  of  business  situated  ? 

A.  63  Broadway. 

Q.  Where  do  your  stockholders  meet  when  they  assemble  annually  ? 
A.  I have  no  idea. 

Q.  Does  the  Exchange  keep  a bank  account  ? 

A.  We  keep  a bank  account,  yes,  sir. 

Q.  In  what  bank  ? 

A.  It  is  kept  with  Donald,  Lawson  & Simpson,  102  Broadway, 

Q.  Are  your  gains  for  the  day  usually  deposited  in  that  bank,  daily  ? 
A.  No,  sir. 

Q.  How  frequently  do  youmiake  deposits  ? 

A.  Very  seldom. 

Q.  Where"does  Mr.  Washington  Barrow  reside  in  New  York  — what 
street  and  number  ? 

A.  His  place  of  business  is  66  Broadway. 

Q.  What  business  is  he  in  ? 

A.  He  is  engaged  in  the  stock  business  — Barrow,  Young  & Com- 
pany. 

Q.  There  is  another  who  resides  in  the  city  ? 

A.  The  other  is  Mr.  Brown,  I don’t  know  where  he  resides. 

Q.  Do  you  know  where  he  does  business  ? 

A.  No,  I do  not;  I have  seen  him  in  the  office  of  Barrow,  Young  & 
Company. 

Q.  Do  you  know  where  any  of  the  stockholders  reside  ? 

A.  I do  not,  sir,  excepting  Barrow;  Barrow  is  a stockholder. 

Q.  Could  you  furnish  this  committee  with  a list  of  your  stock- 
holders ? 

A.  I could,  sir. 

Q.  Can  you  do  it  to-morrow? 

A.  Yes,  sir;  no,  I would  not  say  to-morrow,  because  the  gentleman 
who  will  iprobaby  give  me  the  information  is  out  of  town. 

Q.  When  could  you  do  it? 

A.  1 could  certainly  do  it  by  Thursday  ; I might  do  it  by  Wednesday, 
I’y  Senator  Browning  : 

(,1.  Arc  any  of  the  incorporators  members  of  the  Produce  Exchange  ? 
A.  I don’t  know  some  of  the  incorporators  and  so  I cannot  answer. 

By  Senator  B()Y1>  : 

(^.  How  many  persons  do  you  employ  in  your  office  ? 


777 


A.  Well,  eight. 

Q.  What  are  the  respective  duties  of  those  persons  ? 

A.  Book-keeper,  cashier,  assistant  book-keeper,  boys  to  co])y  quota- 
tions, regular  quotations,  a man  to  call  off  the  quotations,  a man  to 
mark  them  down. 

Q.  Do  your  books  show  a detailed  and  correct  account  of  your 
transactions  daily? 

A.  Our  sheets  do,  yes,  sir. 

Q.  You  do  not  keep  any  correct  account  of  all  your  transactions,  do 
you? 

• A.  Yes,  sir;  we  keep  them  on  sheets  instead  of  in  books  and  those 
sheets  are  filed  away  as  books  you  may  say. 

Q.  Yow,  Mr.  Van  Bokkelin,  this  committee  would  like  you  to  tell 
if  you  know  what  persons  are  the  beneficiaries  of  your  Exchange  ; 
among  whom  are  the  profits  divided  ? . 

A.  How  do  you  mean  — the  class  of  people? 

Q.  How  many  persons  are  there? 

A.  You  mean  in  the  course  of  a year  or  the  course  of  a month? 

Q.  I mean  the  members  of  your  business  — the  persons  who  reap 
the  benefit  of  this  Exchange? 

A.  I suppose  there  are  500  in  the  course  of  a month. 

Q.  You  refer  to  the  customers? 

A.  Yes. 

Q.  I mean  the  proprietors  or  persons  who  control  and  manage  and 
derive  the  profits  of  the  business  ? 

A.  That  depends  upon  how  many  stockholders  there  are. 

Q.  Can  you  tell  how  many  there  are  ? 

A.  No,  sir. 

Q.  Are  there  five  ? 

A.  I don’t  know  whether  there  are  five  or  fifteen. 

Q.  Are  there  more  than  fifteen  ? 

A.  I don’t  know  how  many  there  are. 

By  Senator  Browning  : 

Q.  When  were  you  elected  ? 

A.  About  the  middle  of  August,  sir. 

Q.  Last  August  ? 

A.  Yes,  sir. 

Q.  At  a meeting  of  the  managers  or  incorporators  ? 

A.  I was  put  in  charge  by  one  of  the  directors  of  the  company. 

<3.  By  the  directors  ? 

A.  Yes,  sir. 

Q.  How  many  were  present  at  that  meeting,  if  you  know  ? 

98 


A.  I was  put  in  charge  by  one  of  the  directors. 

Q.  He  came  and  told  you  that  you  had  been  selected  as  manager  ; 
that  you  was  to  take  that  place  ? 

A.  He  asked  me  if  I felt  competent  to  take  charge  of  the  place.  I 
told  him  I did  ; he  said  he  wished  I would  do  so. 

Q.  And  you  took  the  place  ? 

A.  Yes,  sir. 

Q.  And  you  hold  it  to-day  ? 

A.  Yes,  sir. 

Q.  How  many  others  beside  that  gentleman  connected  with  the 
Exchange  have  you  ever  met  ? 

A.  I have  met  four  of  the  incorporators. 

Q.  You  have  met  four  of  the  incorporators  ? 

A.  Yes,  sir. 

Q.  Unofficially? 

A.  Yes,  sir. 

Q.  That  is  all  you  have  ever  met  ? 

A.  I may  have  met  more. 

Q.  If  the  committee  should  call  upon  you  to  produce  the  sheets 
that  show  the  amount  of  the  transactions,  are  you  able  to  do  it  ? 

A.  I am,  sir.  I have  got  nothing  that  I am  afraid  to  show.  You 
are  welcome  to  see  every  paper  and  ask  every  man  that  I have  dealt 
with  since  I have  been  there.  If  you  can  find  a place  in  the  city  of 
Yew  York  where  you  can  go  and  get  a fairer  and  squarer  deal,  you 
have  got  to  look  for  it. 

By  Senator  Boyd  : 

Q.  How  many  such  places  are  there  in  the  city  of  New  York  ? 

A.  I said  before  I did  not  know  of  another  one  that  dealt  in  as 
large  lots  as  we  do. 

Q,  I mean  similar  ? 

A.  There  are  two  other  houses  that  deal  in  small  lots  I believe. 

Q.  Only  two  others  ? 

A.  To  my  knowledge.  I have  not  bothered  myself  to  look  around; 
I attend  to  my  own  business. 

By  Senator  Browning  : 

Q.  You  do  not  interfere  with  other  people  ? 

A.  No,  sir. 

By  Senator  Boyd  ; 

Wlio  was  tlie  gentleman  you  had  the  conversation  with,  with  re- 
gard to  entering  into  the  employ  of  the  proprietors  of  the  Exchange? 


779 


A.  Mr.  J.  E.  Barrow. 

Q.  This  gentleman  who  does  business  at  66  Broadway  ? 

A.  No,  sir,  G.  W.  does  business  at  66. 

Q.  Where  does  J.  E.  Barrow  live  ? 

A.  He  has  no  regular  home.  He  is  in  Washington  city  at  the  pres- 
ent time. 

Q.  What  is  his  business  ? 

A.  He  has  retired,  sir. 

Q.  Not  in  any  business  ? 

A.  Not  in  any  business. 

By  Senator  Brownii^g  : 

Q.  He  has  not  retired  on  the  profits  out  of  this  institution,  has  he  ? 
A.  I think  he  retired  long  before  he  had  any  stock  in  this  institu- 
tion. He  is  a man  of  large  means. 

By  Senator  Boyd  : 

Q.  What  interest  have  you  in  the  proceeds  of  this  business  ? 

A.  A salaried  interest,  sir.  ’ 

Q.  That  is  all  ? 

A.  That  is  all,  sir. 

Q.  What  is  your  salary  annually  ? 

A.  Well,  is  it  important  that  I should  state  that  fact? 

Q.  I would  like  to  have  you.  We  want  to  find  out  how  profitable 
this  business  is  and  what  salary  it  can  afford  to  pay  ? 

A.  My  salary  is  so  small  that  I am  a little  ashamed  to  name  it. 

Q.  Then  you  do  not , run  this  business  on  your  own  account,  do 
you  ? 

A.  I have  no  interest  whatever  in  the  gains  and  losses  excepting  so 
far  as  making  it  successful  and  that  it  may  redound  to  my  credit  here^ 
after. 

By  Senator  BROWNii^G: 

Q.  As  a business  man  ? ^ 

A.  As  a business  man. 

By  Senator  Boyd  : 

Q.  In  case  there  were  heavy  losses  sustained  by  the  Exchange,  who 
would  supply  the  money  to  pay  those  losses  ? 

A.  It  would  come  from  the  capital,  sir. 

Q.  That  is,  the  capital  stock  ? 

A.  Yes,  sir. 

Q.  Of  825,000? 


780 


A.  Yes,  sir. 

Q.  Where  you  have  such  large  transactious  of  course  if  your  losses 
were  continued  for  some  time  the  $25,000  would  soon  run  out.  Who 
would  supply  the  deficiency  ? 

A.  We  are  doing  business  under  a charter  as  a stock  company  and 
I suppose  the  only  thing  would  be  that  the  stockholders  — I believe 
there  is  a law  of  that  kind  — 

.By  Senator  Brownin^g: 

Q.  Have  you  ever  touched  the  capital  yet  ? 

A.  No,  sir,  it  is  in  tact. 

Q.  You  have  never  been  compelled  to  draw  on  it  ? 

A.  Never,  sir. 

Q.  You  do  not  expect  to  be,  I suppose  ? 

A.  No. 

By  Senator  Boyd  : 

Q.  How  much  has  been  added  to  the  capital  stock  since  the  busi- 
ness was  started  ? 

A.  I don’t  know. 

Q.  How  many  dividends  have  been  declared  since  the  business  was 
started  ? 

A.  None,  since  I have  been  there. 

Q.  I mean  since  business  was  started  ? 

A.  I have  no  knowledge  of  that  prior  business. 

Q.  Wliat  amount  have  you  deposited  at  the  bank  where  you  do  busi- 
ness at  the  present  time  ? 

A.  Our  cash  — I keep  that  in  my  own  safe,  as  our  business  transac- 
tions close  after  bank  hours  and  I am  obliged  to  have  the  money  to 
pay  to  customers  if  they  come  in  and  ask  for  it. 

By  Senator  Browning  : 

Q.  Do  you  have  a watchman  down  there  to  look  after  it  ? 

A.  1 don’t  leave  it  in  that  place.  I have  a vault,  I leave  it  in  a 
vault.  You  can  see  readily  that  I cannot  tell  at  two  o’clock  whether  I 
urn  going  to  pay  out  one,  two  or  three  hundred  dollars. 

PORK. 

Puiujc  I’roduce  Exchange,  Limited.  No. 

1 hereby  sell  yon  poi’k  (as  the  order  may  be  given  below),  and 

agrees  that  if  I do  not,  without  notice,  keej)  good  my  margin  below 
rriarkel  price,  as  per  (|Uot;iti()ns  posted  from  time  to  time  on  the  black- 
Iroanl  in  said  Mxchange,  yon  may,  without  notice,  sell  tlie  pork,  for  my 
lutconnt.  or  cancel  the  con  tract  at  any  time.  If  my  margin  shall  at  any 
time  he  eniii’cly  exhausted,  the  contract  shall  thenceforth  be  iiiopera- 


781 


V 


live  aud  void.  I authorize  the  proper  filling  of  any  blanks  below 
which  I may  neglect^  and  the  correction  of  any  errors  in  price  or  time 
named  in  this  order. 

New  York,  188  - 

According  to  the  above  conditions,  I sell  barrels  of  mess  pork, 
at  per  barrel,  commissions  to  be  added  to  said  price,  for  de- 
livery in  next. 

Margin,  $ 

Time, 

Public  Produce  Exchange,  Limited.  No. 


New  York,  188  . 

I buy  of  bbls.  mess  pork,  at,  per  barrel,  for  delivery  in 
next. 


Makgin.  Exhausts. 

Public  Produce  Exchange,  Limited, 

S.  D.  C.  VxiN  BOKKELEN, 

Managing  Director. 


Close  this  at 


WHEAT. 

Public  Produce  Exchange,  Limited.  No. 

I hereby  buy  from  you  wheat  (as  the  order  may  be  given  be- 
low), and  agree  that  if  I do  not,  without  notice,  keep  good  my  margin 
low  market  price,  as  per  quotations  posted  from  time  to  time  on  the 
blackboard  in  said  Exchange,  you  may,  without  notice,  buy  the  wheat 
for  my  account,  or  cancel  the  contract  at  any  time.  If  my  margin 
shall  at  any  time  be  entirely  exhausted,  the  contract  shall  thenceforth 
be  inoperative  and  void.  I authorize  the  proper  filling  of  any  blanks 
below  which  I may  neglect,  and  the  correction  of  any  errors  in  price 
or  time  named  in  this  order. 

New  York,  188 

According  to  above  conditions,  I buy  bushels  No.  2 

spring  wheat,  at  per  bushel,  commissions  to  be  added  to  said 

price  in  delivery  in  next. 

Margin,  $ 

Time, 

Public  Produce  Exchange,  Limited.  No. 


New  York,  188  . 


I sell  to  bushels  wheat,  at  per  bushel,  for  delivery  in 

next. 


Margin.  Exhausts. 

Public  Produce  Exchange,  Limited. 
S.  H.  0.  VAN  BOKKELEN, 

Managing  Director. 


Close  this  at 


782 


J.  R.  Keene,  being  duly  sworn,  was  then  interrogated,  and  testified 
as  follows  : 

By  Senator  Boyd  : 

Q.  What  is  your  name  ? 

A.  J.  E.  Keene. 

Q.  Where  do  you  reside  ? 

A.  In  the  city  of  New  York. 

Q.  What  is  your  business  ? 

A.  Speculating,  I suppose. 

Q.  How  long  have  you  been  in  that  business  ? 

A.  I should  think  for  twenty  years. 

Q.  In  what  cities  have  you  been  chiefly  engaged  ? 

A.  The  city  of  Snn  Francisco  and  the  city  of  New  York. 

Q.  What  is  your  opinion  concerning  the  whole  system  of  making 
corners  and  dealing  in  futures  with  reference  to  its  effect  upon  com- 
merce and  its  influence  upon  the  public  welfare? 

A.  Well,  it  is  very  diflicult  to  answer  a question  so  broadly  put  as 
that,  but  if  you  will  precisely  state  the  question  1 will  give  you  a pre- 
cise answer  to  it. 

Q.  That  is  the  reason  why  I have  put  that  question  — because  it 
expresses  the  purpose  for  which  this  committee  was  appointed  ? 

A.  Yes,  I understand,  sir  ; but  you  want  to  know  my  opinion  — 

Q.  And  your  knowledge  with  reference  to  the  effect  of  corners  upon 
the  public  welfare  and  upon  the  business  of  the  country  ? 

A.  Well,  I have  never  known  a corner  that  ever  worked  any  injury  to 
the  business  of  the  people  of  the  country  since  I have  been  in  New  York, 
excepting  one,  because  all  the  corners  we  have  had  in  commodities  have 
been  in  bread-stuffs  and  they  have  lasted  so  short  a length  of  time  that 
their  influence,  so  far  as  raising  the  price  of  the  necessaries  of  life,  has 
never  worked  any  injury  whatever.  Had  they  been  protracted  over 
veiy  many  months  they  might  possibly  have  worked  considerable  in- 
jury to  the  consumer ; but  on  the  contrary,  the  agricultural  interest 
has  been  very  much  benefited  by  the  advanced  prices  those  corners 
have  occasioned,  and  as  we  are  an  agricultural  country,  and  the  basis 
of  our  p)-()sperity  is  agricult;ure,  I think  any  interference  with  any  rules 
of  (loijig  business  would  be  very  unfortunate.  I don’t  mean  at  all  to 
advn(;ai(‘  th(*  cornering  of  any  thing,  because  I think  it  is  a foolish 
thing  and  always  redounds  to  the  disadvantage  of  the  promoter,  but  at 
tin  KaiiM*  lime  I have  never  seen  but  one  corner  that  has  ever  worked 
any  jmblio  injury  in  Ibis  country. 

. What  corner  was  that? 


/ 


783 


A.  That  IS  the  corner  that  at  present  exists  in  coal;  that  arranjrye- 
ment  between  the  anthracite  coal  companies  which  fixes  the  price  of 
coal  and  has  fixed  it  for  three  or  four  years  at  a price  which  bears 
heavily  on  every  consumer,  is  out  of  all  proportion  to  what  they  should  * 
sell  it  at.  That  is  the  only  corner  1 know  of  that  ever  worked  any 
injury  in  this  country. 

Q.  Do  you  know  how  that  corner  originated? 

A.  That  originated  out  of  the  necessities  of  the  corporations  who, 
burdened  with  excessive  debts  and  enormous  stocks,  had  to  resort  to 
that  means  of  making  money  in  order  to  pay  dividends  and  interest 
upon  their  bonds  and  stock.  That  corner  has  been  continued  for  a 
long  time  and  of  course  the  public  are  compelled  to  pay  a great  deal 
more  than  they  ought  to  for  the  article. 

Q.  Who  are  the  persons  who  have  originated  and  still  carry  on  that 
corner  in  coal ? * 

A.  The  heads  of  the  various  coal  companies  who  perhaps  have  done 
what  others  would  have  done  in  their  places  — combined  for  the  pur- 
pose of  advancing  the  interests  of  their  companies  ; but  it  has  been 
done  at  the  public  expense  and  unwarrantably  done.  Had  the  situation 
of  the  stocks  and  bonds  of  these  corporations  been  what  it  ought  to 
have  been;  if  there  had  been  wise  investments  made  in  the  first  place 
it  would  not  have  been  necessary,  but  there  has  been  an  extension  of 
so  much  water  in  that,  that  in  order  to  pay  dividends  and  keep  their 
heads  above  water,  they  have  been  compelled  to  combine  and  put  the 
price  of  coal  at  what  I consider  an  excessive  rate. 

Q.  Please  explain  what  you  mean  by  the  system  of  watering  as  car- 
ried on  by  those  persons  ? 

A.  Well  watering  stock  means  increasing  its  capital  without  giving 
any  equivalent  therefor.  It  also  means  the  private  purchase  by  par- 
ties interested  in  the  corporation  of  property,  at  one  value  and  selling 
it  to  the  corporation  at  a very  large  advance  where  the  company  does 
not  get  the  proper  equivalent.  Of  course  these  payments  are  made  in 
shares  and  bonds,  and  the  result  is  the  same. 

Q.  To  what  extent  has  the  system  of  watering  stock  been  carried  on 
by  the  coal  corporations? 

A.  Well,  I don’t  know;  I do  not  know  that  I could  cite  any  instance 
so  far  as  the  coal  companies  are  concerned,  excepting  that  they  have 
been  compelled  under  the  pressure  of  hard  times  or  were  compelled 
a few  years  ago  under  the  pressure  of  hard  times  to  increase  their 
bonded  indebtedness  and  their  stock  indebtedness  from  the  simple 
fact  that  they  failed  to  earn  sufficient  money  to  i^ay  their  necessary 
disbursements  and  expenses.  But  I don’t  know  of  any  increase  of  the 
capital  stock  except  under  their  pressure. 


784 


Q.  AVhat  other  corporations,  it  any,  liave  contributed  to  tlie  corner- 
ing of  the  coal  crop  besides  the  coal  corporations  themselves  ? 

A.  Well,  I don’t  know  that  anybody  else  has  been  a party  to  it 
except  those  that  were  interested  parties. 

Q.  Explain  how  they  have  conducted  their  corner  ? 

A.  They  have  combined  together  to  fix  the  price  of  coal,  and  have 
agreed  arbitrarily  to  maintain  that  rate  ; the  consequence  is  it  is 
practically  a corner,  and  as  coal  is  j^robably  the  most  important  of  all 
products  that  we  have,  its  injury  to  the  great  manufacturing  interests 
of  the  country  cannot  be  overestimated  ; while  it  is  charged  that 
anthracite  coal,  which  is  the  coal  that  these  companies  mine,  and  arbi- 
trarily fix  the  rate  of — I say,  while  it  is  charged  that  very  little  of  it 
goes  into  the  manufacture  of  pig  iron,  it  nevertheless  has  an  influence 
upon  the  price  of  the  soft  coal ; one  reacts  upon  the  other  and  with 
dear  coal  of  course  we  have  dear  iron  and  all  the  results  of  it. 

Q.  Can  you  state  to  the  committee  how  much  the  price  of  coal,  per 
ton,  has  been  increased  above  its  natural  value  by  reason  of  the  corner 
to  which  you  have  referred  ? 

A.  I should  think  coal  was  selling  at  one  dollar  a ton,  at  tide-water, 
more  than  the  company  should  sell  it  at,  with  a due  regard  to  the 
interests  of  the  public. 

By  Senator  Browkikg  : 

Q.  That  has  been  done  by  limiting  the  supply,  has  it  ? 

A.  No,  sir ; oh,  they  limit  the  supply,  yes,  but  the  consumption  has 
very  largely  increased  in  the  last  three  years. 

By  Senator  Boyd  : 

Q.  But  that  was  done  by  arbitrarily  fixing  their  price  as  you  have 
stated  ? 

A.  Yes,  sir ; and  the  production  has  been  limited  from  time  to  time, 
in  order  to  maintain  that  j)rice  so  arbitrarily  fixed  ; coal  is  selling  for 
almost  twice  as  much  as  it  is  in  England. 

Q.  And  does  the  cost  of  production  amount  to  any  more  in  this 
country  than  it  does  in  England  ? 

A.  Wages  or  labor  may  be  a little  higher  here,  but  I should  not 
think  tlierc  would  be  very  much  difference  in  the  cost. 

Q.  Is  tlic  cost  of  transportation  from  the  coal  fields  to  tide-water 
any  more  ])er  mile  jxu-  ton  on  coal  than  it  is  in  England  ? 

A.  'Tliat  I don’t  know,  sir;  I should  think  not,  however. 

(2.  Wliat  is  your  opinion  concerning  the  system  of  dealing  in 
Inl  II n*H  ? 

A.  I don’t  tliink  tliat  the  commerce  of  the  country  and  the  business 
♦ •f  tin*  country  criiild  b(‘  carric'd  on  without  that  system. 


785 


Q,  You  were  in  the  room  while  the  last  witness  was  being  examined 
were  you  not  ? 

A.  Yes,  sir. 

Q.  Did  you  hear  his  testimony  ? 

A.  Yes  ; I hoard  a portion  of  it. 

Q.  What  is  your  opinion  of  the  effect  of  such  a business  as  he  states 
that  he  carries  on  upon  the  public  welfare  ? 

A.  I should  think  it  was  rather  demoralizing  in  its  tendency,  inas- 
much as  there  is  no  pretense  to  make  deliveries  of  any  thing  purchased 
or  sold,  and  it  resolves  itself  into'a  pure  act  of  gambling.  As  I under- 
stand from  what  the  witness  said,  they  keep  a bank  and  the  other 
people  play  against  them. 

Q.  And  all  business  conducted  in  such  a style  you  consider  is  de- 
moralizing ? 

A.  Yes;  I consider  a business  of  that  kind — I cannot  call  it  a 
business  — it  is  not  a business — it  is  a pure  gambling  act ; I am  not 
defending  gambling  at  all.  As  I don’t  seo  that  there  is  any  clement 
of  business  in  it  I am  probably  not  a proper  person  to  answer  that 
question.  I cannot  contribute  any  thing  that  you  do  not  know  in 
reference  to  it. 

Q.  What  remedy  would  you  suggest  for  the  suppression  of  such  a 
system  of — we  will  call  transacting  business  as  the  last  witness  has 
described  ? 

A.  Abolish  it  by  law. 

Q.  Then  you  think  it  is  the  duty  of  the  people  through  their  Legis- 
lature to  provide  laws  for  the  suppression  of  all  such  systems  of  deal- 
ing  ? 

A.  I should  think  it  was  the  duty  of  the  law-makers  to  abolish  that 
system  of  dealing. 

Q.  Yow  where  such  sales  are  made  as  the  last  witness  described, 
whether  it  be  in  the  Produce  Exchange  or  Stock  Exchange,  or  any- 
where else,  do  you  consider  it  equally  demoralizing  even  though  con- 
ducted according  to  the  rules  of  or  by  sanction  of  those  institutions  ? 

A.  Other  transactions  are  not  of  a like  nature  at  all,  sir ; they  are 
not  of  the  same  nature  at  all ; the  transactions  in  the  Stock  Exchange 
and  in  all  the  great  Exchanges  of  the  country  are  not  done  in  that  way 
at  all.  If  a man  buys  a future  in  Chicago  he  contracts  to  pay  his 
money  for  the  article  that  he  buys  at  a certain  time  when  it  is  deliv- 
ered to  him,  and  he  must  take  it.  He  makes  an  absolute  purchase. 
If  I buy  a thousand  shares  of  stock  to-day  in  the  Stock  Exchange  I 
must  pay  the  money  for  it  to-morrow.  That  is  the  separate  transac- 
tion. I may  re-sell  it  again,  but  I have  to  pay  for  the  identical  stock 
I bought  and  re-deliver  the  stock  I sell  again  ; and  if  I buy  a million 
99 


786 


bushels  of  wheat  in  Chicago  for  next  month,  I have  bound  myself  by 
my  contract  to  take  that  million  bushels.  When  it  is  tendered  to  me, 
according  to  the  rules  of  the  Exchange  I must  take  it.  I may  in  the 
mean  time  sell  it  out  again,  but  that  is  a separate  transaction  ; and  if 
I do  not  sell  it,  of  course  the  transaction  remains  that  I must  take  the 
w’heat  and  pay  for  it  and  provide  for  it.  I think  the  committee  are 
under  the  idea  that  what  is  called  dealing  in  futures  is  a mere  gamb- 
ling transaction  that  carries  no  responsibility  except  putting  up  a 
margin,  and  that  you  do  not  buy  the  article  outright.  That  is  a 
mistake ; you  do. 

Q.  I would  just  say  here  that  that  is  the  reason  why  we  call  you 
gentlemen  before  the  committee  to  state  how  those  things  are,  and  to 
express  your  views  in  regard  to  how  any  evils  that  may  exist  ought  to 
be  remedied  ? 

A.  Yes,  sir;  but  in  the  transactions  which  this  gentleman  nar- 
rated to  you,  and  which  you  ask  me  to  speak  of  in  regard  to  these 
bucket-shops,  it  was  a ditlerent  proposition  entirely,  because  no  trans- 
fer^ -were  made — no  obligations  made  requiring  that  they  shouldeither 
Take  or  deliver  the  grain  or  pork  or  whatever  it  was  that  was  sold. 
They  merely  gatnble  on  the  fluctuation.  If  the  thing  went  down,  one 
person  lost  his  money,  and  if  it  went  up,  one  person,  the  bank,  paid  it. 
They  are  very  difierent  indeed.  Besides  a man  cannot  buy  500  shares 
of  stock  in  the  Stock  E:^change  unless  he  goes  to  a reputable  broker 
and  does  it  and  puts  up  a margin,  neither  can  he  go  to  Chicago  and 
buy  500,000  bushels  of  wheat  unless  he  does  it  through  a reputable 
man  and  puts  up  a margin.  And  the  moment  he  does  it,  it  is  a con- 
tract made  by 'him  to  take  that  stuff.  If  he  sells  it  for  a future 
month,  it  is  a contract  for  him  to  deliver  that  identical  thing.  ISTow 
the  committee  can  see  how  all  those  transactions  facilitate  business, 
because  the  Chicago  market,  which  is  the  greatest  corn  or  wheat 
market  in  the  Tvorld,  merely  reflects  the  public  opinion  of  the  country 
upon  the  value  of  the  wheat,  or  the  corn,  or  the  pork,  or  whatever  it 
may  be  that  is  dealt  in  there  according  to  the  best  lights  of  the  indi- 
vidual and  the  millions  of  individuals  who  are  continually  dealing 
there  day  after  day,  or  week  after  week.  The  farmers  and  the  business 
men  and  the  speculators,  and  the  army  of  people  of  various  occupa- 
tions, read  the  pa})ers  and  thuy  read  up  statistics  of  this  thing,  and  the 
otlier  thing,  and  they  come  to  tlie  conclusion  for  themselves  that  this 
article  is  selling  too  low  or  it  is  selling  too  dear,  and  they  speculate 
accordingly.  It  is  not  fair  to  call  that  purely  gambling.  Of  ^course 
it  is  not  fair  to  say  that  there  is  not  a large  gambling  proposition  in  it, 
because  thei’e  is.  All  l)usiness  in  this  country,  in  my  opinion,  is 
Hj»ecnlativc  to  the  very  highest  degree,  and  the  business  of  the  country 


is  of  such  enormous  magnitude  that  it  must  have  the  facility  of  regu- 
lar markets  in  order  that  a man  may  be  able  to  turn  around,  and  if  he 
makfs  a sale,  we  always  know  that  he  can  find  a market  for  what  he 
buys  or  find  a market  to  buy  in  what  he  sells.  Suppose  that  dealing 
in  futures  were  abolished  in  Chicago,  what  position  would  the  farmer 
be  in  ? What  position  would  the  commission  merchant  in  the  inte- 
rior, who  sells  his  goods  to  the  farmers  and  buys  their  wheat,  be  in  ? 
He  would  have  no  quotation  at  all.  The  wheat  that  he  buys  from  the 
farmer  to-day  may  by  exigencies  of  the  weather  not  be  delivered  for 
three,  four,  five,  or  six  weeks.  There  maybe  snow-storms  and  diffi- 
culties in  transportation  ; but  the  stuff  that  he  buys  is  sold  fifteen 
minutes  afterward  for  future  delivery,  and  he  is  safe.  And  the  farmer 
is  satisfied  ; ho  has  got  his  money  because  he  knows  the  price.  Xow 
that  price  is  fixed  speculatively  by  the  whole  country.  Sometimes  it 
will  be  abnormally  run  up  or  down  by  speculation,  but  it  always  adjusts 
itself  to  the  true  statistical  condition  sooner  or  later.  Therefore  I 
believe  (and  I have  thought  the  matter  over  a great  deal)  that  without 
such  speculation  in  futures  for  the  long  and  for  the  short  account,  the 
business  of  this  country  could  not  be  conducted,  that  it  would  be 
wonderfully  restricted,  and  that  it  would  work  a great  oppression,  par- 
ticularly to  the  producer,  and  very  largely  to  the  purchaser  in  a financial 
way ; because  a man,  when  he  makes  a sale  for  a month  ahead,  of 
100,000  bushels  of  wheat  that  he  has  bought  in  the  interior,  sells  it 
through  his  banker;  the  margin  is  immediately  put  up  on  the  sale,  and 
he  can  draw  his  money  upon  that  sale  and  get  it ; whereas,  if  there  was 
no  quotation,  he  could  do  nothing;  he  would  have  to  depend  entirely 
upon  the  money  lender,  and  if  wheat  pressed  in  without  such  a market 
as  I speak  of,  it  might  be  manipulated  down  four  or  five  cents,  to  the 
injury  of  the  people  that  happened  to  have  wheat  or  corn  or  pork,  or 
any  thing  of  that  sort  for  sale,  because  there  would  be  no  public 
competition. 

Q. ^ You  have  been  speaking  of  the  legitimate  system  of  dealing; 
you  are  aware,  however,  that  there  is  a large  amount  of  dealing  in 
futures  and  transactions  in  grain  carried  on  which  could  not  be  called 
purely  legitimate,  are  you  not ; that  is  to  say,  persons  come  in  simply 
to  get  all  they  can  make  out  of  their  speculations,  without  rendering 
either  to  the  producer  or  the  consumer  any  profit  ? 

A.  That  is  what  we  are  all  doing  — trying  to  make  as  much  money 
as  we  can  in  a speculative  way  — everybody;  there  is  not,  I sup- 
pose, ajDerson  in  this  room  nor  in  any  other  room  nor  anywhere  else 
that  would  not  buy  something  if  he  thought  it  was  going  up  ; people 
dealing  in  stocks  buy  because  they  believe  they  are  going  up ; they  in- 
tend to  sell  them  again  ; neither  is  wheat,  cotton,  corn  or  pork  bought 


788 


for  investment ; it  is  bought  with  the  expectation  of  selling  it  at  a 
profit ; nevertheless,  it  is  not  any  more  speculative  than  the  purchasing 
by  a wholesale  dealer  on  Broadway  of  a large  amount  of  cotton  prints 
at  a Lowell  factory  in  the  expectation  of  the  firm  making  it  that  they 
could  re-sell  the  property  in  a month  or  six  weeks  at  a very  handsome 
advance  ; failing  in  that,  they  sell  the  goods  for  what  they  can  get, 
and  make  a loss ; now  can  you  see  any  difference  in  those  transactions  ; 
then,  if  you  destroy  the  speculative  feature  about  all  stocks  and  grain 
and  cotton  transactions,  you  work  a great  injury  to  the  investor,  because 
you  may  have  an  investment  of  $100,000  in  some  stock  down  in  Wall 
street,  which  pays  you  an  excellent  dividend,  and  you  might  have 
occasion  to  go  to  Europe,  and  feel  that,  in  going  there,  you  would 
rather  shift  your  property  into  something  probably  more  permanent; 
how  are  you  going  to  do  it  if  you  haven’t  got  a speculative  market ; 
you  might  wait  two  weeks  before  you  got  a bid  for  it;  now  all  you 
have  got  to  do  is  to  go  down  and  in  five  minutes  the  sale  is  made  and 
you  get  your  money  ; this  whole  thing  is  in  accordance  with  the 
progress  of  ideas  all  over  the  world;  you  cannot  go  back; 
you  cannot  restrict  speculation  in  this  great  speculative  country; 
speculation  is  the  civilizer  of  this  country ; speculations  in  lands, 
and  in  railroads,  and  in  all  enterprises  out  in  the  far  West  take  people 
there  and  take  the  money  there ; speculation  has  been  the  greatest 
benefit,  and  will  be  the  greatest  benefit  to  the  people  of  this  country, 
in  my  opinion  ; I do  not  mean  to  say  to  get  up  an  excitement  and 
boom  and  frenzy,  such  as  we  had  for  three  years,  when  people  went 
mad  and  did  not  know  or  care  whether  they  were  buying  a thing  that 
was  worthless,  so  long  as  they  could  buy  it  to-day  and  sell  it  to-mor- 
row in  the  excitement;  I do  not  mean  that,  but  I mean  good,  healthy, 
legitimate  speculation  in  the  line  of  progress  and  in  the  line  of  advance- 
ment of  this  country. 

Q.  What  do  you  think  of  the  system  of  socculation  which  is  usually 
carried  on  in  Wall  street  ? 

A.  I think  it  is  all  right. 

Q.  It  was  said  by  one  witness  here,  who  claims  to  be  an  expert,  that 
the  system  consisted  in  something  like  this  — that  a few  managers 
were  there,  and  when  the  lambs  came,  they  fieeced  them  ? 

A.  Wb'll,  I have  no  donlit  that  tliat  frequently  occurs,  but  there  is 
nothing  to  compel  a lamb  to  go  into  Wall  street  unless  ho  wishes  to  go. 

Ihit  what  is  your  ()j)inion  of  the  system  which  allows  persons  who 
are  inexperienced  and  misled  by  false  reports  to  go  there  and  be  fieeced  ? 

A.  Well,  yon  cannot  compel  a man  in  a free  country  like  this*to  do 
any  thing  but  what  he  wishes  to  do,  and  I believe  the  Stock  Exchange 
in  New  York  have  endeavored  to  do  all  in  their  power  to  prevent,  if 
j)0HHible,  any  misrepresentations  in  regard  to  the  stocks  that  are  dealt 


789 


in  at  the  Exchange  ; but  that  is  almost  an  impossibility;  that  is  the 
only  misfortune  in  regard  to  speculation  ; I do  not  see  how  you  can 
touch  that  evil,  because  there  are  men  who  are  willing  to  say  and  do 
jiny  thing  for  the  purpose  of  fostering  speculation  when  they  wish  to 
sell,  and  vice  versa. 

Q.  Can  you  explain  how. that  evil  exists  — how  it  continues  to  be 
carried  on  ? 

A.  Well,  I don’t  know  how  it  is  carried  on.  Men  in  Wall  street 
have  purposes  of  their  own  to  serve,  and  they  sometimes  indulge  in 
misrepresentations  about  their  own  properties,  to  the  detriment  and 
the  loss  of  the  people  at  large,  who  do  not  think  these  things  out. 

Q.  And  such  misrepresentations  usually  affect  the  whole  market,  do 
they  not? 

A.  Well,  they  do  ; they  affect  the  prices  of  stocks,  of  course,  very 
naturally  — put  them  up  or  put  them  down,  as  the  case  may  be. 

Q.  Is  there  any  difference  in  such  a system  of  misrepresentation  as 
■that  and  the  business  carried  on  by  the  witness  Avho  vvas  last  before  the 
committee  ? 

A.  He  does  not  represent  any  thing  at  all;  the  Gold  and  Stock  Tele- 
graph represents  the  price  of  the  article  in  Chicago  ; these  people  come 
and  bet  on  it  or  against  it,  as  they  choose;  if  the  price  of  wheat  is  a 
dollar,  a man  buys  50,000  bushels  ; he  puts  up  one  per  cent  margin  or 
two  percent  margin;  he  does  not , intend  to  take  the  wheat;  if  the 
price  goes  down  to  99,  that  ends  the  transaction  and  the  proprietor 
has  got  the  man’s  $500  ; if  it  goes  up  to  101,  the  proprietor  pays  him 
$500  ; as  I look  at  his  explanation,  the  association  is  a hank  with  an 
established  capital,  which  allows  the  people  at  large  to  come  in  and  bet 
against  them  on  the  prices  no  obligation  existing  to  deliver  or  to  take. 

Q.  Is  the  evil  resulting  from  that  system  of  doing  business,  what- 
ever we  might  call  it — ^'Moing  business,”  I presume  — different  in 
its  general  effects  from  the  system  of  misrepresentation  carried  on  by 
certain  brokers  ? 

A.  Well,  in  one  case  there  is  no  misrepresentation.  The  only  evil 
that  I can  see  ])articularly  in  the  business  is  that  it  is  purely  a gamb- 
ling transaction,  and  the  margins  required  are  so  small  that  young 
men  and  boys  and  women,  and  people  who  have  a very  small  amount 
of  money,  who  want  to  take  a chance  and  do  something  to  increase 
their  store,  will  go  in  there  without  any  knowledge  at  all  and  make  a 
transaction,  and  probably  in  the  majority  of  cases  they  lose  their 
money.  But  so  far  as  brokers  are  concerned,  as  a rule,  in  Wall  street, 
I don’t  think  they  misrepresent  any  thing  at  all  ; they  merely  do  the 
business  that  is  intrusted  to  them.  The  misrepresentation  comes  from 
people  who  are  financial  agents  for  certain  securities,  and  they  some- 


790 


times  misrepresent  their  value,  and  sometimes  depreciate  their  value,, 
as  their  interests  may  lead  them  to  do. 

Q.  Are  not  the  disastrous  fluctuations  in  the  market  which  fre- 
quently occur  almost  entirely  produced  by  over-speculation  ? 

A.  I think  they  are,  generally. 

Q.  They  are  in  no  way  connected  with  the  legitimate  workings  of 
the  law  of  supply  and  demand,  are  they  ? 

A.  I should  think  they  would  be  in  stocks,  as  well  as  in  any  thing 
else.  If  there  is  too  free  a supply  of  stocks,  they  go  down  ; if  there  is 
an  urgent  demand  above  the  supply,  they  go  up. 

Q.  How  IS  it  in  regard  to  bread-stuffs  and  the  various  necessaries 
of  life  ? 

A.  Well,  the  volume  is  so  large  in  this  country  and  the  movement 
so  large,  it  is  very  liard  to  control  it.  It  regulates  itself,  I think. 
That  may  be  very  easily  illustrated  by  the  working  of  a corner  per- 
haps in  St.  Louis,  Milwaukee,  Chicago,  or  some  other  large  com- 
mercial center.  Probably  the  effect  upon  the  price  of  the  commodi- 
ties of  life  in  New  York  would  hardly  be  noticed,  there  is  so  much  of 
it  in  the  country — the  supply  is  so  great.  It  is  beyond  the  reach  of 
any  man  or  any  set  of  men. 

Q.  What  influence  have  such  operations  as  the  corners  which  you 
speak  of  upon  our  transportation  interests  ? 

A.  I don’t  think  they  affect  them  at  all,  except  temporarily. 

Q.  What  influence  have  they  upon  our  foreign  trade  and  upon  our 
exports  ? 

A.  I don’t  think  they  last  long  enough  generally  to  influence  it 
much.  I don’t  say  that  they  are  not  unfortunate  ; I only  say  that  the 
consequences,  so  far  as  I have  seen,  have  never  been  very  far  reaching 
or  disastrous. 

Q.  Now  Mr.  Keene,  a good  deal  has  been  said  in  regard  to  what  is 
known  as  the  Keene  corner  ? 

A.  Yes. 

Q.  Now,  we  would  like  you  to  explain  that  to  the  committee.  We 
have  heard  so  many  versions  of  it  that  we  presume  you  are  prepared  to 
give  us — 

• A.  It  IS  so  long  ago  that  I have  forgotten  all  about  it  really.  I never 
was  engaged  in  a corner  in  my  life. 

Q.  Never? 

A.  Never,  sir. 

(-1.  Why,  then,  has  the  corner  to  which  these  persons  refer  been 
called  tlie  Keene  corner  ? 

A.  Well,  I suppose  because  I was  the  central  'figure  in  the  combi- 
natioj),  which  owned  at  that  time  a very  large  amount  of  wheat ; but 


791 


that  combination  was  not  formed  for  the  purpose  of  cornering  the 
market ; it  was  only  formed  for  the  purpose  of  defending  the  in- 
dividual purchases  of  the  syndicate  previously  made,  and  which  we 
felt  we  could  better  do  by  combining  than  by  submitting  ourselves  to 
the  tender  mercy  of  the  bears,  who  were  very  active  and  wanted  to 
sell  it,  and  came  near  knocking  the  price  down. 

Q.  You  speak  of  a syndicate.  Of  whom  was  that  syndicate 
composed  ? 

A.  WelJ,  I don’t  think,  unless  you  press  me,  it  is  worth  while  to 
state  who  the  parties  are  — unless  you  think  it  is  a matter  of  public 
interest.  , 

Q.  Do  any  of  them  reside  in  New  York  or  do  business  in  New  York  ? 

A.  Yes. 

Q.  Is  that  syndicate  still  in  existence? 

A.  Oh,  no,  sir  ; it  disbanded  long  before  the  wheat  that  was  pur- 
chased was  sold  out. 

Q.  Then  we  have  no  desire  to  press  the  question  ? 

A.  Oh,  it  was  not  organized  for  the  purpose  of  making  any  corner 
whatever. 

Q.  How  long  was  that  syndicate  in  existence  previous  to  the  making 
of  that  corner  ? 

A.  Well,  if  you  call  it  a corner,”  it  w^as  made  when  the  syndicate 
was  made,  ^because  the  aggregate  holdings  of  the  individuals,  when 
they  came  together,  comprised  pretty  much  all  that  was  in  existence. 

Q.  I suppose  that  the  syndicate  was  something  like  a certain  num- 
ber of  men  who  had  united  their  capital  for  the  purpose  of  sending 
out  and  purchasing  up  wheat  or  corn  in  the  country  ? 

A.  No. 

Q.  That  was  not  it  ? 

A.  No,  sir  : these  individuals  held  certain  quantities  of  wheat,  pur- 
chased in  Chicago,  and  they  combined  for  a common  ‘ advance.  The 
speculation  was  considered  to  be  pretty  well  digested,  and  to  have 
taken  in  every  possible  contingency,  and  to  have  estimated  the.  re- 
quirements of  Europe  and  the  quantity  in  this  country,  and  it 
turned  out  in  the  main  to  be  correct ; but  the  pressure  to  sell  was  too 
great  and  the  newspapers  took  up  the  hue  and  cry  of  a “corner,”  and 
that  we  were  destroying  the  commerce  of  the  country  and  raising 
great  disturbance  generally,  and  we  were  finally  compelled  to  sell  what 
we  had  purchased  at  a loss. 

Q.  After  the  formation  of  the  combination  did  you  send  agents 
throughout  various  sections  of  the  grain  producing  country  to  pur- 
chase up  the  grain  that  was  produced  during  that  year  ? 

A.  No,  sir. 


7953 


Q..  Did  the  amount  of  grain  stored  by  the  syndicate  amount  lo 
any  more  than  what  they  possessed  previous  to  the  formation  of  Llie 
syndidate  ? 

A.  I expect  it  did,  sir. 

Q.  To  what  extent  ? 

A.  Well,  really  my  memory  would  hardly  be  correct  at  tliis  time, 
for  I really  have  almost  forgotten  the  transaction  ; but  we  had  a very 
large  amount  of  grain  — fifteen  or  sixteeen  or  seveventeen  million 
bushels,  I think. 

Q.  Altogether  ? 

A.  Yes,  twenty,  perhaps.  I may  be  wrong  in  my  estimate,  even  of 
that.  I should  think  fifteen,  perhaps, 

Q.  When  was  the  syndicate  formed  ; at  what  time  of  the  year,  I 
mean  ? 

A.  1 think  in  December. 

Q.  And  when  was  it  broken  up  ? 

A.  I think  many  of  the  parties  dropi:)ed  out  for  want  of  funds, 
leaving  two  or  three  to  bear  the  burden  of  the  fight  and  to  dispose  of 
the  holdings,  which  were  disposed  of  from  time  to  time,  probably,  by 
April  or  May,  or  something  of  that  kind,  or  June. 

Q.  Then  we  may  say  that  the  corner  lasted  from  September  — 

A.  No,  from  December.  No,  it  was  not  a corner  ” at  all,  because 
a man  that  wanted  to  buy  could  buy  any  thing  that  lie  wanted.  There 
was  no  arbitrary  price  fixed  at  all.  There  was  never  a day  in  the  history 
of  the  Stock  Exchange  in  Chicago,  or  at  least  of  the  Corn  Exchange 
in  Chicago,  that  a man  could  not  have  gone  in  there  and  bought  two 
or  three  million  bushels  of  wheat.  Therefore  there  could  have  been 
no  corner. 

Q.  It  has  been  stated  that  the  syndicate  refused  to  sell  wdieat  during 
the  continuance  of  the  corner,  or  whatever  you  may  call  it? 

A.  That  is  not  true. 

Q.  It  has  also  been  stated  that  by  the  influence  of  the  syndicate  the 
transportation  of  wdieat  from  the  West  was  suspended  temporarily? 

A.  Well,  jierhaps  it  was  restricted. 

Q.  It  was  not  absolutely  suspended  ? 

A.  I don’t  think  so,  but  it  might  have  been  restricted  during  the 
jiendency  of  that  syndicate. 

Q.  To  what  extent  w'as  it  restricted  by  the  operation  of  the  syndi- 
cate ? 

A.  Well,  the  general  judgment  of  the  country  — of  the  people  of 
1 he  countj-y  — at  that  time  weis  that  wheat  was  too  high.  The  New  York 
market  was  always  lower  than  the  Chicago  market ; therefore,  it  would 
not  pay  to  transport  wheat  from  Chicago  to  New^  York,  wdicn  the  price 


703 


was  higher  there  than  it  was  in  New  York.  It  miglit  have  been  kept 
higher  by  the  result  of  this  combination  we  are  speaking  of  now  ; 
perhaps  it  was.- 

Q.  And  on  whom  did  the  burden  of  that  increase  in  the  price  fall  ? 

A.  I think  it  fell  on  the  syndicate.  I think  the  farmer  benefited 
by  it  very  much  indeed.  But,  still,  the  price  of  grain  at  that  time  was 
not  dear.  I don’t  think  any  consumer  suffered  very  much  by  it. 

Q.  How  much  was  paid  per  bushel  at  the  markets  throughout  the 
country  and  country  districts  to  the  producer  for  wheat  at  that  time  ? 

A.  Well,  wheat,  if  I remember,  was  worth  about  $1.15  per  bushel 
at  that  time,  or  $1.20. 

Q.  ^J’o  the  producer  ? 

A.  Well,  I don’t  know  what  the  farmer  got  for  it. 

Q.  You  don’t  know  what  the  farmer  got  for  it? 

A.  No,  sir.  He  got  a corresponding  price,  transportation  added,  I 
have  no  doubt. 

Q.  In  what  year  was  that  syndicate  in  existence  ? ^ 

A.  I think  in  the  spring  of  1880. 

Q.  Now  will  you  state,  if  you  know,  how  the  canal  boat  interest  was 
affected  by  reason  of  that  operation  ? 

A.  I should  think  very  beneficially. 

Q.  It  has  been  stated  that  for  some  time  the  steam  cars  — freight 
cars  — had  nothing  to  do  by  reason  of  the  retention  of  this  immense 
quantity  of  wheat  in  Chicago,  and  that  afterward,  when  the  corner 
broke,  there  was  such  a rush  that  the  railroads  were  not  able  to  fill 
their  demands,  how  is  that  ? 

A.  Whose  testimony  is  that  ? 

Q.  I might  say  all  the  men  connected  with  the  railroad  interests  that 
have  testified.  Have  you  any  knowledge  as  to  that,  as  to  the  effect  of 
that  operation  upon  the  railroad  interests  at  that  time  ? 

A.  Well,  I don’t  think  the  railroads  were  very  much  affected  ; I don’t 
think  they  carry  much  grain  any  way  in  the  winter.  People  do  not  pay 
exorbitant  prices  to  move  grain  in  the  winter  time  when  they  can  wait 
until  spring  and  have  the  carrying  rate  reduced  by  canal  and  lake  to 
the  lowest  price ; so  that  the  amount  that  they  carry  is ' very 
infinitesimal.  I suppose  their  rates  probably  were  up  to  a point 
which  were  practically  cornered,  and  that  is  the  reason  that 
the  stuff  could  not  move.  If  there  had  been  such  rates  as  they 
should  have  charged,  probably  we  could  have  afforded  to  have  moved 
the  material  to  New  York  ; they  were  probably  s«ch  rates  as  they  have 
got  now,  which  are  more  disastrous  to  the  country,  probably,  than  any 
corner,  or  any  thing  that  comes  to  my  mind  at  the  present  time. 

100 


794 


Q.  The  committee  would  like  to  have  you  speak  in  detail  with  re- 
gard to  that  question  ? 

A.  What,  sir  ? 

Q,  With  regard  to  the  disastrous  condition  of  the  rates  of  trans- 
portation ? 

A.  Well,  I say  that  rates  are  cornered  — are  arbitrarily  fixed.  , 

Q.  By  whom  ? 

A.  By  Mr.  Fink  and  by  railroad  men  ; by  the  trunk  lines  between 
here  and  Chicago. 

Q.  Were  they  fixed  in  that  arbitrary  way  during  the  continuance  of 
this  ? 

A.  I think  very  likely  ; I don’t  remember,  but  I think  they  were. 

Q.  Are  they  fixed  in  that  condition  at  present  ? 

A.  They  are. 

Q.  And  do  you  think  the  fixing  of  rates  of  transportation  in  that 
arbitrary  way  is  prejudicial  to  the  commercial  interests  of  the  country? 

A.  I think  it  is  prejudicial  to  the  business  of  the  country,  of  course, 
because  the  rates  so  charged  are  entirely  out  of  proportion  to  the  ser- 
vice that  is  given  for  them. 

Q.  Can  you  give  us  any  example  or  illustrate  how  they  affect  the 
commercial  interests  of  the  country;  do  they  impose  an  unnecessary 
tax  upon  the  produce  of  the  country  ? 

A.  Undoubtedly  they  do  when  their  rates  are  fixed  beyond  the 
proper  compensation  ; of  course  it  all  comes  out  of  the  agricultural 
products  of  the  country  ; it  comes  out  of  the  farmers’  pockets. 

Q.  Is  the  consumer  affected  also  by  these  exorbitant  rates  that  you 
refer  to  ? 

A.  Well,  he  is,  of  course. 

Q.  How  much  greater  are  these  rates  at  present  than  what  they 
ought  to  be  according  to  your  opinion  ; that  is  to  say,  how  much  higher 
are  they  than  you  think  they  ought  to  be  and  afford  a fair' compensa- 
tion to  the  railroads  and  other  transportation  companies  for  the  amount 
of  money  invested  by  them  and  the  cost  of  serving  the  public  ? 

A.  Twenty- five  per  cent  at  least  too  high. 

Q.  On  the  transportation  of  all  commodities  ? 

A.  Of  every  thing. 

Q.  And  you  would  designate  such  a system  of  fixing  rates  of  trans- 
])ortation  on  our  great  j)ublic  highways  as  making  a corner  in  these 
rates  ? 

A.  I say  fixing  therti  arbitrarily. 

Is  making  a corner  in  them  ? 


T95 


Q.  How  do  such  arbitrary  rates  affect  our  commerciai  interest  with 
foreign  ports  in  the  way  of  getting  our  products  to  the  sea-board  ? 

A.  They  increase,  of  course,  the  price  of  all  products  that  come  for- 
ward for  export,  and  upon  the  principle  that  the  cheaper  you  can  sell 
the  more  you  can  sell,  must  certainly  have  a baneful  effect  upon  our 
export  business. 

Q.  Is  it  a tax  which  places  us  in  an  unfair  state  of  competition  with 
foreign  producers  ? 

A.  I should  think  it  was. 

Q.  Would  it  tend  to  materially  reduce  the  amount  of  our  export 
tonnage  ? 

A.  I should  think  it  would  reduce  the  tonnage ; high  rates  always 
restrict  tonnage. 

Q.  It  was  stated  here  that  in  1879  it  was  reported  here,  in  the  papers 
and  otherwise,  that  there  were  some  872  ships  of  all  grades  and  de- 
scriptions idle  in  the  docks  of  !New  York  which  came  here  to  carry 
away  our  products,  which  were  controlled  by  combination,  and  they 
held  wheat  then  at  from  five  to  fifteen  cents  higher  than  what  foreign 
countries  would  pay  tor  it,  even  if  the  vessels  were  willing  to  take  it 
at  a small  rate  of  freight;  what  do  you  know  as  to  that  statement? 

A.  It  may  or  may  not  be  correct. 

Q.  And  any  thing  of  that  kind,  whether  it  be  exorbitant  rates  of 
transportation,  or  the  fact  of  syndicates,  or  the  making  of  corners  in 
our  products,  do  you  think  it  has  a tendency  to  reduce  the  amount  of 
our  export  tonnage  ? 

A.  I think  the  higher  the  cost  of  the  articles  that  we  have  for  sale, 
the  more  we  are  at  a disadvantage  with  other  countries  who  are  also 
producers  and  sellers,  and  therefore  I think  high  rates  are  injurious 
and  calculated  to  restrict  trade  ; as  I said  before  corners  are  of  such 
short  duration  that  the  injury  that  they  inflict,  I think,  is  over- 
estimated. 

Q.  Is  it  not  true  that  over-speculation,  making  corners  and  high 
rates  of  transportation  tend  to  increase  prices  so  that  foreign  consumers 
cannot  purchase  them  as  cheaply  as  they  can  find  supplies  elsewhere? 

A.  Of  course  high  rates  of  transportation,  as  I said  before,  increase 
the  prices  of  the  products  we  have  for  sale,  but  over-speculation  de~ 
pends  very  much  on  whether  it  is  on  one  side  of  the  account  or  the 
other;  I don’t  know  what  you  mean  exactly  by  — 

Q.  Such  a system  of  speculation  as  is  usually  carried  on  in  our  vari- 
ous products  ; all  the  speculators  make  money  I am  told. 

A.  You  haven’t  been  in  Wall  street. 

Q.  And  we  are  also  told  that  the  effect  of  this  speculation  is  to  en- 
hance the  cost  of  products.  If  that  be  so,  would  it  not  tend  to  di- 
minish our  exports  ? 


790 


A.  I think  the  thing  always  rectifies  itself.  There  is  a great  deal 
of  common  sense  in  this  country.  Tlie  producer  is  very  well  posted, 
and  if  he  sees  that  there  is  a prospect  that  other  countries  can  furnish 
what  he  lias  to  sell  clieaper  than  the  ruling  price,  he  will  make  haste 
to  sell  his  and  never  stand  upon  the  order  of  his  going.  That  soon 
regulates  the  price.  You  cannot  maintain  things  above  what  they 
are  actually  worth,  except  for  a very  short  time,  and  I don’t  think  that 
speculation  has  any  thing  whatever  to  do  with  our  export  interests, 
unless,  indeed,  the  whole  grain  product  of  the  country,  or  any  partic- 
ular product,  might  he  cornered  for  an  indefinite  period,  which  I 
think  to  be  an  impossibility. 

Q.  One  gentleman  stated  that  in  1879,  when  these  men  (referring 
to  the  syndicate)  expected  to  get  11.65  for  wheat,  they  broke  and 
caused  a panic  here  ? 

A.  When  ? 

Q.  In  1879  ? 

A.  Wheat  never  sold — $1.65  in  New  York  ? 

Q.  No,  I think  this  refers  to  the  syndicate  in  Chicago  It  says 
‘^In  1879  when  these  men  expected  to  get  $1.65  for  wheat,  they  broke 
and  caused  a panic  here,  because  in  the  European  markets  there  the 
people  sought  elsewhere  for  supplies  ? ” 

A.  Who  broke  ? 

Q.  The  syndicate  — the  corner,  I suppose  ? 

A.  Whose  testimony  is  that  ? 

Q.  Mr.  Partridge’s  testimony,  I believe. 

A.  Who  is  Mr.  Partridge  ? 

Q.  A member  of  the  Produce  Exchange  in  the  city  of  New  York. 

In  1879  when  these  men  expected  to  get  $1.65  for  wheat,  they  broke 
and  caused  a panic  here,  because  in  the  European  markets  the  people 
there  sought  elsewhere  for  supplies,  and  drew  wheat  from  nooks  and 
corners  nobody  ever  heard  of  before,  and  they  got  their  supplies.” 

A.  Well,  I don’t  know  of  anybody  breaking,  but  it  is  very  possible 
that  — 

Q.  It  has  been  suggested  to  me  that  it  refers  to  prices  9 

A.  I don’t  think  wheat  ever  sold  in  Chicago  above  $1.30  a bushel, 
and  I think,  if  I remember  aright,  that  the  average  price  of  the  wheat 
held  by  the  syndicate  was  about  $1.10  a bushel. 

il.  In  the  Chicago  market? 

A.  In  the  Chicago  niiirket,  yes,  sir. 

(2-  Wliat  did  it  sell  for  in  New  York  ? 

A.  $1.65  — $1.60. 

().  d'h'it  is  correct  ? 

A.  So  that  that  evidence  was  not  true,  whoever  gave  it. 


797 


Q.  It  is  true  so  far  as  it  sold  for  $1.G5  in  New  York  city? 

A.  You  are  talking  about  Chicago.  You  say  this  syndicate  ex- 
pected to  sell  this  wheat  for  $1.65.  Wheat  never  sold  higher  than 
$1.30,  and  it  was  ruling  almost  all  the  time  during  the  pendency  of 
this  agreement  at  from  $1.15  and,  $1.18,  down  to  $1.06,  and  the  aver- 
age price  of  the  wheat  that  was  purchased  was  somewhere  in  the- 
neighborhood  of  $1.10  a bushel. 

Q.  But  don’t  you  know  that  withholding  the  wheat  crop  and  stor- 
ing it  in  Chicago  would  tend  to  lessen  the  supply  in  New  York  con 
sequently  ? 

A.  I don’t  think  it  ran  up  prices  in  New  York  at  all;  wheat  sold  at 
$1.65  long  before  this  arrangement  was  made  — before  this  corner  was 
made,  if  you  choose  to  call  it  so  ; it  sold  at  $1.65  a bushel,  sir. 

Q.  In  New  York  city  ? 

A.  Yes,  sir. 

Q.  Can  you  give  any  reason  why  so  much  shipping  should  be  driven 
away  from  the  port  of  New  York  in  that  season  other  than  the  fact  that 
they  could  not  find  freight  on  account  of  the  withholding  of  wheat  ? 

A.  I don’t  believe  that  statement  is  true  ; in  the  first  place  there 
was  plenty  of  wheat  in  New  York  at  the  time.. 

Q.  You  know  that  the  steamships  have  been  willing  to  oarry  wheat 
to  the  other  side  simply  for  ballast,  do  you  not  ? 

A.  I think  they  have  this  year  — or  last  year  ; last  year. 

Q.  Without  making  any  charge  ? 

A.  Yes ; there  wasn’t  any  to  come  forward. 

Q.  What  was  that  owing  to  ? 

A.  The  scarcity  of  the  article  in  the  interior. 

Q.  Then  any  thing  that  would  tend  to  make  the  article  scarce  in 
the  port  of  New  York  would  tend  to  produce  such  a state  of  things 
again,  would  it  not  ? 

A.  Well,  there  are  other  things  besides  wheat  that  this  country 
ships ; it  ships  a great  deal  of  cotton,  petroleum,  beef,  pork,  etc.;  the 
shipments  of  wheat  are  not  so  enormous  during  the  winter;  the  re- 
tention of  any  one  article  in  the  interior  is  not  going  to  create  any 
special  change  in  our  exports  or  going  to  make  any  marked  difference 
in  commerce. 

Q.  Bo  you  know  of  any  corners  having  been  made  in  the  cotton  or 
petroleum  market  which  would  tend  to  affect  our  foreign  exports  ? 

A.  I do  not,  sir. 

Q.  It  has  been  stated  that  our  shipping  is  falling  off  annually ; it 
has  been  said  that  they  are  now  five  million  dollars  less  than  they  have 
been  in  other  years  ? 

A.  Five  million  ions  less  ? 

\ 


'08 


Q.  Five  million  less ; that  is,  if  I can  read  it  ; so  that  the 

balance  of  trade  will  be  against  us  in  a short  time,  if  we  do  not  look 
out  ; that  is,  that  our  exports  are  not  keeping  up  as  they  have  been  in 
former  years  ? 

A.  Well,  but  they  didn’t  raise  any  thing  last  year;  how  could  they 
keep  up  ? that  is  what  has  driven  the  ships  away  ; we  had  no  crop  to 
sell ; the  consequence  w^as  the  tonnage  sought  other  countries  that 
could  employ  it,  and  has  not  got  back  again  ; now  this  year  we  are 
rather  crippled  for  tonnage;  it  will  come  back  by-and-by;  it  is  not 
the  result  of  any  corner. 

Q.  Does  our  present  system  of  speculation  not  tend  to  create  arti- 
ficial values  ? 

A.  I don’t  think  it  does,  sir. 

Q.  In  the  testimony  of  Mr.  Trafton,  offered  before  the  committee, 
he  says:  ^^Take  the  case  of  the  syndicate  formed  by  Mr.  Keene  in 
1870,  when  we  had  a very  line  crop  ; the  crop  of  1870  amounted  to 
448,000,000  bushels  ; the  supposition  was  that  France,  England,  Ger- 
many, and  portions  of  Austria  and  Eussia  had  lost  their  fall  crops  and 
that  this  syndicate  could  control  the  markets  of  the  world  ; by  a com- 
bination of  twenty  or  tliirty  wealthy  men,  representing  from  forty 
millions  to  fifty  millions  of  dollars,  this  great  syndicate,  this  great  un- 
dertaking was  commenced  I think  some  time  in  October,  and  it  ran 
up  the  price  from  its  natural  and  legitimate  level  until  it  finally 
reached  $1.63,  cash  price  for  future  delivery  and  81.65  ? ” 

A.  Who  is  Trafton. 

Q.  William  11.  Trafton,  commercial  editor  of  the  Produce  Exchange 
Reporter  ? 

A.  I think  the  highest  price  wheat  sold  in  Chicago  for  was  81.30  a 
bushel;  it  might  have  sold  two  or  three  cents  above,  but  not  very 
much,  sir. 

Q.  Don’t  you  think  tliat  the  corner,  or  storage,  effected  by  the 
syndicate  had  a tendency  to  run  the  price  up  in  New  York  ? 

A.  X(q  it  was  u]-)  before  the  syndicate  was  formed;  wheat  sold  in 
New  York  at  81.60  or  81.65  a bushel  before  the  syndicate  was*  formed  ; 
why  it  sold  there,  you  must  be  the  best  judge. 

ip  What  great  wheat  producing  countries  do  we  compete  with  ? 

A.  Eussia  and  India  are  both  great  exporting  countries ; France  is 
a gi-oiit  wheat  country,  and  in  good  years  has  a very  large  exportable 
surjjlus. 

How  do  their  markets  aff(>ct  ours,  if  in  any  w'ay  ? 

A.  I think  we  have  the  controlling  markets, 

(E  And  have  our  markets  the  chief  effect  in  establishing  prices? 

A.  IJndoubh'dly. 


799 


Q.  And  our  prices  depend  upon  the  arbitrary  decisions  of  the  various 
Produce  Exchanges,  do  they  not  ? 

A.  They  depend  upon  the  prices  that  are  ruling  at  the  various  Ex- 
changes, yes,  and  which  result  from  the  preponderating  sentiment  of 
the  country  at  large  in  reference  to  them. 

Q.  Then  our  Produce  Exchanges  and  that  preponderating  sentiment 
which  you  refer  to  wliich  makes  prices  have  the  effect  of  fixing  the 
prices  of  produce  throughout  the  world  ? 

A.  I think  so,  undoubtedly. 

Q.  Did  the  breaking  up  of  the  syndicate  tend  to  depreciate  the 
prices  of  grain  ? 

A.  Grain  declined  as  the  spring  opened  and  it  commenced  to  move. 

Q.  What  was  the  cause  of  the  decline  in  prices  ; was  it  the  abun- 
dance of  production  in  foreign  countries,  or  was  it  simply  because 
those  who  had  control  of  the  products  of  this  country  chose  to  let 
them  go  ? 

A.  I suppose  the  sales  that  had  been  penned  up  in  Chicago  affected 
the  prices. 

Q.  But  was  it  not  more  attributable  to  the  fact  that  our  foreign 
markets  were  being  supplied  more  cheaply  from  foreign  countries, 
such  as  India  and  Russia? 

A.  I (lonT  think  so,  sir;  India  was  not  a f.ictur  at  that  time  at  all ; 
the  exports  of  India  were  nominal  in  1879,  bin  Uiey  have  bounded  up 
to  a very  large  tonnage  now  — some  80,000,000  of  bushels;  in  1879 
they  could  not  have  been  5,000,000  or  3,000,000  ; I think  that  the 
English  people  were  led  to  believe  through  the  newspapers  that  there 
was  far  more  wheat  in  this  country  than  there  really  was,  and  that  it 
was  held  by  combination,  and  that  if  they  waited  they  would  buy  it  at 
, their  own  price  ; they  took  that  advice,  and  they  bought  it  very  much 
cheaper  than  they  would  have  bought  it  during  the  winter  ; had  it  not 
been  for  the  hue  and  cr}",  wheat  w*ould  have  moved  legitimately  at 
that  price  and  found  ready  buyers  on  the  other  side  at  the  prices  at 
which  it  was  originally  bought  and  purchased  by  the  individuals  com- 
posing the  syndicate ; there  was  no  great  quantity  of  wheat  in  this 
country  at  the  time,  and  if  it  had  not  been  for  the  interference  of  peo- 
ple who  had  no  business  with  speculation  and  the  hue  and  cry  that 
was  made  about  it,  we  should  have  made  more  money  than  we  did  out 
of  the  operation. 

Q.  I understand  it  was  not  a successful  operation  ? 

A.  Well,  no;  there  was  some  money  lost  in  it,  but  still  — 

Q.  What  was  the  amount  of  the  wheat  production  in  the  country 
during  that  year  ? 

A.  I really  cannot  remember ; perhaps  that  statement  of  440,000,- 
000  bushels  would  be  something  near  it. 


800 


Q.  How  many  bushels  do  you  say  the  syndicate  controlled  in  Chi- 
cago ? 

A.  Perhaps  fifteen  or  twenty  millions. 

Q.  Do  you  know  what  proportion  of  the  amount  of  sales  now  made 
in  the  Stock  Exchange  are  made  for  the  actual  delivery  of  the  stuff  ? 

A.  In  the  New  York  Stock  Exchange  ? 

Q.  Yes. 

A.  Why,  they  are  all  made,  of  course  ; all  stocks  are  to  be  delivered 
that  are  purchased,  and  all  stocks  delivered  that  have  been  sold ; or, 
rather,  all  stocks  are  received  that  are  purchased,  and  all  stocks  deliv- 
ered that  are  sold. 

Q.  Do  you  know  about  the  Produce  Exchange  ? 

A.  No,  I do  not  know  any  thing  about  it. 

Q.  How  much  of  the  wheat  held  by  the  syndicate  was  exported  from 
this  country  ? 

A.  The  whole  of  it. 

Q.  And  at  what  price  per  bushel  was  it  sold  to  be  exported? 

A.  1 really  do  not  know,  sir,  without  consulting  my  books  ; I could 
not  tell  you. 

Q.  You  say  there  was  a depression  ? 

A.  There  was  a depression,  but  we  were  selling  all  the  time,  and  we 
should  have  sold  a great  deal  more,  but  transportation  charges  were  so 
enormous  that  we  preferred  to  wait  until  spring  opened  up  the  canals 
and  the  lakes. 

Q.  Then  you  virtually  charge  upon  the  railroads  the  cause  of  the 
wheat  being  held  so  long  in  Chicago  ? 

A.  I don’t  make  any  charge  at  all,  because  the  whole  subject  has 
been  quite  forgotten  by  me  ; but  I know  that  arbitrary  railroad 
charges  restricted  the  movement,  and  they  do  far  more  injury  to  every 
interest  in  this  country  than  any  corner  that  two  or  three  men  may 
get  up  in  an  article  which  may  kist  for  a month  or  two,  because  the 
railroads  levy  tribute  upon  everybody,  on  the  consumer  and  on  the 
producer. 

Q.  How  much  less  were  you  compelled  to  dispose  of  that  wheat 
for,  to  foreigners,  than  you  could  have  got,  had  you  had  reasonable 
trans})ortation  facilities  to  get  it  to  the  sea-board  ; I mean,  how  much 
less  ])er  bushel  ? 

A.  Well,  if  1 remember  correctly,  the  rate  from  Chicago,  that  win- 
ter, was  thirty-five  cents  a hundred,  it  may  have  been  thirty  cents  a 
hundred,  1 do  not  wish  to  state  it  incorrectly.  If  the  transportation 
price  had  been  what  it  should  have  been  — 

(-1.  What  should  it  have  been  ? 

A.  Certainly  not  over  twenty  or  twenty-two  cents  a hundred.  You 


801 


can  see  that  it  made  a difference  of  al)ont  six  cents  a bushel.  If  the 
rate  was  thirty-five  cents,  that  was  nine  cents  a bushel;  if  it  was  thirty 
cents  a hundred,  it  was  six  cents  a bushel. 

Q.  That  was  a tax  upon  the  wheat  ? 

A.  That  was  a tax  upon  the  wheat. 

Q.  Now,  you  say  you  were  compelled  to  sell  it  for  less  than  you 
ought  to  have  sold  it  ? 

A.  I say  we  did  ; we  were  not  comi^ellecl  to  sell  it,  but  we  did ; we 
waited  until  spring  for  better  rates  of  transportation,  and  had  we 
moved  the  wheat  at  reasonable  railroad  rates  we  could  have  sold  it  at 
better  advantage  during  the  winter. 

Q.  Do  you  remember  how  much  less  you  were  compelled  to  sell  it 
for  per  bushel  than  you  ought  to  have  sold  it  for  ? 

A.  I should  think  ten  cents  per  bushel. 

Q.  Then  that  difference  in  price  was  so  much  less  in  money  to  this 
country,  Avas  it  not  ? If  you  had  not  been  able  to  get  the  ten  cents  — 

A.  Of  course  we  should  have  got  the  money  and  it  would  have 
come  here. 

Q.  From  foreigners  into  our  country  ? 

A.  Of  course. 

Q.  What,  in  the  aggregate,  did  that  loss  of  money  to  the  country 
amount  to  ? 

A.  Well,  it  must  have  amounted  to  two  or  three  millions  of  dollar^, 
I should  think;  not  as  much  as  that,  perhaps  — perhaps  a million 
dollars. 

Q.  And  that  loss  was  on  the  comparatively  small  smount  of  wheat 
which  your  syndicate'held  ? 

A.  Yes. 

Q.  Of  course  there  was  a similar  loss  on  all  other  Avheat  that  was 
exported  from  the  West  to  foreign  countries  ? 

A.  Unquestionably. 

Q,  Have  you  been  familiar  with  any  corners  that  have  occurred  in 
the  money  market  ? 

A.  No,  sir.  ■ 

By  Senator  Browkii^g: 

Q.  It  has  been  suggested  to  me  that  there  was  more  flour  and  grain 
exported  during  the  winter  of  1879-’80  and  the  spring  following  than 
had  been  exported  before  for  some  years  and  since  that  period.  Do 
you  know  that  fact  to  be  true  ? 

A.  What? 

Q.  That  there  was  more  flour  and  grain  exported  during  that  period 
Avhen  it  is  alleged  that  corner  existed  than  Avas  exported  before  for 
many  years,  and  since  ? 

101 


802 


A.  Well,  if  this  is  the  case  it  shows  that  the  corner  did  not  create 
any  disturbance  in  trade. 

Q.  Do  you  know  that  that  is  the  fact  ? 

A.  That  I do  not  know  ; as  I told  you  before,  the  circumstances  of 
the  whole  thing  have  passed  from  my  mind. 

By  Senator  Boyd  : 

Q.  Now,  with  regard  to  this  matter  of  transportation,  how  is  it  pos- 
sible to  remedy  that  evil  — remove  that  extra  tax  upon  the  produce  of 
the  country  ? 

A.  By  passing  a law  that  all  parallel  roads  shall  not  be  allowed  to 
pool  their  earnings  and  fix  arbitrary  rates. 

Q.  That  is,  to  maintain  a healthy  competition  ? 

A.  Yes. 

Q.  And  prevent  combinations  among  railroad  corporations  ? 

A.  To  i:»revent  combination  of  parallel  roads. 

By  Senator  BROWXiisG : 

Q.  Competing  lines  ? 

A.  Yes  ; for  instance,  you  have  the  New  York  Central,  the  Erie, 
and  the  Delaware  and  Lackawanna  running  to  Buffalo  ; I think  they 
all  combine  and  fix  the  price,  do  they  not  ? 

By  Senator  Boyd  : 

Q.  Are  you  familiar  with  our  elevating  system  ? 

A.  Elevated  railway  system? 

Q.  No;  elevating  grain  system  ? 

A.  No,  sir ; I am  not. 

Q.  You  said  you  were  a speculator  ; in  what  commodities  do  you 
speculate,  chiefly  ? 

A.  Well,  I speculate  in  stocks;  speculate  in  oil  — stocks  generally; 
I am  also  engaged  in  the  refining  of  oil  and  the  business  of  transport- 
ing it  by  pipe  from  the  oil  regions  in  the  sea-board. 

Q.  I think  you  stated  that  you  knew  of  no  corners  having  been 
made  in  the  oil  crop.  ? , 

A.  I do  not  think  of  any  corner;  I think  it  is  too  large  to  corner. 
Q.  Are  you  a member  of  the  Standard  Oil  Company? 

A.  1 am  not,  sir.  , 

(^.  '’.riiat  is  an  o])position  line  ? 

A.  Yes,  I am  a memljer  of  tlio  Tide-water  Pipe  Line  Company. 

llow  many  pi[)e  line  companies  are  there? 

A.  fihvo;  tlic  Standard  Oil  Com])any  and  the  Tide-water  Pipe  Line. 
0.  It  lias  been  alleged  freipiontly,  that  the  Standard  Oil  Company 
lias  cornered,  or  attenijited  to  corner,  the  other  competing  refining 
coni])ani(.‘s  and  lines  ; what  do  you  know  about  that  ? 


803 


A.  Well,  it  has  not  cornered  ours  ; I don’t  know  what  it  has  don 
with  the  balance. 

Q.  Has  it  made  any  attempt  to  corner  or  to  crush  out  your  refineries? 

A.  In  no  other  way  than  by  inaugurating  a very  active  competition. 

Q.  Is  there  any  thing  that  you  would  like  to  state  to  the  committee? 

A.  I am  through  if  the  committee  are. 

Adjourned  to  December  22,  at  11  a.  m. 

\ 

Hew  York,  Decemler  22, 1882,  11  o’clock,  a.  m. 

The  Committee  met  pursuant  to  adjournment  at  the  Metropolitan 
Hotel,  Hew  York  city. 

Metropolitan-  Hotel,  ) 
Hew  York,  Decemler  21,  1882. ) 

L.  E.  Chittekden-  : 

Dear  Sir — The  committee  now  investigating  the  system  of  mak- 
ing corners  have  reached  a point  where  counsel  is  necessary  to  assist 
the  committee  in  bringing  out  many  facts  of  essential  public  import- 
ance. But  the  committee  are  not  authorized,  by  the  terms  of  the  reso- 
lution appointing  them,  to  retain  counsel  at  the  expense  of  the  State, 
nor  are  they  willing  to  give  assurance  of  future  action. 

The  committee  would  be  glad  to  have  your  professional  assistance 
provided  you  are  willing  to  give  it,  leaving  to  the  Senate  to  decide 
whether  in  view  of  the  importance  of  the  case  it  thinks  proper  to 
make  you  proper  compensation  when  the  facts  are  laid  before  that 
body. 

Yours  respectfully, 

JOHH  E.  BOYD, 

Chairman  of  Committee, 

To  which  the  following  reply  was  received  : 

CniTTEKDEN,  TowNSEKD  & Chittekden",  Laiuijers, ) 

160  Broadway,  Hew  York,  December  21,  1882.  ) 

Hon.  John"  G.  Boyd,  Chairman,  etc. : 

Dear  Sir  — I have  received  your  note  of  this  date;  any  service 
which  I can  render  in  eliciting  the  facts  involved  in  the  subject  of  its 
investigation  is  at  the  disposal  of  the  committee ; if  such  service  pro- 
motes the  public  interest,  I have  no  doubt  it  will  be  paid  for ; if  it  does 
not  it  will  not  deserve  compensation.  From  the  published  reports  it 
seems  clear  that  several  prominent  gentlemen  have  justified  the  prac- 
tice of  speculating  in  what  are  called  “ futures  ” in  the  cotton,  food. 


804 


light,  fuel  and  property  of  the  people.  And  exposure  of  fuo  real 
effect  of  such  speculations  upon  legitimate  business  seems  to  be  indis- 
pensable to  proper  legislation. 

Yours  truly, 

L.  E.- CHITTENDEN. 

Adjourned  to  December  23,  1882. 


New  York,  Decemler  23,  1882. 

The  Committee  met  pursuant  to  adjournment  at  the  Metropolitan 
Hotel,  New  York  city. 

Preseitt — Senators  Boyd  and  Browning  of  the  Committee’;  John 
W.  Corning,  Sergeant-at-Arms  of  the  Senate;  Daniel  A.  Cooney, 
Clerk  of  the  Committee,  and  Mr.  L.  E.  Chittenden,  as  Counsel  for  the 
Committee. 

Rev.  James  M.  King  was  then  called,  and  being  interrogated,  testi- 
fied as  follows  : 

Senator  Boyd  — In  consideration  ot  the  sacredness  of  your  calling 
we  will  not  put  the  usual  oath. 

By  Senator  Boyd  : 

Q.  What  is  your  profession  ? 

A.  I am  a minister  in  the  Methodist  Episcopal  Church. 

Q.  With  what  church  are  you  at  present  associated  ? 

A.  18  West  Eighteenth  street. 

Q,  How  long  have  you  been  a minister  of  the  gospel  ? 

A.  Seventeen  years. 

Q.  What  is  your  opinion  of  the  whole  system  of  making  corners  and 
dealing  in  futures,  with  reference  to  its  effect  upon  commerce  and  its 
influence  upon  the  public  welfare? 

A.  I ougiit  to  say  that  I have  been  trying  to  inform  myself  concern- 
ing these  matters,  and  my  principal  sources  of  information  have  been 
the  revelations  that  have  been  brought  out  by  your  examinations  here; 
and  in  view  of  the  fact  that  I think  that  a man  who  bears  testimony 
upon  any  given  subject  ought  to  be  so  thoroughly  posted  that  he  can 
give  information,  I don’t  consider  ’ myself  sufficiently  well  informed 
or  expert  in  these  matters  to  give  information  of  a character  tliat 
would  be  instructive  to  tlie  committee  ; but,  at  the  same  time,  I have 
my  own  conviction  upon  these  things,  and  I believe  that,  in  just  so  far 
as  transactions  of  tlie  character  in  (picstion  foster  a spirit  of  venture 
ami  gami)ling,  they  are  detrimental  to  public  morals;  and  I think 


805 


that  the  result  of  this  investigation  and  the  broad  range  of  the  calling 
of-witiiesses  will  secure  at  least  two  favorable  results  ; and  the  first  is 
the  calling  of  the  general  attention  of  the  public  to  a discussion  of  this 
question,  and  the  public  being  thus  informed  whether  it  is  advisable 
to  take  any  legislative  action  upon  the  subject  or  not ; those  who  are 
engaged  in  questionable  transactions  will  find  the  public  so  thoroughly 
informed,  and  themselves  so  thoroughly  watched,  that  it  will  be  at 
least  a check  upon  them.  In  reference  to  any  thing  more  than  a gen- 
-eral  opinion  based  upon  this  information  in  the  light  of  the  testimony 
that  has  been  given  here  by  those  who  ought  to  be  considered  as  ex- 
perts in  trade,  as  well  as  in  morajs,  I can’t  consider  myself  as  being  either 
sufficiently  informed  or  authorized  to  go  into  a minute  discussion.  I 
might  say  that  one  advantage  that  I consider  will  accrue  from  the 
summoning  of  witnesses  here  of  the  teachers  of  morals,  as  well  as  men 
engaged  in  trade,  will  be  the  calling  of  the  attention  of  that  class  of 
people  who  are  churchgoers,  and  who  make  morality  and  Christianity 
and  different  phases  of  religion  a subject  of  study,  to  call  the  attention 
of  that  class  of  people  to  make  it  a thorough  matter  of  study  in  its 
relationship  to  their  own  life  and  conduct.  If  you  should  call  me  as 
a man  measurably  well  informed  as  an  expert  in  some  branch  of  the- 
ology, perhaps  I might  answer  some  explicit  question,  but  my  source 
of  information  concerning  futures  and  corners  is  the  same  as  the  gen- 
eral public — the  information  that  has  been  given  here. 

Q.  Assuming  the  testimony  of  business  experts  which  has  been  of- 
fered before  this  committee  to  be  correct,  in  regard  to  the  system  of 
dealing  in  futures  and  making  corners,  and  in  regard  to  the  system 
of  what  is  called  illegitimate  speculation,  what  would  be  your  opinion, 
or  rather  how  would  you,  as  a Christian  minister,  characterize  such 
transactions  ? 

A.  Basing  my  judgment  upon  the  general  drift  of  the  testimony,  I 
should  say  that  there  was  ample  reason  for  asserting  that  in  many  of 
these  transactions  there  was  evident  and  flagrant  dishonesty,  and  that 
they  inspire,  and  especially  in  the  minds  and  purposes  of  young  men, 
a desire  and  purpose  to  secure  wealth  or  returns  without  legitimate  in 
vestment  or  adequate  labor. 

Q.  Wherein  is  such  a system  of  speculation  different  in  any  degree 
from  the  popular  idea  in  relation  to  gambling  ? I might  state  here 
that  certain  business  experts  have  characterized  this  system  of  deal- 
ing as  a species  of  gambling  ? 

A.  I will  respond  in  this  way:  in  general  I should  think  not. 
Where  in  sales  and  purchases  there  is  no  purpose  of  delivering  I should 
«ay  that  that  was  pure  and  simple  gambling. 


I 


806 


Q.  Where  the  system  of  speculation  has  a tendency  to  enhance  the 
cost  of  the  necessaries  of  life  witlrout  contributing  any  thing  to  the 
wealth  of  the  country  or  to  tlie  increase  of  production  of  the  country, 
what  would  your  opinion  be  of  sucli  a state  of  specuhition  ? 

A.  I should  say  that  it  was  not  only  illegitimate  but  that  the  men 
engaged  in  it  ought  to  be  by  law  or  in  some  way  forced  to  earn  an 
honest  livelihood. 

Q.  Where  the  produce  of  the  country  and  all  commodities  neces- 
sary for  the  support  of  life  are  by  any  means  withheld  from  circula- 
tion and  from  producers  at  their  proper  value  for  the  purpose  of  en- 
riching a favored  few  individuals  who  have  the  capital  to  corner  and 
lock  up  the  mass  of  the  production,  what  is  your  idea  of  such  trans^ 
actions  ? 

I should  say  in  the  first  place  that  it  is  evidently  detrimental  to 
the  public  good,  and  in  the  second  place,  from  a moral  standpoint,  at 
least  ciuestionable. 

Q.  What  is  the  doctrine  of  scripture  in  relation  to  such  transactions? 

A.  I should  say  briefly,  that  if  all  men  engaged  in  business  trans- 
actions recognized  Christian  morality  as  the  basis  of  their  relationships 
to  each  other,  there  wouldn’t  be  aUy  necessity  for  this  committee  to 
meet- 

Q.  That  is  hardly  a categorical  answer,  and  knowing  that  you  are 
so  well  qualified  to  give  a categorical  answer  I will  ask  you  whether 
such  transactions  are  opposed  to  or  in  accordance  with  the  teachings 
of  scripture.  ? 

A.  I could  say  in  response  to  that  this  : That  basing  my  opinion 
of  the  character  of  these  transactions  upon  the  information  received 
from  previous  testimony  before  this  committee,  I should  say  that 
they  were  antagonistic  to  the  teachings  of  Christian  morality. 

By  Mr.  Chttten^den  : 

Q.  During  your  ministry,  you  have  been  an  attentive  observer  of 
public  affairs,  I suppose  ? 

A.  I have  tried  to  inform  myself,  yes,  sir. 

Q.  Did  you  ever  hear  at  all,  within  the  past  four  or  flve  or  six 
years,  of  the  terms  futures,”  ‘^options,”  ‘‘ puts,”  “ calls,”  “strad- 
dles,” etc.,  being  used  as  they  are  now  used  in  tlie  nomenclature  of 
speculative  transactions? 

A.  No,  sir,  those  ])hrasos  are  of  recent  use  as  far  as  my  knowledge 
goes. 

(}.  State  whetlier  or  not  you  have  noticed  increasing  in  some  pro- 
j)ortion  to  tlie  volume  of  speculative  transactions,  cases  of  violations 


807 


by  trustees,  clerks,  cashiers,  and  other  persons  acting  in  a fiduciary 
capacity  of  their  trust  relations  ; whether  such  violations  in  your  judg- 
ment are  more  common  now  than  they  were  say  ten  or  twenty  years 
ago  ? 

A.  They  have  been  greatly  on  the  increase  in  the  past  ten  years. 

Q.  State  whether  or  not  you  have  noticed  that  in  a great  majority 
of  cases  these  violations  of  fiduciary  relations  appear  to  have  been 
caused  by  speculation  ? 

A.  In  almost  every  instance  that  I have  known. 

• Q.  Those  cases  have  become  very  common  within  the  last  few  years, 
have  they  not  ? 

A.  Yes,  sir,  and  one  fact  I ought  to  mention  from  my  observation 
in  connection  with  it  : they  have  become  very  common  with  a class  of 
men  that  when  revelations  have  been  made,  they  have  been  a shock  to 
the  moral  and  the  religious  portion  of  the  community,  especially. 

Q.  Men  have  violated  those  trust  relations  who  stood  high  in  the 
confidence  of  the  community,  and  were  generally  esteemed  men  of  ex- 
emplary character  before  ? 

A.  Yes,  sir. 

By  Senator  Boyd  : 

Q.  Can  you  suggest  to  the  committee  any  remedy  by  which  those 
evils  might  be  suppressed  by  legislation  or  otherwise  ? 

A.  I should  say  that  it  would  be  very  desirable  to  secure  an  accu- 
rate definition  of  crime  in  connection  with  these  proceedings,  and  then 
when  the  crime  has  been  defined,  there  ought  to  be  some  way  of  reach- 
ing it  as  crime  by  law. 

Q.  Is  there  any  thing  further  that  you  would  like  to  suggest  to  the 
committee  ? 

A.  I think  of  nothing.  I desire  to  express  myself  thoughtfully  and 
carefully  upon  the  matter,  as  I know  the  whole  thing  now  has  come  to 
be  a matter  of  public  education,  and  where  a question  of  public  morals 
is  being  investigated,  it  seems  to  me  that  utterances  up(3n  the  subject 
ought  to  be  most  careful  and  judicious  in  order  to  carry  any  weight 
with  them.  I think  of  nothing  that  I desire  to  add. 

Henry  Cleius,  being  duly  sworn,  was  then  interrogated  and  testified 
as  follows: 

By  Senator  Boyd  : 

Q.  Where  do  you  reside  ? 

A.  14  West  Fortieth  street. 

Q.  What  is  your  business  ? 


808 


1 


A.  Banker  and  broker. 

Q.  Where  is  your  place  of  business? 

A.  18  New  street. 

Q.  Are  you  a member  of  a firm  ? 

A.  Henry  Clews  & Co.;  yes,  sir. 

Q How  long  have  you  been  in  that  business  ? 

A.  Over  twenty  years. 

Q.  What  is  your  opinion  in  relation  to  th’e  whole  system  of  making 
corners  and  dealing  in  futures  with  reference  to  its  effect  upon  com- 
merce and  its  influence  upon  the  public  welfare  — that  cjuestion  em-‘ 
braces  the  whole  of  the  authority  under  which  this  committee  is 
acting,  and  that  is  the  reason  why  I put  it  ? 

A.  The  corners  are  the  result  of  speculations  at  times  carried  to 
extremities.  . They  are  not  frequent  and  are  liable  to  be  less  so  owing 
to  the  result  to  the  parties  connected  with  them,  which  has  not  been 
successful  — scarcely  ever.  It  usually  leaves  the  parties  with  the  ma- 
terial on  hand  whether  it  is  products — T speak  especially,  thougli, 
with  regard  to  stocks  — without  a market  for  their  property  and  has 
always  seriously  embarrassed  them  and  invariably  led  to  disaster.  I 
have  prepared  a few  notes  here  which  I will  read : 

•‘Speculation  is  the  method  now  adopted  for  adjusting  differences 
of  opinion  as  to  future  values,  whether  of  products  or  securities.  It 
is  more  common  than  in  former  years  because  the  facility  for  procur- 
ing information  has  increased  with  the  greater  intelligence  with  which 
business  is  now  conducted  and  also  from  the  greater  rapidity  witli 
which  such  information  can  be  transmitted  by  telegraph  and  cable. 
In  former  years  the  results  of  a crop  were  known  only  vrhen  the  crop 
came  to  be  marketed  ; now,  all  is  ascertained  before  the  crop  is  gath- 
ered. This  advance  information  naturally  becomes  the  subject  of 
speculative  transactions  which  could  not  exist  in  former  times. 

“ Speculation  brings  into  play  the  best  intelligence  as  to  the  future 
of  values.  It  has  always  two  sides.  The  one  that  best  comprehends 
the  facts  and  conditions  of  the  situation  wins  in  the  end  ; and  the  re- 
sult of  the  conflicts  is  the  nearest  possible  approach  to  the  correct 
valuation.  The  result  of  speculation  for  a fall  in  prices  is  based  on 
the  presumption  of  an  over  supply.  If  it  succeeds,  the  production  of 
the  particular  article  is  checked  until  prices  recover,  and  in  the  mean 
time,  production  is  diverted  together  articles  less  abundant.  Thus 
speculation  ])r()ves  a regulator  of  both  values  of  i)roduction.  A specu- 
lation for  a rise  in  ])rices  is  based  on  a })resum})tion  of  scarcity  or  short 
8U})ply ; and  its  direct  effect  is  to  (piicken  production  and  thereby  re- 
store the  e(juilib]-ium  of  })ricos.  “Corners”  usually  come  from  run- 


809 


uing  a speculation  to  an  excessive  length,  by  which  the  sellers  become 
responsible  for  deliveries  beyond  what  they  can  possibly  make  and 
thereby  place  themselves  at  the  mercy  of  those  with  whom  they  'nave 
made  contracts.  These  exigencies  chiefly  affect  tlie  speculators,  and 
affect  the  producing  community  but  little.  Extreme  prices  usually  grow 
out  of  them;  but  they  arc  only  momentary,  and  have  no  effect  ii})ou 
regular  or  ‘"cash”  transactions,  which  sympaihize  very  remotely  with 
these  momentary  artificial  quotations. 

Speculation  is  not  to  be  judged  by  its  occasional  excesses,  but  })y  its 
general  effects,  which  the  foregoing  considerations  show  to  be  bene- 
ficial. 

It  regulates  production,  first,  by  instantly  advancing  prices  when 
there  is  scarcity,  and  thereby  stimulating  production  ; and  secondly, 
by  putting  down  prices  when  there  is  an  over  supply,  and  thereby 
checking  production.  And  it  equally  regulates  prices  also  by  keeping 
them  adjusted  to  the  best  obtainable  information  respecting  the  con- 
ditions of  supply  and  demand. 

“ Speculation  is  not  really  the  factor  that  joroduces  fluctuations  in 
prices  ; it  is  only  the  agency  for  giving  effect  to  the  fluctuations  in 
supply  and  demand,  which  are  the  actual  factors  controlling  values. 

Prices  would  equally  fluctuate  in  the  absence  of  speculation  ; but 
the  changes  would  come  more  slowly  and  later;  and  therefore  in  most 
cases,  the  variations  would  come  too  late  to  regulate  preparations  for 
the  succeeding  crops.  It  is  one  of  the  great  advantages  of  speculation 
that  it  makes  conspicuous  the  results  of  the  present  crop  in  time  to 
adjust  preparations  for  the  next;  thereby  tending  to  prevent  two  large 
crops  or  two  light  crops  in  succession,  and  thus  it  becomes  an  import- 
ant means  of  maintaining  an  even  course  of  prices,  and  also  of  evenly 
distributing  capital  and  labor  as  among  the  various  industries. 

‘‘Corners  invariably  follow  enterprise.  All  kinds  of  business  that  is 
exclusive  leads  to  corners,  such  as  is  covered  by  patents  especially. 

“ A distinguished  merchant,  now  deceased,  made  more  corners  in  his 
time  than  the  balance  of  the  community  put  together;  this  he  did  by 
contracting  for  the  entire  production  of  certain  classes  of  goods,  and 
as  such  goods  could  only  be  obtain  ed  at  his  establishment,  he  had  a 
close  corner  in  them  and  charged  a fictitious  price  therefor  in  many 
instances,  which  enabled  him  often  to  m ark  down  below  cost  staple 
goods,  sucli  as  all  firms  had  to  keep,  and  not  unfrequently  thereby 
break  his  competitors.  Many  of  the  present  large  mercantile  firms 
now  do  business  in  the  same  way,  and  ail  importing  houses  deal 
in  “futures,”  they  sell  goods  by  samples,  contracting  to  deliver  at 
a future  stated  period,  varying  from  thirty  days  to  one  year,  in  the 


810 


meanwhile  the  goods  sometimes  have  to  be  made  or  grown  and 
brought  from  a distance  of  3,000  or  more  miles.  All  such  corn^ws  are 
the  natural  and  legitimate  result  of  enterprise  and  they  will  continue 
to  exist  and  increase  in  all  future  time.  The  intervention  of  Congress 
or  State  Legislatures  is  not  needed  to  put  down  American  enterprise 
and  Yankee  goaheadtiveness,  it  will  beat  the  world  if  left  alone.  Sup- 
ply and  demand  is  the  real  regulator  and" always  asserts  its  power  in 
the  end;  those  who  do  not  obey  its  mandates  will  become  the  victims. 
People  who  buy  cheap  and  sell  dear  make  the  money  in  all  lines  of 
business. 

“ Congress,  I well  remember,  during  the  war  passed  an  act  to  sup- 
press selling  gold  short,  the  result  was  it  broke  up  the  general  trading 
in  it,  and  drove  the  business  into  foAV  hands,  thereby  giving  to  said, 
parties  the  monopoly  and  thus  produced  a corner  in  gold,  which  re- 
sulted in  the  premium  almost  doubling  in  a comparatively  short  time. 
The  wise  statesmen  who  originated  the  measure  and  who  were  instru- 
mental in  getting  it  through  Congress  took  alarm  at  the  result  pro- 
duced, and  at  once  had  the  act  repealed.  Another  attempt  and  in- 
terference was  made  by  Secretary  Hugh  McCulloch,  who  made  a 'mi- 
nute calculation  that  Gold  Greenbacks  should  uot  range  higher  than 
129f  premium,  hence  undertook  by  selling  treasury  gold  whenever  it 
reached  180.  To  keep  the  price  at  his  figure,  his  brokers  had  carte 
Handle  to  meet  all  demands  at  130;  it  was  prior  to  the  cable  period, 
hence  all  foreign  neAvs  came  by  steamers.  One  afternoon,  at  about 
tAvo  and  a half  o’clock,  the  ncAvs  struck  the  street  that  a serious  panic 
Avas  prevailing  in  England  — Overend,  Gurney  & Co.  had  failed  ; hun- 
dreds of  merchants  and  many  banks  also.  The  foreign  bankers  here 
had  imperative  orders  from  their  correspondence  to  remit  gold  to  Eng- 
land at  once.  The  orders  were  sent  to  the  gold  room,  and  in  less  than 
half  an  hour  the  government  gold  broker  Avas  bailed  out  of  at  least  $25,- 
000,000  of  gold  in  the  time  Immediately  thereafter  the  premium  ad- 
vanced to  40,  and  before  the  close  of  the  next  day  it  reached  60.  It 
Avas  the  cheap  government  gold  that  Avas  shipped,  and  its  arrival  in 
England  stopped  the  panic,  and  but  for  which  general  bankruptcy  in 
England  doubtless  Avould  have  been  ineAutable,  thereby  causing  Eng- 
land’s high  credit  to  be  impaired,  and  in  consequence  the  sooner 
building  Noav  York  city,  as  the  financial  center  of  the  Avorld,  — her 
future  destiny. 

Corners  in  stocks  Avhich  after  past  experience  seldom  occur,  and  all 
that  have  been  inaugurated  have  resulted  in  loss  to  the  conspirators 
and  in  most  instances  their  ruin  ; it  was  so  in  the  Black  Friday  corner, 
Prairie  dii  Chein  coi-iicr,  the  Pock  Island  corner,  the  Nortli-Avcst 
corner  and  moi’e  recently  the  Hannibal  & St.  Joe  corner  ; it  invariably 
leaves  the  ])arties  to  such  nefarious  transactions  high  and  dry  Avith  all 


811 


the  stock  on  hand  and  without  a market  therefor.  There  is,  however, 
a class  of  stock  and  grain  dealing  which  should  be  suppressed  by  law, 
and  that  is  bucket-shop  business,  as  that  is  merely  betting  on  quota- 
tions as  they  pass  over  the  tape  on  the  indicator,  the  inducements 
held  out  by  the  circulars  sent  out  by  such  corners  capture,  as  custom- 
ers, people  of  small  means,  such  as  clerks  and  servants  which  not  in- 
frequently lead  to  acts  of  dishonesty;  railroads  obtain  their  franchises 
through  either  Congress  or  State  Legislatures,  hence  are  under  the  im- 
mediate control  thereof  and  can  be  regulated  thereby  ; corners  or  pool- 
ing which  is  the  sam'e  thing  and  now  so  universal  should  be  prohibited 
by  law  ; so  should  the  combinations  of  coal  companies  ; also  the  consoli- 
dation of  telegraph  companies,  owing  to  their  prejudicial  effect  upon 
public  interests  and  also  contrary  to  public  policy;  they  build  up 
monopolies,  thereby  enriching  and  making  all  powerful  the  few  at  the 
expense  of  the  many,  and  hurtful,  politically  and  otherwise,  to  the  great 
interests  of  the  nation.  * 

‘‘Again,  referring  to  short  sales  or  futures,  especially  in  the  grain 
market,  they  form  at  times  an  important  sustaining  power  in  the  mar- 
ket. I refer  to  j^eriods  of  depressions  which  come  periodically  in  this 
country,  and  but  for  that  element  the  big  and  bold  European  opera- 
tors would  be  enabled  at  such  periods  to  manipulate  at  the  price  of 
our  products  to  suit  themselves,  and  before  buying  would  raid  and 
hammer  down  prices  much  below  production  cost.  When  we  sell  to 
Europe  we  must  do  so  at  prices  that  give  profit  on  production,  or  we 
are  not  much  benefited.  I merely  cite  those  cases  to  show  the  effect 
of  congressional  or  legislative  interference  with  business.” 

By  Mr.  CniTTEKDEi^ : 

Q.  Have  you  completed  your  statement  ? 

A.  Yes,  sir, 

Q.  How  long  have  you  personally  been  engaged  in  business  in  Wall 
street  ? 

A.  Over  twenty  years. 

Q.  And  what  has  been  your  general  system  ? 

A.  Banking  and  brokerage. 

Q.  The  purchase  and  sale  of  stocks,  bonds  and  securities,  I suppose  ? 

A.  Yes,  sir. 

Q.  You  are  engaged  in  that  business  now  ? 

A.  Yes,  sir. 

Q.  Have  you  ever  been  engaged  in  the  business  of  dealing  in  wheat, 
corn,  provisions,  and  those  things  which  generally  fall  under  the  name 
of  produce? 

A.  Yes,  sir. 


812 


Q.  la  what  manner  ? 

A.  I am  a member  of  the  Chicago  Board  of  Trade,  and  execute 
orders  there  quite  largely. 

Q.  IIow  do  you  execute  orders  there  ? 

A.  I send  them  by  wire  to  Chicago,  and  they  are  executed  by  my 
broker  there. 

Q.  In  otiier  words,  your  broker  buys  and  sells  for  your  customers 
here,  does  he  ? 

A.  Yes,  sir. 

Q.  Do  you  deal  to  any  extent  upon  the  Produce  Exchange  here  ? 

A.  Yes,  sir,  somewhat. 

Q.  And  in  the  same  way  ? 

A.  In  orders  only.  I never  bought  or  sold  a bushel  of  corn  or 
wheat  or  grain  in  my  life  on  my  own  account,  nor  have  my  firm  ever 
done  so. 

Q.  What  business  are  your  customers  engaged  in  for  whom  you  exe- 
cute these  orders  in  Chicago  ? 

A.  They  are  engaged  in  the  grain  business.  Some  of  them  have 
no  other  business  excepting  to  operate, 

Q.  Have  you  in  mind  any  one  for  whom  you  have  made  any  such 
extensive  purchases  and  sales  for  actual  consumption  or  delivery  ? 

A.  Yes,  sir,  a great  many,  especially  for  delivery,  I have. 

Q.  For  actual  consumption  ? 

A.  For  consumption  ? that  does  not  quite  enter  into  my  business. 
The  orders  of  that  character  are  usually  executed  by  people  who  are 
exclusively  in  the  produce  business,  such  as  David  Dows  and  Jesse 
Hoyt,  and  firms  of  that  character. 

Q.  Is  not  your  business,  so  far  as  it  extends  to  produce,  largely 
speculative  ? 

A.  Well,  it  may  be  so  considered,  yes.  sir,  for  those  that  we  do 
it  for. 

Q.  And  a very  ilittle  of  it  is  for  actual  consumption  or  sale  by  the 
parties  for  whom  you  purchase,  is  that  so  ? 

A.  Well,  I suppose  it  is. 

Q.  Do  you  deal  in  cotton  ? 

A.  Yes,  sir  ; we  execute  orders  in  cotton.' 

Q.  In  the  same  way  ? 

A.  Yes,  sir. 

Q.  And  of  the  same  character? 

A.  Yes,  sir. 

(2-  ^'ivo  us  some  idea  of  the  amount  of  your  purchases  or  sales  of 
])rodiH;(*  for  example,  for  any  week  or  month  or  year  — I want  to  get 
tlie  volume  of  it  ? 

A.  I would  1)0  unable  to  do  that  without  reference  to  my  books. 


813 


QJ  Does  it  run  up  to  hundreds  of  thousands  of  dollars  annually  ? 

A.  Yes,  sir ; it  far  exceeds  that. 

Q.  It  goes  into  millions,  doesn’t  it  ? 

A.  Yes,  sir. 

Q.  Are  your  cotton  transactions  equally  extensive? 

A.  No,  sir;  our  cotton  business  is  not  quite  equal  to  the  other. 

Q.  Give  us  some  idea  of  the  annual  volume  of  that  as  near  as  you 
can  do  so  without  your  books  ? 

A.  It  probably  amounts  to  some  hundreds  of  thousands  of  dollars, 
periodically. 

Q.  Do  you  deal  in  oil  ? 

A.  Yes,  sir  ; on  orders,  exclusively. 

Q.  And  orders  of  the  same  character,  I suppose  ? 

A.  Yes,  sir. 

Q.  To  what  extent  will  your  oil  business  run  per  year  ? 

A,  That  is  a new  addition  to  the  business,  made  within  a few  days  ; 
so,  therefore,  I cannot  give  much  experience  as  to  that. 

Q.  Do  you  deal  in  pork  and  other  provisions  ? 

A.  We  execute  orders  in  them,  but  our  business  is  not  particularly 
large  in  that  branch. 

Q.  You  have  been  in  the  produce  business  in  this  way  for  several 
years,  have  you  not  ? 

A.  About  two  years,  I should  think.  ^ 

Q.  Not  over  two  ? 

A.  No,  sir. 

Q.  Were  you  in  it  in  1879  ? 

A.  No,  sir. 

Q.  The  large  amount  of  your  business  is  in  stocks  and  securities,  is 
it  not  ? 

A,  Yes,  sir  ; executing  orders  at  the  New  York  Stock  Exchange. 

Q.  Executing  orders  for  your  customers  ? 

A.  Yes,  sir,  exclusively. 

Q.  Is  the  greater  part  of  your  business  done  in  the  Stock  Exchange? 
A.  Yes,  sir  ; almost  all  of  it. 

Q.  You  are  entirely  familiar  with  the  process  of  doing  business  in 
. that  Exchange,  are  you  not  ? 

A.  I am,  sir. 

Q.  And  have  been  for  twenty  years  ? 

A.  Yes,  sir. 

Q.  You  do  a very  large  business,  amounting  to  many  millions  of 
dollars  annually,  don’t  you  ? 

A.  Yes,  sir. 

Q.  Could  you  give  the  committee,  in  round  numbers,  an  idea  of  its 
general  volume? 


814 


A.  No,  sir,  I cannot  without  reference  to  the  books  ; I wouldn’t  like 
to  make  a guess  of  it. 

Q.  Give  us  the  best  guess  you  can — the  aggregate  of  your  pur- 
chases and  sales  ? 

A.  I really  would  not  want  to  venture  on  an  opinion  as  to  that,  be- 
cause it  is  quite  large. 

Q.  Fifty  millions  a year  ? 

A.  Yes,  sir. 

Q.  Probably  more  than  that,  isn’t  it? 

A.  A^es,  sir. 

Q.  On  all  that  you  are  paying  a commission,  are  you  ? 

A.  AYs,  sir. 

A.  What  are  the  average  commissions  of  all  purchases  and  sales  of 
that  character? 

A.  $12.50  on  each  100  shares  of  stock  for  buying,  and  the  same  for 
selling. 

Q.  Could  you  give  any  general  average  value  of  the  shares  that  you 
deal  in  — wouldn’t  the  average  be  somewhere  from  $30  to  $50  a share  ? 

A.  I should  think  it  would  range  about  $50,  — somewhere  in  that 
neighborhood  — the  par  value. 

Q.  We  have  heard  a good  deal  in  the  outside  world  about  specula- 
tors locking  up  money  in  Wall  street  ; do  you  understand  that  process  ? 

A.  AYs,  sir. 

Q.  It  is  reputed  that  Mr.  Gould,  Mr.  Sage,  Mr.  Dowd,  and  others, 
have  been  engaged  in  that  to  a considerable  extent  during  the  last  few 
years  ; is  that  report  true  ? 

A.  I am  unable  to  testify  as  to  their  dealings. 

Q.  Is  it  the  general  understanding  in  the  trade  with  which  you  are 
connected  that  such  has  been  the  fact  ? 

A.  I cannot  give  facts. 

Q.  AMu  know  what  the  understanding  is,  don’t  you  ? 

A . There  are  various  rumors,  there  have  been  at  times,  to  that  ef- 
fect. 

Q.  Do  you  yourself  believe  that  they  have  been  largely  engaged  in 
locking  u])  money  many  times  within  the  last  three  years  ? 

A.  1 won’t  say  as  to  those  gentlemen ; I think  it  has  been  done  in  . 
the  street  at  times. 

Q.  Describe  the  process  to  the  committee  ? 

A.  It  lias  been  diflicult  in  later  years  to  lock  up  money,  and  it  has 
scarc(!ly  Ix-en  doiu*  excepting  recently. 

(T  Deseribe  tin*  process? 

A.  'Idu;  pi’oeess  wliich  is  a,(lniissible  now  — 

(2-  Not  now  — the  past  three  or  four  years  ? 


815 


A.  It  has  been  impossible  for  several  years  past  owing  to  the  bulki- 
ness of  gold;  it  was  only  gold  that  could  be  obtainable,  and  any  one  start- 
ing to  lock  up  gold  would  find  after  he  had  locked  up  about  $500,000  it 
would  be  exceedingly  difficult  to  find  a place  to  put  any  more  and  keep 
it  safe  ; so  owing  to  that  fact  it  was  impossible  to  lock  it  up. 

Q.  Please  explain  to  the  committee  the  process  of  locking  up  money 
that  has  been  in  use  or  attempted  during  the  last  three  or  four  years  ? 

A.  Bankers  or  brokers  or  merchants  or  any  one  haviny  balances  to  their 
credit  in  their  bank  are  entitled  to  draw  the  money  out.  and  it  is  their 
money,  and  they  can  do  what  they  like  with  it  ; they  can  take  it  home 
with  them  or  can  put  it  in  their  vaults,  secrete  it  anywhere  audit  takes 
it  out  of  circulation  ; the  recent  act  of  Congress  authorizing  the  issue 
of  gold  certificates  makes  it  easier  to  be  accomplished  ; they  can  de- 
posit now  a million  of  dollars  of  gold  — 

Q.  Excuse  me,  but  you  are  going  entirely  away  from  my  question  ? 

A.  I was  going  to  explain  how  it  is  done  by  taking  these  gold  cer- 
tificates, which  you  can  do — the  way  it  is  done  and  the  way  it  has 
been  done  lately.  They  will  deposit  their  gold  in  the  treasury.  It  is 
carted  from  their  bank  to  the  treasury  and  they  take  out  a corre- 
sponding amount  of  gold  certificates,  and  it  is  an  easy  "matter  to  put  a 
million  dollars  of  gold  certificates  in  your  pocket  and  walk  home  with 
them,  which  couldn’t  be  done  with  gold,  and  it  can  be  done  with  $2,- 
000,000  or  $3,000,000  or  $5,000,000 — there  is  no  limit  to  it,  and  there- 
fore the  passage  of  that  act  and  the  authorization  of  these  gold  certi- 
ficates make  it  comparatively  an  easy  matter  to  lock  up  money,  while 
before  it  was  almost  impossible.  It  was  done  during  the  war  when 
greenbacks  could  be  got ; but  of  late  greenbacks  have  been  scarce.  If 
you  go  to  the  bank  they  give  you  gold  and  not  greenbacks. 

Q.  I don’t  consider  the  answer  responsive.  Please  explain  to  the 
committee  the  process  of  locking  up  money? 

The  question  formerly  asked  was  then  repeated  to  the  witness,  as 
follows:  ‘^Q.  Please  explain  to  the  committee  the  process  of  locking 
up  money  that  has  been  in  use  or  attempted  during  the  last  three  or 
four  years  ?” 

Q.  Do  you  consider  that  you  have  answered  that  question  ? 

A.  There  is  another  raetliod  of  doing  it. 

Q.  State  the  other  method  ? 

A.  Certified  checks  can  be  retained  and  not  deposited.  They  rep- 
resent money  in  the  banks,  and  that  money,  of  course,  belongs  to  the 
certified  checks,  and  not  being  called  for,  not  being  deposited,  it  re- 
mains in  the  banks  out  of  use.  That  is  done  frequently,  but  that  can 
last  only  a few  days— not  over  one  or  two  days  generally.  The  banks 


816 


find  that  the  certified  checks  are  not  sent  in  and  they  will  take  the 
risk  often  in  lending  the  money  out,  being  suspicions  that  the  checks 
are  kept  back.  So  it  does  not  last  very  long.  It  defeats  itself  after  a 
while. 

Q.  Are  you  not  personally  cognizant  of  cases  in  which  a party  of 
gentlemen,  capitalists,  desiring  to  lock  up  money,  have  commenced 
by  loaning  large  amounts  of  money  on  call  in  the  Stock  Exchange  and 
elsewhere  at  low  rates  ot  interest — are  you  not  cognizant  of  such 
cases  ? 

A.  I am  that  money  has  been  loaned  in  that  way;  yes,  and  it  is 
loaned  all  the  time,  every  day. 

Q.  But  I ask  you  wliether  you  do  not  know  of  cases  in  which 
money  has  been  so  loaned  by  parties  intending  to  lock  it  up  ? 

A.  That  I am  unable  to  say  of  my  own  knowledge. 

Q,  You  don’t  personally  know  of  any  such  cases  ? 

A.  Of  my  own  knowledge  I do  not  know  the  facts  in  the  case. 

Q.  xVre  not  such  cases  frequently  reported  ? 

A.  They  are  reported  and  they  carry  that  suspicion  attached  to 
them  oftentimes  ; but  I do  not  know  the  facts. 

Q.  xVnd  then  are  you  not  cognizant  of  cases  where  those  men  have 
gone  to  the  banks  with  which  they  were  connected  and  borrowed  as 
largely  as  they  could  the  balances,  paying  interest  and  leaving  them  in 
the  banks  ? 

A.  Such  casee  have  occurred. 

Q.  And  then  when  they  want  to  lock  it  up,  having  secured  those 
balances,  they  call  their  loans,  don’t  they  ? 

A.  Those  things  have  occurred,  yes,  sir.  It  has  occurred  so,  I 
think. 

Q.  Is  not  that  a pretty  common  way  of  locking  up  money  ? 

A.  It  has  been  adopted,  I am  inclined  to  think,  often. 

Q.  The  effect  of  that  is  to  compel  those  who  are  carrying  large 
amounts  of  securities  when' these  loans  are  called,  to  throw  their 
securities  on  the  market,  isn’t  it — one  of  the  effects  ? 

A.  Yes,  sir. 

il.  And  in  that  way  the  prices  of  those  securities  are  forced  down 
and  tlieir  owners  lose  money,  don’t  they  ? 

A.  Yes,  sir,  tliat  would  be  the  consequence. 

Q.  Then  when  these  balances  are  suffered  to  go  out  and  money  be- 
comes cheap  the  market  reacts  and  goes  up,  does  it  not  ? 

A.  Yes,  sir. 

Q.  That  is  one  kind  of  a corner  in  money,  isn’t  it  ? 

A.  Yes,  sir,  it  tends  that  way. 


817 


Q.  Do  you  consider  that  legitimate  speculation  ? 

A.  That  feature  of  it  I should  say  not. 

Q.  Isn’t  it  ruinous  and  disastrous  to  legitimate  business  ? 

A.  Yes,  sir,  that  process  is  hurtful. 

Q.  Do  you  know  any  thing  about  a corner  that  took  place  in  Han- 
nibal & St.  Joe  stock  ? 

A.  Yes,  sir. 

Q.  When  was  that  ? 

A.  It  must  have  been  about  eightjmonths  ago  I should  think,  or  ten 
months  ago  probably. 

Q.  About  a year  ago  wasn’t  it  ? 

A.  Somewhere  in  the  neighborhood  of  a year  ago — ten  months  or  a 
year  ago. 

Q.  Now  along  through  the  year  of  1880,  and  up  to  July,  1881,  what 
had  been  the  range  of  Hannibal  and  St.  Joe  stock,  the  market  price 
for  it  ? 

A.  I should  think  on  an  average  of  about  82  to  81  and  I should  say 
about  40  to  50 — somewheres  in  that  neighborhood. 

Q.  Do  you  happen  to  know  the  amount  of  that  stock — the  capital 
of  the  company  ? 

A.  I think  it  is  $9,000,000  if  I mistake  not. 

Q.  It  is  largely  held  in  New  York,  isn’t  it  ? 

A.  Yes,  sir,  it  is  now. 

Q.  And  is  it  one  of  the  stocks  permanently  dealt  in  on  the  Stock 
Exchange  ? 

A.  Not  now,  no,  sir. 

Q.  it  was  at  that  time  ? 

A.  It  was,  but  now  it  has  no  dealings  in  it  at  all. 

Q.  There  were  heavy  short  sales  of  that  stock  during  the  year  ’81, 
were  there  not,  in  this  market  ? 

A.  No,  sir,  not  heavy  for  a corner,  there  were  very  few  short  sales  ; 
my  estimate  is  that  there  were  about  12,000  or  13,000  shares  of  short 
sales  in  the  stock. 

Q.  What  means  have  you  of  forming  that  estimate  ? 

A.  That  is  common  report  and  from  the  data  that  I can  get  at ; I 
think  I have  had  it  intimated  through  Mr.  Duff  himself ; I know  him 
quite  well ; I have  had  it  intimated  by  Mr.  Duff  himself,  I think  that 
that  was  about  the  amount. 

Q.  Twelve  thousand  shares  would  be  how  much,  calling  it  $100  a 
share  ? 

A.  About  a million  and  a quarter  at  par. 

Q.  Wasn’t  it  reported  at  the  time  that  some  holders,  one  holder  in 
particular,  himself  held  more  than  12,000  shares  ? 

103 


/ 


818 


A,  There  were  various  reports,  but  none  were  found  to  exist  as 
being  correct  in  reference  to  those  large  short  interests;  but  it  suf- 
ficed to  make  a corner,  even  the  12,000,  or  13,000,  or  14,000  shares 
that  existed,  because  the  reports  had  all  the  cash  stock. 

Q.  It  became  very  difficult  for  the  short  sellers  to  fill  their  contract^ 
didn’t  it? 

A.  It  wasn’t  difficult,  it  was  easy,  but  it  very  much  advanced  prices ; 
there  was  no  time  but  wliat  there  was  a market  for  the  stock. 

Q,.  What  dividends  did  that  stock  pay  in  1881? 

A.  At  that  time  it  didn’t  pay  any. 

Q,  Has  it  paid  any  since? 

A.  No,  sir. 

Q.  How  high  was  that  stock  run  up  ? 

A.  I think  it  went  up  to  <80. 

Q.  And  it  went  up  in  consequence  of  the  corner,  didn’t  it  ? 

A.  A^es,  sir. 

Q.  And  the  shorts  had  to  settle  at  that  price  or  fail,  didn’t  they  ? 

A.  Yes,  sir. 

Q.  Many  of  them  did  settle  at  that  price,  didn’t  they  ? 

A.  AYs,  sir,  I think  so  from  what  I learned. 

Q.  And  the  men  who  made  the  corner  made  a great  deal  of  money, 
didn’t  they  ? 

A.  No,  sir. 

Q.  Up  to  the  time  they  settled  they  made  a good  deal  of  money, 
didn’t  they  ? 

A.  No,  sir,  they  were  ruined  ; the  man  that  made  the  corner  was 
ruined  by  it. 

Q.  Please  notice  the  question  ; at  the  time  he  settled  and  received 
his  pay,  he  wasn’t  ruined,  was  he  ? 

A.  Virtually  so,  yes,  sir. 

Q.  You  speak  of  a man  ; were  there  not  several  men  engaged  in 
that  corner  ? 

A.  No,  sir,  I think  it  was  all  one  man. 

Q.  Who  was  the  man  ? 

A.  Mr.  Duff,  of  Boston. 

il.  You  don’t  think  that  anybody  here  in  New  York  had  any  con- 
nection with  making  the  corner? 

A.  hio,  sir,  I do  not. 

Q.  Or  making  any  money  out  of  it? 

A.  Excepting  as  his  agents. 

(2.  After  the  sliorts  settled  the  stock  went  down,  didn’t  it? 

A.  'riiere  wiis  no  nnirket  for  it  which  is  usual  with  such  corners ; 
there  has  not  been  since. 

Q Isn’t  it  sold  at  all  ? 


819 


f 


A.  No,  sir,  it  is  not  dealt  in  scarcely.  They  may  be  nominal  trans- 
actions. 

Q.  At  what  rates  ? 

A.  It  is  quoted  at  about  forty-five,  I think  forty-five  to  fifty;  forty- 
five  bid,  offered  at  fifty.  That  is  about  the  stereotyped  price  each 
day. 

Q.  Do  you  consider  such  a corner  as  that  as  a necessary  product  of 
legitimate  business? 

A.  No,  sir,  and  it  does  not  often  occur.  After  that  experience  it  is 
not  likely  to  be  repeated. 

Q.  I didiiT  inquire  whether  it  often  occurred  or  not.  Do  you  con- 
sider such  corners  as  that  injurious  to  legitimate  business  ? 

A.  Yes,  I suppose  it  is  in  the  main. 

Q.  Did  you  hold  any  of  that  stoch  for  yourself  or  your  customers 
at  the  time  of  the  corner  ? 

A.  I did  not. 

Q.  Do  you  know  any  thing  about  the  corner  in  North-west? 

A.  Yes,  sir,  I have  a recollection  of  it. 

Q.  When  did  that  take  place. 

A.  1 should  think  that  it  was  in  the  year  1872.  It  must  have  been 
as  far  back  as  that. 

Q.  Was  it  before  the  suspension  of  1873  ? 

A.  Yes,  sir,  if  I remember  right,  it  was. 

Q.  How  was  the  price  of  that  stock  inflated  by  that  corner  ? 

A.  It  started,  I think,  at  about  80,  and  then  ran  up  to  about  12.80 

Q.  When  the  shorts  settled  up  I suppose  ? 

A.  Yes,  sir. 

Q.  And  then  where  did  it  go  ? 

A.  It  went  back  to  the  former  price  at  least, 

Q.  Who  were  the  gentlemefl  that  made  that  corner  ? 

A.  Mr.  Gould  has  always  had  the  credit  for  it. 

Q.  Had  he  any  associates  ? 

A.  No,  sir,  I think  he  was  alone  in  it. 

Q.  Have  you  been  personally  cognizant  of  any  corners  in  corn  or 
provisions  ? 

A.  No,  sir,  I am  not  familiar  much  in  reference  to  the  corners  there 
in  that  market. 

Q.  Not  enough  to  give  any  personal  information  ? 

' A.  Not  enough  to  give  any  personal  information. 

Q.  You  do  not  mean  to  be  understood,  do  you,  that  corners  of  any 
kind  are  beneficial  to  legitimate  business  ? 

A.  No,  sir  ; they  are  not  particularly  beneficial  of  course. 

Q.  Are  not  all  corners  of  this  class  — we  will  come  to  the  patents 


820 


pretty  soon  — are  not  all  corners  of  this  class  injurious  to  legitimalc 
business  ? 

A.  They  entail  losses  of  course,  and  to  that  extent  they  must  be  in- 
jurious to  the  parties  that  suffer.  , 

Q.  Do  they  not  cause  the  failures  of  houses  doing  business  upon  a 
small  capital  ? 

A.  Often  they  do. 

Q.  It  results  in  taking  away  from  the  shorts  what  they  have  to  pay 
to  settle  without  returning  them  any  equivalent;  is  not  that  so  ? 

A.  I suppose  it  is;  yes,  sir. 

Q.  Do  I understand  you  to  liken  corners  of  this  class  to  what  you 
call  corners  made  by  merchants  who  buy  up  all  of  a particular  pro_ 
duct  — do  you  think  that  they  resemble  each  other  in  their  effects 
upon  business? 

A.  They  are  not  unlike  ; the  spirit  is  the  same. 

Q.  Do  you  think  that  is  a fair  comparison  between  them  in  their 
effects  upon  legitimate  trade  ? 

A.  They  don’t  go  to  the  same  extremes  ; the  spirit  is  the  same. 

Q.  Let  us  take  some  article  in  which  the  eminent  merchant,  or'any 
other  merchant  to  your  knowledge,  has  made  a corner  within  the  last 
ten  3^ears ; will  you  give  us  some  article  ? 

A.  All  goods  that  are  exclusively  dealt  in  by  one  firm  I consider 
effectually  cornered  ; he  charges  his  own  prices. 

Q.  I would  like  you  to  give  some  particular  article  by  way  of  illus- 
tration ? 

A.  I only  can  give  my  views  in  a general  way  and  apply  them  to  all 
that  class  of  transactions;  I am^not  in  that  business  so  that,  therefore, 
I cannot  give  the  full  details  as  your  question  seems  to  call  for  ; a dry 
goods  man  would  be  more  likely  to  do  tlpt. 

Q.  You  intended  to  give  your  testimony  from  your  personal  knowl- 
edge, didn’t  you  ? 

A.  Yes,  sir. 

Q.  If  you  have  such  personal  knowledge  does  it  not  relate  to  some 
particular  article  of  merchandise  ? 

A.  It  had  reference  to  all  goods  that  parties  had  the  exclusive  sale  of. 

Q.  What  was  one  article  of  those  goods  ? 

A.  Various  classes  of  dry  goods  for  instance. 

Q.  What  article  of  dry  goods  ? 

A.  It  applies  to  particular  makes  of  gloves  for  instance. 

Q.  Like  Juvin’s  gloves  or  Alexander’s  gloves? 

A.  Yes,  Alexander’s  gloves  would  cover  it;,  it  applies  to  particular 
makes  of  woolen  goods,  blankets  and  hosiery  of  peculiar  makes. 


821 


Q.  Take  some  case  that  you  know  of  ; it  would  apply  to  any  thing, 
but  we  want  to  get  at  the  facts  ; did  you  ever  know  of  a corner  in 
gloves  ? 

A.  My  idea  with  regard  to  a corner  was  where  you  could  exact  your 
own  price  and  you  wouldn’t  find  any  competition  ; a corner  is  where 
there  is  no  competition,  where  you  have  the  exclusive  business  and  you 
can  put  your  own  price  on  it,  which  is  generally  more  tlian  a fair  living 
profit ; competition  makes  business  healthy,  brings  prices  down  to  a 
proper  level ; where  there  is  a want  of  competition  you  will  find  prices 
go  up  higher  than  tliey  ought  to  be. 

Q.  My  inquiry  was  whether  you  ever  personally  knew  of  a corner  in 
gloves  ? 

A.  The  Alexander  gloves  has  always  sold  for  a much  higher  price 
than  other  gloves  have. 

Q.  In  those  cases  to  which  you  have  referred,  are  they  not  all  cases* 
where  some  merchant  purchased  the  entire  manufacture  of  some 
manufacturer  — were  those  not  exclusively  the  cases  to  which  you 
referred  among  the  merchants  ? 

A.  Yes,  sir;  mainly  so. 

Q.  If  there  are  any  exceptions  state  them  ? 

A.  Those  are  what  I had  reference  to  particularly  where  they  had 
the  exclusive  sales  of  that  class  of  goods  or  took  all  that  were  made  of 
certain  manufactures. 

Q.  The  manufacturer  in  those  cases  originally  had  the  exclusive  sale  . 
had  he? 

A.  Yes,  sir. 

Q.  Do  you  consider  that  he  made  a corner  in  them  ? 

A.  No,  he  parted  with  his  power  to  it  solely  by  disposing  of  that 
under  contract  to  the  party  to  whom  he  sold. 

Q.  But  were  there  not  at  the  time  numerous  other  makers  of  good 
gloves  besides  ? 

A.  Not  of  that  identical  brand  of  trade-mark. 

Q.  Do  you  tiling  that  that  corner, if  you  call  it  so,  differed  at  all  from 
the  case  where  a person  or  merchant  buys  the  entire  product  of  any 
given  factory  in  this  country,  large  or  small?  . 

A.  It  is  the  same  thing.  That  is  what  is  so  often  done. 

Q.  You  spoke,  I believe,  of  patents  forming  a kind  of  corner  ? 

A.  Yes,  sir,  of  goods  covered  by  the  patent. 

Q.  Do  you  consider  that  that  is  similar  in  its  effects  upon  legitimate 
trade  and  the  corners  you  have  described  in  Wall  street? 

A.  It  has  similarity  of  course. 

Q.  Could  you  name  some  patented  article  in  which  you  understand 


822 


prices  have  been  largely  inflated  by  the  having  the  exclusive  use  of 
them  ? 

A.  Yes,  sir. 

Q.  What? 

A.  Sewing  machines;  they  probably  have  sold  for  prices  five  times 
more  than  their  production  price. 

Q.  Do  you  know  that  from  personal  knowledge? 

A.  In  my  estimate  and  from  information  tliat  I have  had  from  time 
to  time. 

Q.  You  never  dealt  in  that? 

A.  No,  sir,  only  the  investigation  of  the  actual  cost  of  the  produc- 
tion. 

Q.  Have  you  made  such  investigation  ? 

A.  I have,  yes,  sir. 

Q.  In  relation  to  what  machine  ? 

A.  Those  that  have  been  covered  by  patents ; the  Singer  sewing 
machine  and  others. 

Q.  The  Singer? 

A.  Yes,  sir,  I remember  doing  so  some  years  ago. 

Q.  During  the  existence  of  all  those  patents  on  sewing  machines 
was  there  not  a regular  tariff  for  licensing  under  which  any  person  by 
paying  $5  could  make  any  kind  of  sewing  macine  he  saw  fit  ? 

A.  I don’t  know  that  fact. 

Q.  You  are  a member  of  the  Stock  Exchange,  are  you  not  ? 

A.  I am,  yes,  sir. 

Q.  And  have  been  for  how  long  ? 

A.  I should  say  for  fifteen  years. 

Q.  In  the  year  1862  how  many  members  were  there  of  the  Stock 
Exchange  ? 

A.  I don’t  remember. 

Q.  There  were  about  200,  were  there  not  ? 

A.  I should  suppose  there  would  be,  yes  sir,  and  more. 

Q.  More  than  200  ? 

A.  I should  think  so,  yes. 

Q.  How  many  is  your  impression  ? 

A.  I couldn’t  give  it  accurately  ; it  was  over  200  I should  think  ; I 
couldn’t  give  any  accurate  statement. 

Q.  What  w'ere  seats  worth  when  you  became  a member  ? 

A.  They  were  not  dealt  in,  they  were  not'  salable  ? 

Q.  They  were  not  considered  of  any  especial  value  ? 

A.  No,  sir;  we  obtained  our  seats  as  you  would  become  a member 
of  a club  at  that  time.  You  paid  an  initiation  fee  and  you  were  ad- 
jiiitted  as  a member  of  the  body. 

il-  What  was  that  fee  ? 

A.  J think  it  was  $500. 


823 


Q.  What  are  seats  worth  there  now  i 

A.  From  $25,000  to  $30,000  I believe. 

Q.  Some  have  recently  been  sold  as  high  as  $30,000,  haven’t  they? 

A.  Sales  have  been  made  I understand  at  that. 

Q.  And  what  is  the  present  number  of  members  ? 

A.  Over  a thousand  I think. 

Q.  Isn’t  it  a certain  amount  ? 

A.  Yes,  sir,  I am  not  quite  clear  as  to  the  exact  number,  but  it  is 
over  a thousand. 

Q.  Isn’t  it  1,200  ? 

A.  It  may  be  1,200,  I am  not  quite  sure. 

Q.  During  your  experience  in  Wall  street,  the  volume  of  specula- 
tion has  very  largely  increased,  has  it  not  ? 

A.  Yes,  sir. 

Q.  Has  it  increased  30  times  over  what  it  was  20  years  ago  ? 

A.  Yes,  sir. 

Q*  The  number  of  firms  and  persons  engaged  in  this  speculative 
business  ha^also  increased  in  the  same  proportion,  hasn’t  it  ? 

A.  I rather  take  exceptions  to  your  questions  with  regard  to  being 
a speculative  business.  For  instance,  I do  not  consider  myself  a 
speculator. 

Q.  We  will  waive  that  and  call  it  in  this  general  stock  and  security 
business  ? 

A.  Yes,  sir. 

Q.  A great  many  fortunes  have  been  made  there,  have  there  not,  in 
that  time  ? 

A.  Yes,  sir.  ^ 

Q.  A great  many  men  have  retired  with  fortunes  ? 

A.  Yes,  sir. 

Q.  That  business  is  largely  patronized  by  individuals  from  the 
country,  is  it  not  — they  send  in  their  orders  from  the  country  ? 

A.  The  country  contributes  to  the  business,  yes,  sir. 

Q.  In  the  great  majority  of  these  country  orders  do  not  the  parties 
who  engage  in  the  business  in  that  way  fail  — in  the  great  majority  of 
cases  ? 

A.  No,  sir,  I should  think  not. 

Q.  Take  your  own  business.  You  buy  and  sell  to  some  extent  for 
actual  investors,  do  you  not? 

A.  Yes,  sir;  largely. 

Q.  By  investors,  I mean  those  who  desire  to  invest  their  money  per- 
manently? . 

A.  Yes,  sir. 

Q.  These  gentlemen  do  not  buy  on  margins,  do  they  ? ^ 

A.  No,  sir;  excepting  at  times  they  buy  on  margins  anticipating^ 


824 


receipts  of  money,  dividends,  etc.;  when  the  market  suits  them  they 
will  buy  30  days  in  advance,  perhaps  more,  and  have  the  stocks  car- 
ried until  the  money  comes  in. 

Q.  The  large  proportion  of  your  business  is  done  upon  margins,  isn’t 
it  ? 

A.  A good  deal  of  it. 

Q.  Is  not  a good  deal  more  than  half  of  it  done  on  margins  ? 

A.  Yes,  sir,  I sliould  think  it  was. 

Q.  And  from  men  who  speculate  either  for  a rise  or  fall,  isn’t  it  ? 

A.  Yes,  sir  ; quite  largely  so. 

Q.  And  your  business  may  be  taken  as  a representative  case  of  the 
average  business  in 'the  street,  may  it  not  — as  to  the  class  I mean  ? 

A.  I should  think  so,  yes,  sir. 

Q.  Do  you  think  that  business  of  buying  and  selling  on  margins 
adds  any  thing  to  the  aggregate  wealth  of  the  country  ? 

A.  I do  not  see  how  it  detracts  from  it. 

Q.  But  do  you  think  it  adds  any  thing  to  the  aggregate  value  of  the 
property  of  the  country  ? 

A,  Yes,  sir,  I think  it  does.  • 

Q.  How? 

A.  It  makes  a market  for  securities  which  wouldn’t  otherwise  exist; 
it  enables  the  building  of  railroads  which  couldn’t  be  built  but  for 
the  sale  of  their  securities ; the  building  of  railroads  develops  the 
country  and  opens  fields  that  otherwise  would  be  barren  ; I think  its 
effect  is  beneficial  rather  than  the  reverse ; it  enables  us,  because  we 
have  a market  here  produced  by  such  speculation,  to  make  a market 
in  other  nations,  England,  Paris,  Berlin,  Frankfort  and  all  l5uropean 
markets  ; they  follow  our  markets,  see  the  transactions  here  and  they 
follow. 

Q.  Do  you  think  a market  inflated  by  speculation  is  desirable  to 
legitimate  business  ? 

A.  It  is  a forerunner  of  enterprise  in  other  lines  of  business  ; all 
sections  of  this  country  take  their  cue  from  Wall  street. 

Q.  But  then  I understand  you  to  say  that  in  your  opinion  a market 
where  values  are  inflated  by  speculation  is  desirable  to  legitimate 
trade;  do  I understand  you  right  ? 

A.  I do  noh  think  it  is  hurtful  when  prices  are  not. 

Q.  That  hardly  answers  the  question  ; do  you  think  it  desirable? 

A.  Yes;  I think  it  is  more  so  than  a time  of  depression;  more  so 
than  to  see  })i-ices  depressed;  it  forms  an  index  to  the  actual  condition 
of  the  country. 

Q.  Don’t  you  think  that  on  the  whole  it  would  be  as  well  for  the 
country  if  i-ailroads  were  constructed  just  as  fast  and  no  faster  than 
the  wants  of  the  country  demand  — don’t  you  think  tnat  would  be 
better  on  the  whole  ? 


825 


A.  No,  sir. 

Q.  Many  of  these  railroads,  the  construction  of  which  has  been 
forced  in  advance,  have  turned  out  very  disastrously,  haven’t  they  ? 

A.  They  have,  yes,  sir. 

I Q.  Some  in  your  own  experience  have,  haven’t  they  ? 

A.  No,  sir. 

Q.  By  whicli  you  have  met  with  very  heavy  losses,  is  that  so  ? 

A.  Only  during  the  collapse  of  1873  which  was  what  affected  every 
thing  both  good  and  bad  ; every  thing  was  torn  up  by  the  roots,  so  that 
it  didn’t  make  any  difference  what  value  there  was  to  any  thing. 

Q.  Does  not  this  inflation  by  speculation  tend  to  give  a value  to 
securities  which  have  no  actual  intrinsic  value  ? 

A.  It  does  in  some  instances. 

Q.  I can  put  that  plainer  ; are  there  not  stocks  now  dealt  in  on  the 
Stock  Exchange  that  have  no  value  whatever  except  speculative  pur- 
poses:^ 

A.  No,  sir;  I don’t  think  there  are.  They  have  a value;  It  is  prospect- 
ive in  many  instances. 

Q.  Are  there  not  stocks  that  show  no  promise  of  dividends  in 
the  next  twenty  years  ? 

A.  Yes,  sir;  plenty  of  them,  but  still  they  have  their  value  for  the 
control  of  the  properties  which  they  belong  to. 

Q.  Are  there  not  some  companies  where  the  control  is  in  the  bond- 
holders ? 

A No,  sir;  very  few.  I don’t  recollect  of  any  where  the  properties 
are  within  the  control  of  the  bondholders. 

Q.  But  where  the  control  is  in  preferred  stock? 

A.  No,  sir;  I don’t  know  of  any  but  what  requires  the  common 
stock  to  vote  in  elections  to  enable  the  election  to  be  carried  in  the 
interest  of  parties  seeking  to  obtain  it. 

Q.  Suppose  the  results  of  corners  and  futures  should  be  to  add  to 
the  cost  of  grain  and  provisions,  would  you  then  think  them  objection- 
able in  the  grain  and  provision  trade  ? 

A.  If  it  were  a prominent  thing,  yes;  but  it  is  not ; it  is  only  transi- 
tory and  it  is  only  for  the  moment.  I think  as  far  as  corners  or  spec- 
ulation of  futures  go  in  grain  that  on  the  whole  they  are  advantageous 
for  the  reason,  that  if  there  were  no  futures  in  the  grain  there  would 
be  times  of  depression  which  would  be  waited  for  by  the  large  Euro- 
pean operators  who  are  very  cunning,  and  they  would  use  their  influ- 
ence and  hammering  powers  to  depress  the  market  as  much  as  they 
could,  and  then  would  be  the  periods  when  they  would  make  purchases 
for  European  accounts  and  they  would  get  our  products  every  year  for 
less  than  production  prices. 

104 


826 


Q.  When  the  price  of  pork  is  increased  and  held  up  at  four  dollars 
a barrel,  so  long  as  that  takes  place  those  who  consume  pork  have  to 
pay  a higher  price,  don’t  they  ? 

A.  For  the  time  being,  yes,  sir;  but  they  will  substitute  other  things 
in  the  mean  time. 

Q.  And  the  same  would  be  true  of  all  grains  and  provisions,  wouldn’t 
it? 

A.  Yes.  sir. 

Q.  Have  you  not  known  instances  in  the  prices  having  been  so  inflated 
and  held  up  for  several  months  together  ? 

A.  Scarcely  as  long  as  that,  I think. 

Q.  As  we  are  seeking  information  will  you  please  give  the  com- 
mittee an  instance  in  wheat  or  corn  in  which  this  inflation  and  reac" 
tion  has  taken  place  within  the  last  three  years,  say  ? 

A.  It  took  place  on  the  small  crop  of  last  year  in  Avheat  and  in  corn 
which  was  the  natural  consequence. 

Q.  At  what  time  during  the  last  year  according  to  your  judgment 
was  wheat  inflated? 

A.  It  was  this  year;  it  was  in  the  spring  of  this  year  that  the  in- 
flated or  high  price  took  place.  As  we  neared  the  end  of  the  crop 
the  apparent  scarcity  of  it  became  known,  and  as  we  came  up  into  the 
fall. 

Q.  In  the  spring  of  this  year  was  wheat  high  or  low  according  to 
your  judgment? 

A.  It  w'as  no  higher  than  what  was  justifiable  by  the  small  supply 
on  hand.  It  was  $1.35  ; somewhere  in  that  neighborhood,  or  $1.30. 

Q.  In  March  and  April  it  was  from  $1.35  to  $1.48  and  $1.49? 

A.  It  was  legitimate  ; that  price  was  based  upon  the  supply  and 
demand. 

Q.  That  you  consider  a fair  legitimate  price  for  wheat,  do  you  ? 

A.  Based  upon  the  supply  and  demand,  yes,  sir. 

Q.  At  that  time  ? 

A.  At  that  time,  yes,  sir. 

Q.  As  tlie  crop  comes  in  should  wheat  go  up  or  fall  ? 

A.  Fall  as  it  has  done. 

Q.  And  what  is  it  worth  now  ? 

A.  I forget  what  the  last  quotation  was  for  it. 

Q.  You  can  get  pretty  near  it  ? 

A.  It  is  quoted  every  day ; it  is  between  ninety  cents  and  a dollar. 

(^.  At  any  time  since  March  or  April  has  prices  of  wheat  been  in- 
flated by  a corner  ? 

A.  A cornel*  in  cash,  that  is  it  has  been  higher  for  cash  than  it  has 
been  on  o])tions. 


827 


Q.  I don’t  wish  to  prolong  it;  what  I want  to  draw  out  is  this: 
You  say  that  corners  inflate  prices  beyond  the  legitimate  price,  but  the 
community  get  the  beneflt  of  it  by  the  subsequent  fall  below  the  legit- 
imate price  ; I think  that  was  your  statement,  wasn’t  it? 

A.  That  is  the  way  it  words  usually. 

Q.  I want  you  to  give  us  some  article  illustrative  of  that  — when  it 
occurred  — so  that  we  may  go  to  the  market  and  test  it? 

A.  We  have  had  wheat  up  to  $1.85  and  it  has  been  down  to  90  ; we 
have  had  corn  up  to  75  and  80  cents  and  it  is  now  down  in  the  neigh- 
borhood of  50  cents. 

Q,  I want  you  to  take  some  time  when  you  think  the  price  was  in- 
flated by  a corner,  take  some  period,  some  particular  month,  or  week 
or  year  ? 

A.  I don’t  regard  that  wheat  or  corn  either  have  been  particularly 
inflated  at  any  time  of  late. 

Q.  Then  your  observation  does  not  apply  to  wheat  or  corn  ? 

A.  There  has  not  been  a close  corner  in  either  of  them. 

Q.  Then  your  observation  does  not  apply  to  wheat  or  corn  ? 

A.  Yes,  it  applies  if  they  should  get  up  a close  corner  in  wheat  or 
corn  and  you  couldn’t  obtain  it  at  all;  then  of  course  it  would  be  so, 
but  it  has  not  been  so. 

Q.  Please  give  the  committee  some  case  in  which  youj^  statement,  in 
your  judgment,  does  apply  — some  case  in  some  article  ? 

A.  It  applies  generally  to  corners  when  they  exist  and  then  a re-ac- 
tion comes. 

Q.  Then  do  you  mean  to  say  that  you  can’t  state  any  particular 
article  or  any  particular  time  ? 

A.  I can’t  specify  any  particular  time,  no. 

Q.  Nor  any  particular  article  ? 

A.  It  covers  any  thing  that  there  are  corners  in,  but  necessaries  of 
life  especially. 

Q.  The  difference  here  is  between  your  personal  opinion  and  the 
fact ; I want  to  get  some  fact ; if  you  can’t  give  any  I will  drop  it  ? 

A.  They  did  call  it  a comer  in  wheat,  putting  it  at  $1.35. 

Q.  When  was  that? 

A.  That  was  during  this  last  fall,  early  in  the  fall. 

Q.  In  September? 

A.  Somewhere  about  that  time. 

Q.  And  do  you  consider  that  a corner? 

A.  I don’t,  no ; I don’t  think  it  was  a corner,  it  was  what  wheat 
was  really  worth  at  that  time,  considering  the  short  supply. 


828 


By  Senator  Browning  : 

Q.  Do  you  desire  to  say  any  thing  in  addition  to  what  you  have  al- 
ready said  ? 

A.  No^  sir  ; I don’t  know  that  I have  any  more  to  say.  With  re- 
gard to  people  of  moderate  means  they  are  prevented  during  high 
prices  from  buying  that  kind  of  food,  and  they  will  buy  other  food 
which  they  can  easily  obtain.  It  may  not  be  as  agreeable  to  them, 
but  it  is  a substitution  and  it  is  attainable. 

By  Senator  Boyd  : 

Q.  You  speak  ol  persons  with  moderate  means  and  you  speak  with 
a good  deal  of  certainty.  Do  you  know  of  any  instance  where  per- 
sons of  moderate  means  did  act  as  you  have  stated  ? 

A.  I don’t  know  of  any  particular  case. 

Q.  Then  in  case  of  the  article  of  flour  what  would  they  substitute 
— what  could  they  substitute  for  that  ? 

A.  They  could  substitute  meat  and  substitute  other  grains  and  veg- 
etables. 

Q.  You  know  of  no  such  case,  however,  where  they  have  done  so  ? 

A.  I can’t  .call  any  particular  instance  to  mind. 

By  Senator  Browning  : 

Q.  Have  you  heard  that  to  be  the  fact  ? 

A.  Yes,  I understand  that  to  be  the  case  with  the  common  people, 
I talk  more  or  less  with  people  and  get  their  opinions,  etc.,  and  seek 
information  where  I can.  get  the  opportunity,  and  I find  by  talking 
with  people  that  that  is  what  they  have  done  at  times. 

By  Senator  Boyd  : 

Q.  Then  you  know  that  corners  have  subjected  people  of  moderate 
means  to  this  state  of  things  ? 

A.  At  times,  yes,  sir;  it  makes  them  more  economical  in  the  use  of 
flour  and  grain. 

Q.  'J'hey  have  been  arbitrarily  compelled  by  the  manipulators  of 
those  corners  to  sui)stitute  coarser  material  for  ordinary  ? 

A.  No,  not  arbitrarily.  As  I said  before  I do  not  regard  that  these 
liave  been  corners.  I don’t  think  there  have  been  any  corners.  Grain 
does  not  go  up  to  these  high  prices  excepting  there  is  a basis  for  it.  It 
is  the  sliort  su])ply  tliat  makes  it  so,  and  if  it  goes  up  to  those  high 
])rices,  it  is  justifiable  in  most  cases,  especially  if  it  stays  therefor 
some  time.  ^I’liis  fall  ^1.35  was  not  dear  for  grain  A dollar  for  grain 
is  always  cheap.  A lal)oring  man  will  produce  a bushel  of  wheat  a 
day.  The  labor  of  a man  is  worth  a dollar,  and  wheat  is  never  dear 


829 


at  a dollar.  That  is  the  price  of  a man’s  labor,  and  all  that  will  be  pro- 
duced by  manual  labor  is  a bushel  of  wheat  a day.  That  is  my  opin- 
ion about  that. 

Mr.  Chittendek  — These  are  all  expressions  of  pure  opinions  and  I 
hope  the  committee  will  endeavor  to  get  the  plain  facts. 

Senator  Browning  — Tliis  committee  have  examined  a great  num- 
ber of  witnesses  and  heard  a great  number  of  assertions,  and  all  our 
testimony  is  based  upon  opinions  and  observations.  Hardly  any  thing 
has  been  adduced  upon  matter  of  fact  and  personal  experience.  You 
are  commencing  now  a new  rule.  You  are  tying  this  witness  down 
to  what  he  particularly  knows  of  his  own  knowledge  to  be  the  fact, 
and  you  are  shutting  out  all  his  judgment  and  his  opinion  as  based 
upon  observation  and  rumor  as  brought  out  upon  the  street,  which  is 
current,  and  which  everybody  is  acquainted  with.  Now  I am  satisfied 
to  have  that  theory  stopped  right  here,  and  to  produce  nothing  before 
this  committee  except  what  is  produced  upon  fact  and  personal  knowl- 
edge, and  I heartily  concur  with  counsel  if  he  will  stick  to  that  right 
straight  through  from  now  until  the  end  of  this  examination,  but  I 
want  to  say  here  that  every  whit  of  testimony  brought  out  before  this 
committee  now  is  upon  observation  and  rumor  and  opinion. 

Mr.  Chittenden  — My  view  is  that  it  is  the  mission  of  the  com- 
mittee to  form  opinions,  and  the  mission  of  the  witnesses  to  give 
facts. 

By  Senator  Boyd  : 

Q.  Is  there  any  thing  further  you  would  like  to  state  to  the  com- 
mittee ? 

A.  No,  sir,  I have  no  more  matter  to  produce. 

By  Mr.  Ohitten])EN  : 

Q.  I believe  you  requested  the  committee  to  hear  your  statement  ? 

A.  I did  not,  sir ; I was  subpoened. 

Q.  When  was  that  subpoena  served  ? 

A.  About  ten  days  ago.  ^ 

Q.  ilsking  you  to  appear  here  at  what  time  ? 

A.  I don’t  know  that  it  specified  a time.  It  was  served  at  my  office 
upon  me.  I don’t  quite  remember  the  reading  of  it. 

Q.  You  didn’t,  however,  appear  at  the  time  ? 

A.  Not  at  the  moment ; no,  sir. 

Q.  But  subsequently  came  ? 

A.  Yes,  sir.  I took  counsel  in  the  matter,  and  I was  informed  that 
it  was  imperative  to  respond  or  it  would  be  regarded  as  contempt,  so 


830 


that  I felt  compelled  to  present  myself,  and  thought  it  was  courtesy 
on  my  part  also  to  do  so. 

Rev.  Edioard  McOly7in  was  then  called,  and  being  interrogated 
answered  as  follows : 

Senator  Boyd  — In  consideration  of  your  sacred  calling,  the  com- 
mittee will  dispense  with  the  customary  oath. 

By  Senator  Boyd: 

Q.  What  is  your  profession  ? 

A.  I am  a clergyman. 

Q.  In  connection  with  what  denomination  ? 

A.  Pastor  of  St.  Stephen’s  Catholic  Church  in  this  city. 

Q.  IIow  long  have  you  been  a clergyman  ? 

A.  Twenty- three  years. 

Q.  About  how  long  in  connection  with  your  present  charge  ? 

A.  Sixteen  years. 

Q.  What  is  your  opinion  concerning  the  whole  system  of  making 
corners  and  dealing  in  futures  in  reference  to  its  effect  upon  com- 
merce and  itsiiiffuence  upon  the  public  w'elfare  ? 

A.  I presume  that  I have  been  invited  here  to  appear  here  because 
of  my  profession  as  a clergyman,  and  some  supposed  familiarity  with 
the  moral  view  of  the  case. 

Q.  That  is  the  object  ? 

A.  I am  giving  not  merely  of  my  own  opinion  but  that  of  the 
casuists,  and  the  moral  theologians,  as  to  the  morality  of  gambling 
and  monopolies  ; for  if  I understand  the  question,  speculation  in  fu- 
tures and  corners  is  but  another  form  of  designating  gambling  and 
monopolies.  I believe  that  speculation  in  futures  is  a betting,  prac- 
tically, upon  the  future  price  of  whatsoever  the  article  may  be,  and 
that  a corner,  to  whatsoever  article, is  a monopoly  by  one  or  a few  per- 
sons, and  banded  together  to  hold  the  article  together,  to  hold  the 
article  for  a price  higher  than  would  be  a fair  price  if  no  such  monop- 
oly existed.  Betting  or  gambling  in  itself  is  not  essentially  immoral. 
Tdie  natural  law  does  not  so  declare  it  for  the  obvious  reasoji  that  a 
man  may  be  iree  to  dis})ose  of  certain  portions  of  his  projiertv  gratui- 
tously, and  if  so,  he  is  equally  free  a forfiori  to  risk  the  alienation 
of  such  portion  of  his  proj^erty  upon  a game  at  cards,  the  cast  of  a 
die,  or  whatsoever  other  game  might  come  under  that  designation  of 
gambling.  However,  I am  free  to  say  and  anxious  to  say,  that  while 
gambling  is  not  essentially  immoral,  it  is  as  Hr.  Sainnel  Johnson  said 
fionmwhere  — I don’t  remember  exactly  where — if  not  immornl,  de- 
cidedly un})rofitable.”  I believe  that  it  is  unprofitable  and  pernicious, 


and  that  like  many  other  things  that  are  not  strictly  immoral  by  the 
law  of  nature,  it  may  be  so,  and  should  be  so  by  the  law  of  man ; that 
it  comes  within  the  province  of  the  State,  that  it  were  well  for  the 
State,  and  may  be,  and  is  the  duty  of  the  State,  to  protect  the  Corn- 
moinvealth  against  the  pernicious  effects  of  unbridled  gambling.  I be- 
lieve that  among  the  pernicious  effects  of  gambling  or  lotteries,  and 
among  them  I would  include  speculation  in  futures,  of  the  drawing 
away  for  protective  pursuits  that  would  add  to  the  wealth  of  the  com- 
munity, and,  therefore,  increase  the  common  weal  of  a large  number 
of  able-bodied,  and  still  more  keen-witted  men  who  devote  themselves 
to  simply  exchanging  property  from  other  people’s  pockets  into  their 
own.  While  I have  said  that  the  law  of  nature  does  not  declare  gambling 
to  be  essentially  immoral,  however  right,  reason,  and  therefore  the  law 
of  nature  does  teach  that  betting  or  gambling  should  be  with  pretty 
nearly  even  chances  ; that  where  it  is  purely  a game  of  chance  in  the 
cast  of  dice,  there  is  no  essential  immorality;  but  the  immorality  may 
speedily  creep  in  any  other  games  where  skill  is  added  to  chance,  for 
nstance  in  games  at  cards  where,  I believe,  inmost  instances,  skilland 
chance  combining,  or  again  in  certain  games  where  there  is  purely  a 
contention  of  skill  or  strength,  as  in  prize  fights  or  wrestling  matches, 
the  law  of  nature  would  surely  as  right,  reason  and  common  sense 
would  dictate,  teach  here  that  there  must  be  some  kind  of  equality, 
some  equality  of  chances,  that  it  were  unjust  for  one  extremely  more 
skilled  in  the  game  of  cards  or  immensely  superior  in  strength  and  skill 
in  the  prize  fight  or  the^  wrestling  to  take  advantage  of  the  other’s 
ignorance  or  lack  of  such  skill,  and  it  occurs  to  me  that  while  in  indi- 
vidual cases  in  the  matter  of  speculation  in  futures  there  may  be  no 
essential  immorality  for  the  reasons  assigned,  that,  however,  there  is 
the  greatest  danger  in  nearly  every  case  that  such  immorality  may 
creep  iu  and  that  therefore  in  most  cases  such  speculation  in  futures 
is  immoral,  iniquitous,  and  I would  make  haste  to  add  or  to  repeat 
with  more  emphasis  than  before,  that  it  seems  to  me  that  here  pre- 
cisely comes  in  the  province,  and  even  the  duty  of  the  State,  to  pro- 
tect the  weak,  the  ignorant,  the  simple,  the  country  cousin,  from  the 
superior  skill,  knowledge,  adroitness,  if  not  the  downright  rascality 
of  those  who  induce  them  to  speculate  in  futures  : for  the  lambs 
should  be  protected  from  the  wolves,  and  I believe  that  in  the  nomen- 
clature of  the  street,  the  country  members  are  known  as  the  lambs 
whose  providential  mission  it  is  to  be  shorn.  It  seems  to  me  that  spec- 
ulating in  futures,  as  understood  I believe  by  the  committee  in  this  in- 
vestigation, is  but  another  form  of  lottery  and  gambling  with  the  ad- 
dition very  probably  of  the  iniquity  of  fraud  or  chicanery  in  either  in- 
stance, or  depreciating  the  price  as  the  case  may  be,  by  false  rumors 


832 


V 


and  the  matter  of  panics  created  by  such  false  rumors  ; all  of  which 
are  iniquitous,  immoral  and  unjust,  and  the  gains  that  result  from 
such  iniquitous  proceedings  are  so  unjust  that  the  winner  should  he 
held  strictly  to  restitution,  even  as  the  thief  is  held  to  restore  ill-gotten 
goods.  As  regards  corners,  if  I understand  the  question  at  all,  I feel 
that  I am  justified  in  translating  corners  into  the  word  of  monopoly 
or  monojiolies.  I understand  a corner  of  the  ownership  of  some 
article  by  one  person  or  by  several  persons  banded  together  for  the 
purpose  of  acting  in  concert  and  holding  up  the  price  of  the  article. 
As  I have  said  of  gambling,  or  lotteries,  or  betting,  that  while  in  them- 
selves these  things  are  not  essentially  immoral,  yet  they  are  pernic- 
ious and  should  be  restrained  and  prohibited,  and  I would  also 
say  that  monopolies  or  corners  in  themselves  are  not  essentially 
immoral  for  the  obvious  reason  that  one  may  hold  the  monopoly, 
and  yet  sell  the  article  of  which  he  has  the  monopoly  at  a fair 
market  price,  and  if  so  he  is  doing  no  injustice  to  the  com- 
munity, he  is  committing  no  immorality  ; but  it  seems  to  me 
that  the  reasons  for  which  one  man  or  numbers  of  men  would 
seek  a monopoly  of  tbs  market  must  be  for  the  purpose  of  enhancing 
the  price  beyond  a fair  market  value,  otherwise  the  game  would  not  bo 
worth  the  candle,  and  in  such  case  a monopoly  is  essentially  immoral 
and  iniquitous  and  should  be  restrained  by  the  State,  and  I would  say 
that  it  is  my  opinion,  and  the  opinion  of  the  casuists,  and  the  moral 
theologists  unanimously,  that  an  unjust  price  is  a price  that  would  be 
higher  than  the  higher  fair  market  price  if  no  such  monopoly  existed 
and  I would  add,  as  a matter  of  opinion,  that  both  corners  and  specu- 
lation in  futures  certainly  must  derange  the  market.  They  do  inter- 
fere with  the  ordinary  flow  of  trade,  they  enhance  prices  beyond  a 
fair  market  value  at  one  time  to  the  detriment  of  those  who  are  bound 
to  use  such  articles  at  the  time,  or  who  are  bound  by  their  contract  to 
deliver  such  articles,  and  I believe  that  it  is  entirely  within  the  com- 
petency of  the  State  to  supplement  the  natural  law  in  this  as  in  so 
many  other  things,  for  it  is  for  similar  purposes  chiefly  that  the  States 
exist,  as  we  are  told  hy  the  highest  American  authorities  that  justice 
may  be  maintained  and  done  between  man  and  man.  Casuists  be- 
lieve, and  it  is  my  opinion,  for  I fully  agree  with  them,  that  while  cer- 
tain tilings  are  left  undetermined  by  the  law  of  nature,  they  may  be 
determined  by  the  law  of  man,  and  we  are  bound  as  good  citizens  to 
respect  the  law  of  man  in  such  cases,  and  we  are  fully  justifled  in  con- 
science in  acting  by  virtue  of  the  immunities  granted  by  such  law. - 
For  instanc'*  if  the  law  of  the  State  declares  certain  kinds  of  gamb- 


833 


ling  immoral,  the  person  who  has  lost  in  the  game  is  justified  in 
conscience  in  availing  himself  of  the  civil  law  that  exempts  him  from 
the  obligation  of  paying,  even  while  he  inigiit  still  consider  himself 
bound  as  a matter  of  honor,  he  may  very  well  consider  himself  as 
exempt  in  conscience,  as  the  law  of  the  State  can  very  well  supple- 
ment the  law  of  nature.  Such  supplementing  of  the  law  of  nature 
by  the  civil  law  is  obviously  necessary  in  order  that  civil  society  should 
exist  at  all  ; otherwise  every  man  should  have  to  be  his  own  judge  and 
his  own  executive  officer  in  enforcing  his  real  or  supposed  rights,  and 
we  should  have  nothing  simply  but  anarchy.  I think. that  I have  said 
nearly  all  that  I have  to  say  unless  some  gentleman  of  the  committee 
would  like  to  interrogate  me  further. 

By  Mr.  Chittendej^  : 

Q.  Do  your  professional  duties  lead  you  into  connection  with  an 
observation  of  the  laboring  and  mechanical  classes  of  the  community  ? 

A.  To  a very  great  extent. 

Q.  You,  I suppose,  have  taken  occasion  to  observe  their  habits  of 
life,  their  experience  and  the  difficulties  with  which  they  have  to 
contend  ? 

A.  I have  had  frequent  occasion. 

Q.  How  is  it  with  difficulties  of  people  at  the  present  time  — do 
they  find  it  more  difficult  to  support  their  families  in  comfort  and  to 
make  both  ends  meet,  as  the  expression  is,  than  they  did  five  or  ten 
years  ago,  or  have  their  circumstances  in  that  respect  improved  ? 

A.  I believe  that  within  a few  years  they  have  improved.  There 
was  a very  great  depression  several  years  ago  subsequent  to  the  year 
1873.  I believe  that  for  they  are  somewhat  better  off  to-day  than  they 
were  during  the  few  years  that  followed  that  depression. 

Q.  Are  not  the  prices  which  that  class  have  to  pay  for  provisions, 
rents,  certainly  .as  high  now  and  perhaps  higher  than  they  have  ever 
been  before  ? 

A.  I believe  that  they  are  higher — as  high  if  not  higher. 

Q.  Any  thing  that  inflates  the  price  of  provisions,  and  clothing  and 
rent,  adds  to  the  burden  of  this  class  of  people,  does  it  not  ? 

A.  Decidedly. 

Q.  If  the  price  of  pork  for  instance  is  advanced  four  dollars  a barrel, 
this  class  of  people  have  to  pay  higher  for  it  in  proportion,  don’t  they  ? 

A.  To  be  sure. 

Q.  Is  not  the  best  market  for  the  people  that  one  which  is  adjusted 
by  the  law  of  supply  and  demand  ? 

105 


834 


A.  It  is. 

Q.  Every  speciilation  necessarily  tends  to  unsettle  that,  does  it  not  ? 

A.  It  does. 

Q.  And  such  effect  must  be  injurious  to  the  people? 

A.  It  must. 

Q.  Compared  with  four  years  ago — I will  take  it  say  in  1878  — do 
the  class  of  laboring  people  succeed  in  bringing  the  year  around  now 
as  well  and  as  comfortably  as  they  did  four  years  ago  in  this  city  ? 

A.  I can  hardly  say  with  positiveness  as  to  the  comparison  between 
the  present  period  and  that  of  four  years  ago  ; but  if  I may  bo  per- 
mitted I would  say  that  it  strikes  me  that  the  working  classes  are 
suffering  constantly  because  of  corners  and  of  speculations. 

Q.  My  question  leads  to  this  : It  is  in  evidence  here  that  the  volume 
of  speculation  especially  in  provisions  has  largely  increased  within  the 
last  three  or  four  years  and  I want  to  know  whether  you  have  observed 
any  effect  in  that  respect  upon  this  class  of  people  ? 

A.  I would  say  that  while  I believe  that 'the  working  mechanical 
classes  are  but  one  or  two  degrees  constantly  above  absolute  misery, 
that  it  is  the  result  of  monopoly  rather  than  of  the  mere  S|)asmodic 
speculations  in  futures  or  gambling;  that  it  results  rather  from  a 
monopoly  of  one  kind  and  another  ; and  as  Mr.  Chittenden  has  intro- 
duced the  word  rent”  I should  say  that  perhaps  the  most  grinding 
monopoly  that  keeps  the  poor  but  one  or  two  degrees  above  absolute 
pauperism  is  the  monopoly  of  rent.  Whether  that  comes  within  the 
purview  of  this  committee  I don’t  know. 

Q.  Is  there  any  thing  further  you  would  like  to  state  to  the  com- 
mittee ? 

A.  Unless  this  matter  of  the  monopoly  of  rent  comes  within  the 
purview  of  the  committee — 

By  Senator  Boyd: 

Q.  We  would  like  to  hear  your  views  on  that  subject  ? ^ 

A.  I believe  that  the  worst  monopoly  is  the  almost  universal  mon- 
opoly in  land  that  gives  to  the  favored  few  the  ownership  of  what 
Cod  gave  to  the  community,  to  the  created,  by  the  act  of  creating  us 
human  beings  at  jill  and  creating  us  land  animals  and  not  birds  or 
lishes,  and  it  is  within  the  purview  of  the  province  of  duty  of  the 
State  to  so  regulate  the  tenure  of  land  as  to  abolish  any  such  mo- 
nopoly, and  to  make  any  person  who  is  privileged  in  holding  a desired 
})iece  of  land  pay  tlie  full  rental  value  to  the  community- — that  is,  to 
llie  State  ; while  at  present,  by  some  kind  of  chicanery  or  juggling? 
the  individuals  have  lieen  able  to  induce  the  State  to  give  them  the 
ownership  of  a very  large  portion  of  the  national  domain  for  nothing, 


835 


and  the  people  for  all  time  to  come  must  pay  for  what  should  have 
continued  to  belong  to  them  for  all  time  to  come,  as  a community, 
such  toll  as  these  people  can  exact  for  the  use  of  this  land  by  an  abso- 
lute monopoly,  because  it  is  possible  to  create  more  grain  or  provisions; 
but  it  is  not  possible  for  human  beings  to  create  another  world,  or  any 
more  land  than  exists  at  present.  Here,  in  my  opinion,  is  the  w^orst 
monopoly  that  calls  for  legislation,  and  if  I should  suggest  a remedy 
it  would  be  the  naturalization  of  the  land,  by  taxing  to  the  full  rental 
value  of  the  land,  for  the  benefit  for  the  State,  the  municipality,  the 
county,  the  city,  and  thus  every  working  man  would  have  his  share  of 
the  common  estate  in  the  exemption  of  the  working  men,  the  parents, 
the  common  people,  from  nearly  all  future  taxes.  The  rental  of  a 
settled  community  would  abundantly  support  all  the  public  burdens, 
and  would  exempt  the  community  from  all  other  taxes,  would  give  a 
wondrous  freedom  to  trade,  and  would  be,  in  my  opinion,  almost  the 
beginning  of  the  millennium. 

0.  Can  you  suggest  how  the  State  could  act  in  that  matter? 

A.  Just  as  it  does  at'present,  by  taxing  real  estate  ; but  at  present 
you  tax  it  for  a very  small  percentage  of  its  value.  In  place  of  taxing 
two  per  cent,  or  one  per  cent,  or  whatever  it  may  be  of  the  selling 
value  of  the  fee-simple  of  the  land,  it  should  be  taxed  the  full  value  of 
the  ground  rent,  so  that  if  the  ground  on  which  this  hotel  stands  rents 
at  a fair  market  value  of  $100,0U0  a year,  this  ground  upon  which  this 
hotel  stands  should  be  taxed  8100,000  a year,  so  that  where  there' 
might  be  such  a thing  as  private  ownership  in  land,  in  reality  it 
wouldn’t  exist ; there  would  be  simply  perpetual  tenancy  by  the  land- 
lords. Their  improvements  which  they  might  put  on  the  land  would 
be  theirs ; but  the  absolute  land,  as  it  came  from  the  hands  of  the  Crea- 
tor, is,  in  the  view  of  the  enlightened  economist  such  as  John  Stewart 
Mills  and  others,  the  property  of  the  community.  And  the  inherent 
increment  of  the  value  of  the  ground  on  which  this  hotel  stands  is  not 
the  earning  of  the  owner,  so-called,  of  this  ground  ; it  is  the  earning 
of  two  millions  of  people  tliat  have  clustered  all  around  this 
center  and  made  this  a great  metropolis  so  that  it  becomes  a necessity 
for  the  busy  multitude  here  to  have  this  ground  to  stand  upon,  to  work 
upon,  to  print  their  newspapers  upon,  and  thus  the  community  have 
earned  this  value.  If  all  this  community  should  vanish  to-morrow, 
what  would  this  ground  be  worth  ? The  owner  couldn’t  live  here. 
He  would  have  to  emigrate  to  some  other  community;  this  is  no  new 
doctrine  of  mine  ; it  is  the  view  of  John  Stewart  Mills,  Herbert  Spen- 
cer and  others  that  this  matter  of  land  tenure  should  be  looked  into 
and  it  is  being  looked  into. 


83G 


.Mr.  CrriTTEisDEK  — That  necessitates  a correction  and  a radical 
change  in  our  organic  law,  both  National  and  State,  and  of  course  is 
entirely  beyond  the  reach  of  the  Legislature  in  the  present  condition  of 
the  Constitution. 

A.  I would  answer  that  question  by  saying,  that  the  Legislature 
already  taxes  ground  rents,  and  it  is  within  the  purview  of  the  Legisla- 
ture to  increase  the  taxes. 

Senator  Bhownixg  — You  have  interested  me  by  bringing  up  this 
subject;  if  I get  your  idea  correctly  it  is  to  assess  property  for  its  full 
val  ue. 

The  WiTKEss — Its  full  rental  value. 

Senator  Bkowkin^g  — That  has  engaged  my  attention  for  a good 
while  ; you  mean  the  full  value  of  the  improvements? 

The  Witness — The  full  rental  value  of  the  ground  as  distinct  from 
improvements,  as  distinct  from  agricultural  improvements  in  the  shape 
of  drainage,  in  the  shape  of  houses  or  whatsoever  it  may  be  — agricul- 
tural improvements  or  improvements  in  the  way  of  buildings  or  the  like. 

Senator  Browning  — I know  how  we  can  tax  tenant  property;  can 
put  the  rent  at  ten  per  cent  on  the  assessed  valuation  of  the  property 
and  in  that  way  he  must  either  pay  the  full  taxes  for  the  full  value  of  the 
property  or  reduce  the  amount  of  his  rent  — one  way  or  the  other  ; in 
other  words  you  take  the  house  I live  in,  for  instance ; it  may  be  worth 
$10,000  ; it  rents  for  $1,000,  the  landlord  only  pays  on  an  assessment  of 
, $6,500,  he  is  making  me  pay  on  $10,000  but  he  is  paying  the  city  out  of 
the  difference  between  $6,500  and  $10,000.  Now  if  I should  pay  a 
rent  of  ten  per  cent  on  the  assessed  value  of  that  property  I would  not 
pay  but  $650,  But  how  are  we  to  assess  property  that  is  occupied 
by  the  owner?  that  is  where  the  iniquity  of  such  a law  would  work  ; if  I 
could  overcome  that,  I could  introduce  a law  that  would  accomplish 
the  purposes  ; that  is  what  you  have  been  referring  to  ? 

The  Witness — I would  say  it  is  one  of  the  things  that  is  most 
easy  to  ascertain,  the  fair  market  value  of  ground  as  distinct  from 
houses  or  whatsoever  improvements  there  are  upon  the  ground.  You 
are  doing  that  already  in  your  assessments.  You  have  experts  who  are 
opposed  to  aid  the  tax  commissioners  in  the  assessments  of  the  value 
of  ground  and  houses.  They  assess,  let  us  suppose,  fully  the  market 
selling  value  of  that  ground.  I say  tax  that  to  the  full  value  of  the 
rental  ; you  have  the  experience  all  through  New  York  ciiy  of  ground 
held  by  so-called  landlords  being  let  for  periods  of  twenty-one  years 
we  will  say,  or  whatsoever  other  period  at  a certain  rental. 

Conhscate  that  whole  of  that  rent;  that  wo  will  suppose  then  is  the 
market  value  of  that  rental;  conhscate  that;  tax  that  })ro})erty  pre- 
cisely the  same  amount  that  that  man  is  getting  for  the  ground  ; I 
Would  rather  leave  the  house  untaxed  ; I would  leave  trade  free  and 


837 


would  abolis];!  custom-houses;  in  an  adult  community  where  ground 
has  obtained  such  an  enormous  value  because  of  the  adult  character  of 
the  community,  because  of  the  enormous  aggregation  of  population, 
because  of  a necessity  of  the  ground  to  the  community  to  live  u})on, 
to  stand  upon,  to  work  upon,  the  ground  rental  is  more  than  sufficient 
to  pay  all  the  burdens  of  the  State,  and  it  would  give  absolute  liberty 
and  exemption  from  all  taxation;  it  is  not  wise,  it  is  not  accord- 
ing to  the  highest  views  of  political  economists  to  make  a man  pay  a 
tax  for  an  improvement ; rather  pay  him  a premium,  if  any  thing,  for 
an  im})roveinent ; if  he  builds  a house  he  is  doing  a good  thing;  if  he 
causes  two  blades  of  grass  to  grow  where  one  grew  before,  don’t  tax  him 
for  that,  but  rather  reward  him  for  it,  but  make  him  pay  for  the  use 
of  what  belongs  to  the  community,  the  full  value  that  the  market 
shows  belongs  to  such  use  ; I would  add  that  I have  been  largely  in- 
structed and  aided  in  this  matter  by  the  book  of  Henry  George,  who 
I think,  has  done  great  honor  to  this  country  by  his  work  called 
^ Progress  and  Poverty  ” in  which  I am  a firm  believer. 

Adjourned  to  Tuesday,  December  2G,  1882,  at  1 p.  M. 


' New  York,  Decemler  26,  1882. 

The  Committee  met  unrsuant  to  adjournment  at  the  Metropolitan 
Hotel. 

Mr.  Ohittekdek — In  the  cases  of  the  witnesses  subpoenaed  that 
did  not  attend  on  Saturday,  communications  have  been  received  from 
all  of  them,  in  which  they  each  promise  to  attend  before  the  com- 
mittee hereafter  and  therefore  no  compulsory  proceedings  will  probably 
be  necessary ; one  of  them,  Mr.  Hazeltine,  is  represented  here  to-day 
by  Edwin  H.  Burr,  who  reports  that  Mr.  Hazeltine  is  ill  to-day  and  is 
unable  to  attend. 

Senator  Boyd  = — The  committee  excuse  Mr.  Hazeltine  for  the  day, 
and  direct  that  he  be  present  on  the  27th  inst.,  at  1 o’clock. 

George  E.  Moore  recalled  : 

By  Mr.  Chittendek  : 

Q.  What  is  the  corporate  name  of  the  Cotton  Exchange  of  this  city  ? 

A.  (Witness  referring  to  book.)  The  New  York  Cotton  Exchange. 

Q.  And  give  the  date  of  the  act  of  incorporation  ? 

A.  There  have  been  several  changes  in  it. 

Q,  The  original  act  ? 

A,  The  first  act  was  passed  April  8,  1871,  and  there  have  been 
changes  ; the  original  was  amended  by  an  act  passed  April  19,  1881 ; 
that  was  merely  giving  additional  power;  there  was  one  passed  May 
8,  1880,  also. 


838 


Q.  How  long  have  you  been  connected  with  the  Cotto^  Exchange  ? 

A.  I think  a little  over  ten  years. 

Q.  And  how  long  have  you  been  secretary  ? 

A.  Tills  is  my  second  year, 

Q.  What  number  of  members  has  the  Cotton  Exchange. 

A.  I believe  they  have  about  450  at  present ; I am  not  sure,  exactly, 
of  the  number,  but  in  that  neighborhood;  and  it  has  a president,  vice- 
president,  treasurer,  secretary,  superintendent  and  board  of  fourteen 
managers.  The  secretary  is  elected  as  one  of  the  board  of  managers, 
and  then  the  managers  elect  him  secretary  from  year  to  year.  The 
office  of  secretary  is  not  elective.  The  president,  vice-president  and 
treasurer  are  elected  by  the  members. 

Q.  There  are  fourteen  ? 

A.  There  are  fourteen,  and  th«  secretary  completes  the  fifteen  man- 
agers, under  the  act. 

Q.  What  is  the  initiation  fee,  and  what  are  the  yearly  dues,  at  the 
present  time  ? 

A.  The  present  value  at  which  the  Exchange  can  sell  a seat  is 
$10,000,  that  is  the  initiation  fee  at  present,  but  the  value  of  the 
seats  is  about  $5,000,  the  money  value. 

Q.  Do  you  mean  that  the  number  of  members  by  the  by-laws  is  450  ? 

A.  Limited  to  that,  but  the  initiation  fee  is  $10,000  now,  the  Ex- 
change initiation  fee,  but  I think  you  could  buy,  possibly,  from  the 
representatives  of  deceased,  or  from  members  who  are  going  out  of  the- 
business,  a seat  for  about  $5,000,  or  in  that  neighborhood,  I could  not 
say  exactly  ; that  is  about  the  money  value. 

Q.  No  person  is  admitted  to  the  privileges  of  the  Exchange  as  a 
dealer,  unless  he  buys  a seat  ? 

A.  He  has  to  be  elected. 

Q.  He  must  be  elected,  and  now  he  must  buy  a seat  ? 

A.  Yes,  sir;  or  pay  $10,000. 

Q.  Are  there  individuals  and  firms  engaged  in  the  cotton  trade  in 
the  city,  who  are  not  members  of  the  Exchange  ? 

A.  Well,  I don’t  think  there  are  now,  sir;  those  engaged  in  the 
cotton  trade,  I think,  are  all  members,  either  one  partner  or  the  whole 
of  them. 

Q.  You  think  they  are  generally  represented  in  the  Exchange  ? 

A.  Oh,  yes. 

Q.  Ts  there  a statistician  to  the  Exchange  ? | 

A.  No,  sir. 

(i  Who  has  had  charge,  for  the  past  four  or  five  years,  of  making 
up  the  tables  for  the  Exchange,  representing  the  product  and  sales, 
the  anujunt  of  cotton  ? 


830 


A.  Those  are  kept,  from  time  to  time,  according  to  the  information 
brought  in,  kept  in  the  office  of  the  Exchange,  of  which  the  superin- 
tendent has  charge. 

Q.  What  I want  is,  who,  connected  with  your  Exchange,  is  most 
familiar  with  those  statistics  and  figures  ? 

A.  I don’t  know,  but  all  the  members  are  supposed  to  be  familiar, 
because  it  is  a necessary  item  of  their  business  to  be  familiar  with  the 
information  coming  in,  and  statistics  generally. 

Q,  Is  there  not  some  officer  or  person  who  has  charge  of  these  daily 
statements  and  who,  at  set  times  in  the  year,  tabulates  them  ? 

A.  The  superintendent  of  the  Exchange  has  an  office  in  which  he 
has  five  or  six  different  clerks,  and  they  each  have  their  various  de- 
'partments  to  attend  to  in  entering  this  information  on  the  books  of 
the  Exchange.  There  is  quite  an  extensive  set  of  books  kept  for  that 
purpose. 

Q.  I think  you  stated  the  other  day  the  product  of  cotton  in  the 
United  States  in  the  year  1881  ? 

A.  Yes,  sir. 

Q.  Please  repeat  it  ? 

A.  I can  tell  you  from  my  statement  about  5,450,000;  that  was 
about  the  crop  within  a few  thousand  bales. 

Q,  Do  you  remember  what  it  was  in  1880  ? 

A.  It  was  a little  over  6,600,000. 

Q.  And  in  1879  ? 

A.  I think  about  five  million  and  three  quarters  ; that  is  my  im- 
pression. 

Q.  Is  the  amount  of  the  crop  for  1882  now  known  ? 

A.  That  is  something  we  would  give  a good  deal  to  know,  sir,  be- 
cause on  that  hinges  the  question  of  values.  It  cannot  be  known^ 
because  the  crop  is  not  completed  until  the  1st  of  September,  1883. 

Q.  Yow  take  the  year  1881.  Can  you  tell  the  number  of  bales  that 
came  to  New  York  ? 

A.  Well,  as  near  as  we  can  get  at  it,  I think  we’ve  handled  altogether 
in  New  York  about  600,000  bales  of  actual  cotton. 

Q.  Please  explain  what  you  mean  by  handling  ? 

A.  Bought  and  sold  and  delivered  on  these  contracts, 

Q,  About  600,000  bales  ? 

A.  Yes,  sir. 

Q.  And. should  you  think  that  was  about  a fair  proportion  for  the 
average  run  of  the  business  during  the  previous  years  ? 

A.  I think  it  is ; sometimes  it  will  exceed  that  and  sometimes  it  is 
a little  less. 

Q.  There  was  nothing  which  made  last  year  in  any  way  exceptional 
in  that  respect,  was  there  ? 


840 


A.  Except  that  New  York,  out  of  a small  crop,  bought  a great  deal 
more  thau  her  proportion. 

Q.  You  think  that  000,000  bales  was  more  than  her  j)ropartion  of 
the  crop  last  year  ? 

A.  I do;  it  was  a small  crop. 

Q.  Please  state  the  prominent  cities  in  which  cotton  is  handled  and 
sold  for  export,  commencing  on  the  Mississippi  river  ?. 

A.  AYe  will  commence  down  in  Texas  ; there  is  Galveston.  Now, 
do  you  wish  to  go  up  through  the  State  ? 

Q.  No,  I mean  the  principal  seaports  ? 

A.  The  next  one  to  that  would  be  New  Orleans,  then  comes  Mobile 
and  then  Savannah  ; Pensacola  used  to  be  a port  before  the  war,  but  it 
is  not  much  of  a port  now  ; Charleston,  AYilmington,  Norfolk,  Balti- 
more, Philadelphia,  New  York,  Providence,  Boston. 

Q.  Have  any  of  the  interior  cities  like  St.  Louis  or  Memphis  any 
export  trade  that  amount  to  much? 

A.  Well,  yes,  there  is  a certain  amount  of  it,  not  as  much  as  the  sea- 
ports, most  of  the  orders  go  to  the  seaports.  Yes,  there  is  a certain 
quantity,  more  especially  from  Memphis  and  St.  Louis,  because  it  is 
shipped  cheaply  down  the  river  by  steamboat. 

Q.  Of  the  600,000  bales  that  came  to  New  York  in  1881,  how  much 
was  exported  ? 

A.  That  I could  not  tell  you  ; it  would  be  impossible  for  me  to  get 
at  that,  because  a great  deal  goes  through  here  that  we  do  not  handle 
at  all. 

Q.  Have  you  not  some  impression  of  about  what  proportion  of 
what  comes  here  is  exported  ? 

A.  I should  say  over  half  of  it  was  exported ; I don’t  like  to  say 
positively. 

Q.  Is  there  not  a considerable  portion  of  this  600,000  bales  that 
comes  to  commission  merchants  here  and  is  by  them  sold  without 
going  into  the  Cotton  Exchange,  at  all  ? 

A.  No,  sir,  I don’t  think  there  is;  nearly  all  the  transactions  now 
are  really  made  on  the  floor  of  the  Exchange.  This  cotton  is  sampled 
by  the  brokers,  such  for  instance  as  I am,  a spot  broker,  and  the 
samples  are  exhibited  on  our  tables  and  the  exporters  come  in  there 
and  look  at  them,  examine  them  and  see  the  grade  of  them,  and  then 
we  meet  them,  the  buyers  and  sellers,  on  the  floor  of  the  Exchange 
and  the  transactions  are  made  there. 

Q.  Are  there  not  a great  number  of  cotton  brokers  who  sample  cot- 
ton and  keep  the  samples  in  their  oflices  ? 

A.  We  keep  them  in  our  ollice,  we  never  bring  the  samples  on  the 
floor,  but  I say  the  floor  of  the  Exchange  is  where  the  buyers  and 


841 


■sellers  and  brokers  meet;  after  the  buyers  have  examined  the  samples, 
the  transactions  are  usually  made  on  the  floor  of  the  Exchange  as  to 
prices. 

Q.  Do  you  mean  to  say  that  substantially  all  the  sales  of  cotton 
that  take  place  in  New  York  are  recorded  upon  the  books  of  the  Cot- 
ton Exchange  ? 

A.  Yes,  sir,  most  decidedly. 

Q.  Then  the  business  that  was  formerly  done  by  consigning  cotton 
here  to  commission  merchants  and  having  them  sell  it  has  substan- 
tially ceased? 

A*  No,  sir,  I think  not. 

Q.  Well,  it  has  ceased  except  as  it  is  sold  on  the  floor  of  the  Ex- 
change? 

A.  No,  sir,  I think  not. 

Q.  Then  you  do  not  understand  my  question.  I asked  you  whether 
substantially  all  the  sales  ot  cotton  that  take  place  in  the  city  now 
are  made  in,  and  recorded  on  the  books  of  the  Cotton  Exchange  ? 

A.  They  have  to  be  recorded  in  the  shape  of  the  report  by  the  broker. 
The  brokers  are  obliged  to  report  the  sales  of  actual  that  they  make 
and  that  goes  in  the  daily  report  of  the  Exchange;  otherwise  no  cot- 
ton that  is  not  reported  can  be  arbitrated,  never  can  be  settled  by  the 
arbitration  committee  under  the  rules  of  the  Exchange ; that  is  one 
of  the  rules  of  the  Exchange,  that  all  sales  not  reported,  the  parties 
lose  the  benefit  of  the  Exchange  rules  and  arbitration. 

Q.  AYell,  in  point  of  fact  then,  in  your  judgment,  substantially  all 
these  sales  are  reported  and  become  a matter  of  record  in  the  Ex- 
change ? 

A.  Yes,  sir. 

Q.  Does  that  include  sales  for  export  as  weir? 

A.  Yes,  sir,  it  includes  all  sales,  export,  consumption  and  specula- 
tion. 

Q*  You  used  the  term  that  you  yourself  were  a spot  broker,  what 
do  you  mean  by  that  ? 

A.  I mean  by  that  I have  an  office  in  which  commission  exhibit 
the  samples  which  ’we  draw  for  them  ; they  sent  us  an  order  on  the 
warehouse  to  draw  samples  of  their  cotton  and  we  have  a large  office 
in  which  we  have  tables  and  we  exhibit  these  samples  and  offer  them 
for  sale. 

Q.  And  sell  them  ? 

A.  Yes. 

Q.  Well  does  that  term  spot  broker”  define  merely  the  sales  are 
for  consumption  or  speculation  ? 

A.  No,  sir,  it  simply  defines  itself.  The  spot  broker  ”isa  man 
106 


842 


who  attends  to  the  sale  of  cotton  on  samples  ; he  makes  sales  of  cotton 
on  samples.  The  reason  that  the“  spot”  is  used  is  that  it  is  in  dis- 
tinction from  the  broker  who  is  employed  in  the  Exchange  buying  and 
selling  for  future  delivery.  There  are  two  distinct  branches  of  the 
trade,  although  in  many  houses  the  two  are  coniVnned.  We  ourselves 
only  do  a spot  business,  we  do  not  do  any  future  business. 

Q.  You  have  stated  what  spot  indicates  ; is  there  any  similar  name 
for  the  brokers  in  futures? 

A.  No.  You  won’t  find  spot  in  that  book;  it  is  merely  a distinc- 
tion between  the  two  branches  of  the  trade  customary  in  the  market. 
The  others  are  called  future  brokers,  and  loe  spot. 

Q.  Does  your  observation  and  experience  furnish  you  with  the 
means  of  forming  a judgment  of  what  proportion  of  the  sales  are  for 
future  delivery  ? 

A.  There  is  a very  large  business  done  in  future  delivery. 

Q.  Have  you  ever  attempted  to  estimate  the  percentage  of  the  busi- 
ness, the  proportion  ? 

A.  No,  sir,  I have  not  estimated  the  percentage.  I can  give  you 
the  amount  of  future  sales  as  embodied  in  the  yearly  report  of  the 
Cotton  Exchangers  I gave  it  the  other  day  in  my  testimony. 

Q.  How  much  was  it  in  1881  ? 

A.  I shall  have  to  look  at  my  memorandum.  You  mean  the  year 
ending  last  September  ? Our  year  counts  from  September  to  September; 
that  would  be  from  September  1,  1881,  to  September  1,  1882,  or  rather 
our  cotton  year  ends  that  way,  but  our  year  for  the  Exchange,  that 
ends  on  the  31st  of  May  ; I can  give  you  from  the  31st  of  May,  1881, 
to  the  31st  of  May,  1882,  the  sales  of  futures  as  embodied  in  the 
yearly  report  ; the  sales  during  that  time  were  32,700,000  bales  as 
reported  to  the  Exchange.  " 

Q.  And  what  during  the  same  period  were  the  sales  for  consump- 
tion ? 

A.  I have  not  got  a memorandum  ot  that.  I believe  it  is  embodied 
in  our  yearly  report  but  I am  not  sure. 

Q.  I think  you  stated  that  the  whole  amount  of  sales  made  during 
the  year  1881  were  about  36,000,000  bales,  did  you  not  ? 

A.  No,  sir,  tliat  was  two  years  ago,  the  large  crop. 

Q.  How  mucli  were  the  aggregate  sales  in  1881  ? 

A.  You  mean  in  tlie  year  ending  May  31,  1881  ? 

Q.  Yes,  the  same  year  that  you  have  just  given  ? 

A.  Tdiat  is  ending  May  31,  1882. 

<2.  I asked  what  all  the  sales  were  ? 

A.  I told  you  1 had  not  the  memorandum  of  the  spot  sales  and 
delivr'ries,  but  according  to  the  yearly  statement  we  had  handled  about 
600,000  bales  in  New  York,  sales  to  spinners,  sales  for  export  and 
deliveries  on  contract. 


843 


Q.  Then  is  it  your  idea  that  if  that  000,000  bales  were  added  to  the 
32,000,000,  that  that  would  substantially  show  the  amount  of  spot  and 
future  sales  put  together  ? 

A.  I suppose  it  would,  sir  — well,  no,  it  would  not,  because  some 
of  these  cottons,  a very  largo  proportion  of  these  cottons,  were  deliv- 
ered on  these  future  contracts  so  that  the  sales  had  previously  been 
counted  as  futures. 

Q.  Is  there  no  way  that  the  committee  can  ascertain  the  aggregate 
amount  of  sales  made  and  recorded  at  the  Exchange  for  the  year  end- 
ing in  May,  1882  ? 

A.  I have  given  them  to  you  ; I told  you  600,000  bales  of  spot  cot- 
ton was  actually  handled,  either  sold  for  exportation,  or  for  spinnings 
or  for  speculation.  Whatever  is  not  sold  to  be  exported  out  of  the 
country  or  to  go  direct  to  a spinner,  comes  under  the  head,  in  our  re- 
ports, of  speculation,  although  it  may  be  bought  by  the  party  who 
bought  it  with  the  intention  of  sending  it  to  a spinner,  still,  if  not  sent 
direct  to  a spinner,  it  comes  under  the  head  of  speculation. 

Q.  During  that  year  what  number  of  bales,  as  nearly  as  you 
judge,  were  sold  for  exportation  or  to  be  sent  directly  to  the  spinner? 

A.  That  would  be  very  difficult  to  tell  because  very  often  these  con- 
tracts— the  cotton  received  on  these  contracts  goes  for  exportation  or 
for  spinning,  so  that  it  is  impossible  for  anybody  to  arrive  at  that  cor- 
rectly. 

Q.  May  it  possibly  exceed  600,000  bales  ? 

A.  No,  sir,  I don’t  think  it  could,  because  that  was  the  amount  of 
cotton  actually  handled. 

Q.  What  are  the  commissions  per  bale  allowed  for  brokerage  by  the 
rules  of  the  Exchange  ? 

A.  What  sort  of  brokers  ? 

Q.  For  the  sale  of  cotton? 

A.  Future  or  spot  ? 

Q,  If  there  is  a distinction,  I want  both  ? 

A.  A spot  broker  is  entitled  to  twenty-five  cents  a bale  from  the 
seller,  and,  if  there  is  no  other  broker  employed  in  the  transaction,  he 
is  entitled  also  to  twenty-five  cents  a bale  from  the  buyer. 

Q.  How  about  the  future  ? 

A.  In  the  future  business  if  a broker  buys  or  sells  a contract  and 
gives  up  his  principal’s  name  the  same  day  he  makes  the  transaction, 
he  gets  one  dollar  for  every  hundred  bales ; if  he  makes  the  transaction 
for  a member  of  the  Exchange,  and  does  not  give  up  that  member’s, 
name  to  the  buyer  or  seller,  it  is  five  dollars  for  the  round  turn,  that 
is  for  buying  and  selling,  two  dollars  and  a half  for  each  transaction; 
that  is  where  he,  does  it  for  a resident  member;  where  he  does  it  for  a 


844 


non-resident  ni0ml)or  of  the  Exchange,  he  gets  seven  dollars  and  a 
hall*  on  each,  that  is  seven  dollars  and  a half  for  selling  and  seven  dol- 
lars and  a half  for  buying;  if  he  does  it  for  a man  . that  is  not  a mem- 
ber of  the  Exchange, , he  gets  twelve  dollars  and  a half  for  each  tran- 
saction, that  is  twelve  dollars  and  a half  for  buying  and  twelve  dollars 
and  a half  for  selling,  or,  if  he  only  does  one,  he  only  gets  half. 

Q.  I call  your  attention  to  section  96  of  article  9 of  your  by-laws  on 
page  75  of  this  book,  and  ask  you  whether  that  accurately  states  the 
commissions  allowed  ? 

A.  That  is  exactly  what  I have  stated. 

Q.  That  IS  a correct  statement  of  the  commissions  allowed,  is  it? 

A.  Yes,  sir  ; that  is  the  article  which  governs  it. 

The  following  is  the  section  referred  to  : 

ARTICLE  IX. 

COMMISSIO]SrS. 

“Sec.  96.  Commissions  shall  be  charged  and  paid  under  all  circum- 
stances, both  upon  the  purchase  and  sale  of  contracts  for  future  deliv- 
ery, and  where  a ^ turn  ’ involves  two  transactions,  viz. : a purchase  and 
a sale,  a commission  must  be  charged  on  both,  this  rule  being  equally 
applicable  to  extension  or  transfer  of  contracts  from  one  month  to 
another. 

‘^The  rates  of  commission  shall  be  as  follows: 

Twelve  and  one-half  cents  per  bale  for  each  and  every  bale  bought 
or  sold  when  the  transaction  is  made  for  any  party  not  a member  of 
this  Exchange. 

Seven  and  one-half  cents  per  bale  for  each  and  every  bale  bought 
or  sold  wl>en  the  transaction  is  made  for  any  member  of  the  Exchange 
who  has  not  a permanent  office  established  in  the  city  of  New  York 
within  half  a mile  of  the  Exchange,  as  prescribed  by  article  VIII,  sec- 
tion 95  of  these  by-laws,  and  recorded  in  accordance  with  the  require- 
ments of  section  aforesaid. 

“ Two  and  one-half  cents  per  bale  for  each  and  every  bale  bought  or 
sold  when  the  transaction  is  made  for  any  member  of  the  Exchange 
who  has  his  office  permanently  in  the  city  of  New  York,  and  within 
the  limits,  and  under  the  conditions  prescribed  in  section  95  above 
(juoted,  except  that  where  one  member  merely  buys  or  sells  for  another 
(giving  up  his  lu'incipal  at  or  before  three  P.  M.  of  the  day  of  the  trans- 
action), and  does  not  accept  or  carry  the  contract,  the  rate  of  commission 
shall  be  one  cent  for  each  and  every  bale  thus  bought  or  sold. 

“Tlie  above-mentioned  rates  shall  be  in  each  case  the  minimum 
commission  that  may  be  cliarged  by  any  member  of  this  Excliange, 
and  shall  be  absoluLely  net  and  free  of  all  and  any  rebate,  telegraphic 


845 


charge  and  discount,  in  any  way,  shape  or  manner ; nor  sliall  any 
bonus  ov  pro  rata  percentage  of  commission  be  given  or  allowed  to  any 
clerk  or  individual  for  business  procured  or  sought  for  any  member  of 
the  Exchange,  and  any  arrangement  having  in  view,  directly  or  indi- 
rectly, any  rebate  from  the  said  rates  shall  be  deemed  an  evasion  and 
violation  of  this  by-law. 

“In  any  joint  account  transaction  between  a member  and  a party 
not  a member,  the  regular  commission  of  twelve  and  one-half  cents 
per  bale  must  be  charged. 

“ All  partners  not  members  must  be  charged  the  full  rate  of  twelve 
and  one-half  cents  per  bale  upon  the  individual  business.” 

Q.  Are  margins  required  by  your  rules  in  case  of  sales  for  future 
delivery  ? 

A.  In  what  respect  ? For  instance,  if  it  is  an  outsider  gives  us  an 
order  to  buy  or  sell,  do  you  mean,  one  not  a member  of  the  Exchange? 

Q.  I mean  if  any  person  purchases  cotton  for  future  delivery  is  he 
required  by  the  rules  to  deposit  any  margin  to  secure  his  contract  ? 

A.  Do  you  mean  when  this  party  is  a member  of  the  Exchange  ? 

Q.  I mean  both  cases,  where  he  is  a member  and  where  he  is  not  ? 

A.  Where  he  is  not  a member  that  is  entirely  in  the  discretion  of 
the  man  who  attends  to  his  business  for  him ; he  can  neither  demand 
a margin  for  him  or  do  it  without  a margin;  that  is  something  he  has 
to  look  out  for  himself. 

Q.  Suppose  he  is  a member  ? 

A.  Where  he  is  a member  he  has  a right  to  insist  upon  the  member 
for  whom  he  buys  or  sells  putting,  up  in  the  trust  company  a margin 
to  keep  his  contract  to  the  ruling  market  value. 

Q.  Are  the  rules  which  regulate  the  subject  of  margins  rule  3 on 
page  78,  and  rules  5 and  6 on  pages  80  and  81  of  this  book  ? 

A.  I shall  have  to  look  over  that  because  the  question  of  margin  is 
embodied  in  a number  of  these  rules  going  all  through  the  book.  As  I 
have  explained  the  contracts  are  required  to  be  kept  to  the  market 
value  as  between  members;  there  is  such  a thing  as  an  original  mar- 
gin, some  people  call  it,  where  we  trade  with  weak  parties,  but  it  is 
not  customary  to  call  for  that  ; it  is  not  obligatory,  it  rests  with  the 
party  making  the  trade. 

Q.  In  the  Cotton  Exchange  has  either  party  to  a contract  for  the 
future  delivery  of  cotton  the  right 'to  call  for  an  original  margin  of 
from  one  to  five  dollars  per  bale  at  the  time  of  signing  the  regular 
contract  ? 

x\.  Yes,  sir,  but  he  has  to  call  for  that  within  twenty-four  hours  af- 
ter the  transaction,  at  least  I think  that  is  the  time. 

Q.  And  the  party  calling  must  put  up  an  amount  equal  to  that  for 
which  he  calls  ? 

A,  Yes,  sir 


840 


Q.  Is  that  tlie  case  where  the  transaction  is  between  members  of 
the  Excliange  ? 

A.  Yes,  sir  ; that  refers  only  to  members  ; there  is  no  rule  for  mar- 
gins from  outsiders  ; the  man  who  does  the  business  has  to  look  out 
for  that. 

Q.  Suppose  a party  wants  to  call  a margin,  how  is  the  amount  which 
he  is  entitled  to  call  determined  ? 

A.  That  depends  upon  what  hour  of  the  day  he  calls ; the  rule 
specifies  that  if  he  calls  at  a certain  hour  the  fpiotation  for  a like  de- 
livery at  a certain  other  hour  shall  be  the  amount  which  he  has  to 
put  up  ; the  rules  are  very  specific  about  that. 

Q.  Then  it  is  fixed  by  sales  in  the  Exchange  ? 

A.  Yes,  sir;  fixed  by  the  regular  quotations  at  these  different  times  ; 
they  are  posted  in  the  Exchange  at  these  certain  hours  and  govern  the 
putting  up  of  margins. 

Q.  Do  you  know  what  amount  of  margins  are  now  on  deposit  ? 

A.  No,  sir  ; it  would  be  utterly  impossible  for  any  one  to  tell  that. 

Q.  Why,  they  are  required  to  be  deposited  in  a particular  place  ? 

A.  No,  sir;  they  can  be  deposited  in  any  trust  company  ; the  party 
calling  the  margin  designates  what  trust  company  he  wTshes  -it  put  in. 

Q.  And  have  you  no  information,  or  have  you  had  none  at  any  time 
of  the  amounts  of  margins  so  deposited  ? 

A.  No,  sir ; it  would  be  utterly  impossible  for  any  man  to  tell  the 
amount. 

Q.  Are  margins  usually  deposited  in  the  case  of  the  sales  of  futures  ? 

A.  No,  sir. 

Q.  The  rule  is  the  other  way  ? 

A.  It  all  depends  upon  the  credit  of  a man  ; there  are  some  men 
that  very  seldom  have  to  put  margins  because  their  credit  stands  very 
high  ; there  are  other  men  who  when  they  trade  are  nearly  always 
called  upon  for  margins  because  their  credit  is  not  good. 

Q.  That  depends  largely  upon  the  amount  of  their  capital  ? 

A.  Partly  upon  the  amount  of  capital  and  partly  also  upon  the 
known  character  of  the  tnan  or  firm. 

(.}.  Is  there  any  record  kept  in  the  Exchange  of  the  commissions 
j)aid  or  to  be  paid  upon  each  transaction  ? 

A.  No,  sir  ; that  is  a question  for  each  member,  keeping  his  own 
books. 

Is  there  any  rule  prohibiting  a member  of  the  Exchange  from 
doing  business  at  any  less  than  a certain  commission  ? 

A.  Yes,  sir;  article  IX  I think  provides  for  that. 

(}.  Where  a member  of  the  Exchange  buys  or  sells  for  a person  not 
a nicml>fr,  h<*  is  i)()und  to  charge  the  full  rate  of  1*21- cents  a bale,  is  he  ? 


847 


A.  Yes,  sir. 

Q.  Is  not  a large  proportion  of  this  future  business  done  upon  the 
orders  of  persons  who  are  members  of  the  Exchange  ? 

A.  Yes,  sir. 

Q.  Can  you  give  the  committee  any  idea  of  the  percentage  of  the 
business  that  is  done  ? 

A.  I cannot;  it  would  be  a very  large  percentage;  it  comes  from 
all  parts  of  the  world  ; I have  known  orders  to  come  from  India  and 
from  China  to  members  of  the  Exchange. 

Q,  Would  it  be  fair  to  assume  that  twelve  and  a half  cents  per  bale 
was  paid  upon  ninety  ])er  cent  of  this  future  business  ? 

A.  I could  not  say  about  that;  it  would  be  impossible  for  me  to  say 
what  proportion,  because  of  course  the  members  of  the  Exchange  do  a 
very  lai’ge  export  business,  and  they  make  use  of  these  futures 
individually  in  that  export  trade. 

Q.  That  export  trade  must  be  limited  within  600,000  bales  ? 

A.  No,  sir  ; it  is  not  limited  within  the  whole  crop,  because  the 
whole  trade  of  the  world  is  now  based  on  these  futures  in  the  New 
York  market. 

Q.  Do  you  mean  to  say  it  is  possible  that  more  than  600,000  bales 
were  sold  and  exported  in  the  year  1881  ? 

A.  Not  from  New  York  but  from  this  country,  and  the  transac- 
tions were  nearly  all  based  on  futures  in  New  York. 

Q.  I am  talking  about  transactions  in  New  York  ? 

A.  And  the  transactions  in  New  York  are  carried  in  other  places  in 
the  country  by  the  purchase  and  shipment  of  actual  cotton,  so  that  the 
600,000  bales  which  were  handled  in  New  York  were  a mere  bagatelle 
as  compared  with  the  amount  of  cotton  which  was  handled  by  members 
of  the  New  York  Cotton  Exchange. 

Q.  Well  those  cases  are  frequent  ? 

A.  Yes,  sir. 

Q.  And  large  ? 

A.  No;  the  fact  is  that  the  members  of  the  New  York  Cotton 
Exchange  control  nearly  all  the  crop  of  this  country. 

Q.  Please  give  us  some  instance  within  your  personal  knowledge  in 
which  a lot  of  cotton  not  in  New  York  and  which  never  came  to  New 
York  was  sold  on  the  Exchange  and  exported  to  some  other  place. 

A.  I know  of  one  firm  from  the  port  of  Wilmington  that  in  one 
year  exported  over  5 0,000  bales,  all  of  which  was  sold  on  the  New 
York  Cotton  Exchange,  and  not  a bale  of  which  came  to  New  York. 

Q.  What  is  the  name  of  that  firm  ? 

A.  That  I must  decline  to  give. 

Q.  Why? 


848 


A.  Because  I merely  give  the  facts  of  the  case,  and  I do  not  think 
coming  into  my  possession  as  a broker,  I have  any  right  to  mention 
the  name  of  the  firm.  That  firm  is  a member  of  the  New  York  Cot- 
ton Exchange. 

Q.  What  I am  trying  to  get  at  is  the  exact  amount  of  business  tran- 
sacted in  New  York,  the  cost  of  transacting  it  and  to  what  it  applies? 

A.  I think  you  will  have  very  great  difficulty  in  arriving  at  that 
because  the  business  transacted  — 

Q.  I don’t  particularly  care  to  press  this.  Do  you  know  of  any 
others  ? 

A.  Yes,  sir. 

Q.  In  which  you  are  willing  to  give  the  names  ? 

A.  I don’t  know  that  the  gentleman  would  have  any  objections;  I 
can  give  you  the  name  of  Rally,  the  largest  Greek  exporting  house  in 
the  world. 

Q.  Now  what  was  the  instance,  and  where  was  the  cotton  which 
they  purchased  or  sold  upon  the  Exchange  ? 

A.  I cannot  give  you  the  particulars,  but  I have  been  told  by  one  of 
the  members  of  the  concern  — 

Q.  That  would  not  answer  ? 

A.  I know  T have  sold  them  cotton  myself  in  all  the  different  ports. 
They  trade  millions  a year,  and  would  be  able  to  tell  you  better  what 
they  did  South. 

Q.  You  say  you  have  yourself  sold  them  cotton  in  other  ports? 

A.  Yes,  sir. 

Q.  Were  those  sales  reported  on  the  Exchange? 

A.  Some  were  and  some  were  not. 

Q.  Take  some  sold  that  was  recorded  on  the  Exchange  and  which 
comes  into  these  32,000,000  bales  which  you  sold  to  that  firm? 

A.  It  does  not  come  under  these  32,000,000  bales. 

Q.  Or  that  are  recorded  on  the  Exchange  ? 

A.  Well,  I sold  them  about  three  or  four  weeks  ago. 

Q.  I do  not  want  it  this  year,  I want  it  for  the  year  you  mentioned. 

A.  It  would  be  utterly  impossible  to  give  the  record  by  years,  but 
during  the  last  ten  years  since  I have  been  a broker  I suppose  I have  sold 
a hundred  thousand  and  possibly  two  hundred  bales  at  other  ports. 

Q.  You  cannot  now  state  any  instance  occurring  in  the  year  you 
have  mentioned  in  which  you  sold  them  cotton  which  was  at  the  time 
in  other  ports  ? 

A.  Y.*s,  sir,  but  I cannot  give  you  the  date.  If  you  will  allow  me 
to  send  for  my  books  T shall  take  great  pleasure  in  telling  you.  I 
have  sold  (piite  a number  of  cargoes. 

Q.  What  1 want  to  get  at  is  this,  do  any  of  these  sales  that  are  re- 


840 


ported  in  the  Exchange  which  you  have  mentioned  relate  to  sales  of 
cotton  in  any  other  port  than  the  port  of  New  York,  the  32,000,000  of 
bales  ? 

A.  Very  largely. 

Q.  Explain  how  ? 

A.  Well,  perhaps  the  best  way  would  be  for  me  to  read  the  first  por- 
tion of  my  remarks  the  other  day  — 

Q.  You  have  sworn  that  there  were  32,000,000  of  bales  of  cotton 
sold  for  future  delivery  in  the  Exchange  in  New  York  ; now  I want 
to  know  how  those  sales  are  connected  with  cotton  in  any  other  port 
than  New  York? 

A.  Very  well,  I can  explain  to  you  ; au  exporter  comes  to  me  and 
says,  “I  want  a cargo  from  Wilmington;  I want  that  cargo  to  go  to 
Havre  or  to  Bremen,  or  to  any  other  port  on  the  other  side  amongst 
the  various  ports;  can  you  buy  me  such  a cargo  as  that  ; there  are 
certain  houses  in  New  York  that  have  their  agents  or  branch  houses 
in  the  various  ports  that  I have  mentioned  in  the  first  part  of  my  evi- 
dence, Galveston,  New  Orleans,  etc.  ; I go  to  one  of  them  and  I say, 
want  a cargo  from  Wilmington  to  go  to^Havre;”  ‘^Well,  what 
sort  of  grades?”  “Well,  I want  it  of  various  grades,  from  low  mid- 
dling to  good  middling;  what  will  you  sell  me  at  ? ” Well,  he  will  look 
at  the  prices;  Well,  when  do  you  want  it^shipped  ? ” Say  he  came  to 
me  to-day  ; Well,  I want  it  January  shipment;  ” he  goes  over  to  the 
board  and  looks  at  the  price  of  January  ; he  knows  the  difference  in 
value  between  Wilmington  and  New  York,  and  he  takes  January  as 
the  basis  of  his  trade,  and  he  says,  I will  sell  you  2,000  bales  at 
such  a price,”  mentioning  a price ; I go  to  the  exporter  ; after  going 
backward  and  forward  perhaps  half  a dozen  times,  we  arrive  at  a price 
at  which  the  exporter  will  buy  the  cargo,  say  2,000  bales  ; the  man 
who  sells  that  cargo  to  me,  or  to  the  exporter  through  me,  immedi- 
ately buys  2,000  Januarys  here  in  New  York,  and  then  tells  his  Wil- 
mington house  what  he  has  done,  and  to  buy  the  cotton,  giving  them 
a certain  limit  based  on  the  price  of  the  New  York  market  at  the 
time  they  buy  ; as  fast  as  that  cotton  is  purchased  in  WilmingtcA,  or 
in  the  interior  to  be  shipped  to  Wilmington,  the  agent  or  agents  tele- 
graph those  purchases  to  New  York,  and  as  soon  as  those  purchases 
are  telegraphed  a like  amount  of  the  Januarys  which  he  has  bought 
are  sold  out  again,  because  he  has  bought  the  cotton  in  the  country 
which  is  necessary  for  shipment ; in  that  way  he  covers  himself  and 
makes  a legitimate  transaction  of  it,  taking  no  risk  whatever  of  the 
market;  that  is  one  way;  there  are,  I may  say,  millions  of  transac- 
tions of  that  sort  during  the  season  ; there  is  another  form,  such  as 
107 


850 


the  house  ot  Rally  Brothers,  they  have  their  agents  throughout  Great 
Britain  and  the  continent  of  Europe  ; a spinner  will  come  to  them 
and  say,  I have  an  offer  for  my  goods,  so  many  months’ production, 
to  be  delivered  at  a ceidaiii  time,  and  I want  to  buy  cotton  from  you 
to  be  delivered  to  me  at  certain  other  times,  so  that  I can  manufacture 
those  goods  ; I want' American  cotton  of  such  a grade  ; at  what  price 
will  you  sell  it  to  me?”  These  agents  have  their  dispatches  from 
Rally  Brothers  here  five  or  six  times  a day ; they  know'  ex- 
actly, or  within  a few  hundredths  of  a cent  per  pound, 
what  the  Xew  York  market  is.  They  name  a price  to  a spinner  at  which 
they  will  sell  him  the  cotton  necessary  to  produce  these  goods.  He 
accepts  their  offer.  The  agent  immediately  cables  to  Rally  Brothers, 
in  New  York,  to  buy  futures  to  cover  this  amount.  The  order  is  then 
sent  by  letter,  or  sometimes  even  by  cable,  a full  description  of  the 
style  of  cotton  that  is  wanted,  and  Rally  Brothers  buy  that  cotton  in 
. any  market  which  they  find  it  cheapest  in  the  United  States;  they 
may  buy  it  at  Galveston,  they  may  buy  it  at  New  Orleans.  As  soon 
as  they  buy  the  cotton,  or  any  portion  of  it,  such  purchase  is  tele- 
graphed to  them  here  at  New^  York,  and  they  sell  out  a like  amount 
of  futures,  thereby  making  the  transaction  a legitimate  one  and  wdth 
out  any  risk  of  the  fluctuations  in  the  market.  There  are  other 
instances. 

Q.  I only  want  to  say  that  the  two  instances  you  state  are  identical 
in  their  results.  You  have  not  at  all  come  to  my  question. 

A.  If  you  will  explain, 

Q.  In  the  cases  you  have  stated  there  was  a sale  of  futures  on  the 
Cotton  Exchange  which,  of  course,  w'ent  into  the  32,000,000  bales  ? 

A.  Yes,  sir. 

Q,  But  the  actual  sale  of  the  cotton  took  place  in  other  ports  and 
other  places.  I asked  you  to  give  me  an  instance  in  wdiich  an  actual 
sale  in  another  port  w^as  reported  and  recorded  as  a sale  on  the  Cotton 
Exchange  that  comes  into  the  32,000,000. 

A.  It  does  not  come  into  the  32,000,000.  Those  32,000,000  are  future 
traii^actions,  and  those  future  transactions  are  made  use  of  by  the 
exporters  and  by  the  spinners,  and  by  others,  commission  merchants 
as  hedges  to  transactions. 

Q.  They  do  not  refer  to  actual  cotton  at  all  ? 

A.  Yes,  sir,  every  contract  refers  to  actual  cotton.  If  a man  buys 
cotton,  the  man  who  sells  it  has  to  deliver  it ; there  is  no  such  thing 
recognized  in  our  Exchange  as  a settlement  of  differences. 

(2.  In  all  the  casesj^'ou  have  mentioned  there  will  be  a sale  reckoned 
in  the  32,000,000,  and  another  sale  in  some  other  port  ? 

A.  No,  sir;  tliere  wdll  ))e  a sale  and  a purchase  reported  in  the 
32,000,000. 


851 


Q.  And  there  will  also  be  an  actual  sale  of  the  cotton  lying  in  some 
other  port  or  place  ? 

A.  There  will  be  an  actual  purchase  of  it  in  some  port  of  the  Uni- 
ted States,  or  in  some  portion  of  the  United  States,  and  a sale  in  the 
case  of  export  as  are  mentioned  in  another  part  of  the  world. 

Q.  How  long  have  you  been  in  the  cotton  trade  ? 

A.  About  eighteen  years  in  New  York. 

Q.  When  did  this  business  of  buying  and  selling  futures  commence 
as  it  is  now  transacted  ? 

A,  Well,  it  has  grown  from  a very  small  beginning ; I think  it 
commenced  about  1868  or  1869,  or  somewhere  along  there ; it  com- 
menced a few  years  after  the  cable  was  in  existence. 

Q.  Do  you  remember  how  much  it  was  in  any  year  five  years  ago  ? 

A.  I can  tell  you,  sir,  from  the  yearly  reports  of  the  Exchange.  I 
caii  give  you  back,  well  for  the  twenty  months  ending  May  31,  1872, 
that  was  the  commencement  of  the  Exchange  ? 

Q.  What  was  it  then  ? 

A.  In  those  twenty  months  5,600,000  bales  of  futures  were  sold. 

Q.  Take  four  years  after  the  year  ending  May  31,  1876  ? 

A.  That  would  be  for  twelve  months ; there  were  8,000,000  bales, 
about,  sold. 

Q.  Give  it  right  along  after  that  ? 

A.  Year  ending  May  31,  1877,  10,000,000;  year  ending  May  31, 
1878,  12,500,000;  year  ending  May  31,  1879,  20,500,000;  year  ending 
May  31,  1880,  36,700,000  ; year  ending  May  31, 1881,  26,700,000;  year 
ending  May  31,  1882,  32,700,000. 

Q.  Are  there  any  contracts  between  the  Cotton  Exchange  as  a party 
and  the  railroad  or  steamboat  coast  transportation  companies  relating 
to  the  transportation  of  cotton  ? 

A.  In  what  respect  ? 

Q.  In  what  respect  ? 

A.  I don’t  know  of  any  connection  between  them  at  all;  they  sim- 
ply give  us  the  information  of  the  cotton  they  bring  here,  and  who 
are  the  assignees. 

Q.  Do  corners  exist  in  the  cotton  trade  ? 

A.  I believe  since  the  starting  of  the  Exchange  there  have  been  five 
what  have  been  called  corners ; I don’t  think  there  was  ever  what  I 
understand  to  be  a corner  in  the  market. 

Q.  Have  there  been  cases  where  a body  of  men  acting  together  con- 
trol substantially  what  cotton  was  for  sale  ? 

A.  I am  not  conversant  with  that  enough  to  say  whether  they  were 
acting  together  ; there  have  been  times  when  prices  have  gone  up  for 


852 


a period  of  fifteen  or  thirty  days,  that  is,  prices  of  contracts,  but  I 
don’t  know  that  there  was  any  body  of  men  acting  together ; that  is- 
somethiug  I have  no  connection  with. 

Q.  Take  one  of  the  extremes  of  those  cases ; how  much  did  cotton 
go  up  ? 

A.  I could  not  tell  you,  really  ; I think,  at  the  outside,  not  over  a 
cent  to  a cent  and  a half  a pound  at  the  time. 

Q.  When  did  the  last  one  occur  that  you  have  in  your  mind  ? 

A.  Last  year  ; in  the -spring  and  summer  of  last  year  prices  steadily 
advanced;  it  was  said  to  be  caused  by  parties  being  short  of  it  and 
other  parties  long  of  it,  but  there  was  no  corner;  I have  never  known 
of  an  instance  where  there  was  a close  corner  of  it ; people  have  been 
short  of  it  and  have  had  to  pay. 

Q.  Do  you  mean  to  tell  the  committee  that  you  have  no  knowledge 
of  any  instance  in  which  a nnmber  of  men  have  combined  together 
to  raise  the  price  of  cotton,  by  purchasing  substantially  all  that  was 
available  ? 

x\.  I have  no  personal  knowledge  of  any  such  combination  existing 
that  I could  swear  to. 

Q.  But  you  do  know,  by  report,  that  such  cases  have  existed? 

A.  I know  that  cotton  has  advanced,  and  certain  parties  have  taken 
the  cotton  according  as  it  was  tendered  to  them. 

Q.  Do  you  know  by  report  of  cases  in  which  several  parties  have 
combined  to  raise  the  price  of  cotton  by  purchasing  and  holding  all, 
or  substantially  all,  that  was  available  ? 

A.  I have  heard  of  such  reports,  but  I know  nothing  of  it  person- 
ally. 

Q.  Do  you  know  any  thing  about  a corner  in  middling  upland  cot- 
ton last  year  in  Liverpool  ? 

A.  No,  sir;  I know  there  was  a great  advance  there,  in  October  a 
year  ago. 

Q.  How  much  was  that  advance  ? 

A.  I don’t  know ; I think  about  a penny  a pound. 

Q.  Wasn’t  it  more  than  that? 

A.  No,  sir;  I don’t  think  it  was. 

Q.  Did  any  people  in  this  country  have  any  connection  with  that,  to 
your  knowledge  ? 

A.  Not  to  my  personal  knowledge;  I only  know  by  report,  and  I 
don’t  know  whether  they  liad  any  connection  at  all;  it  was  simply  a 
member  of  a board  of  our  Exchange  was  said  to  be  engaged  in  it. 

Q.  Ilisname?  * o 

A.  Mr.  Ranger. 


853 


Q.  His  first  name  ? 

A.  I don’t  know ; that  was  in  Liverpool,  not  here. 

Q.  Do  you  not  know  by  report  that  men  here  were  engaged  in  it  ? 

A.  No,  sir;  I don’t  know  that  ; the  house  in  Liverpool,  as  I un- 
derstand, is  entirely  distinct  from  the  house  here. 

Did  that  corner  in  Liverpool  cause  the  failure  of  a considerable 
number  of  houses  ? 

A.  I don’t  know  that. 

Q.  Did  it  cawse  the  failure  of  a considerable  number  of  brokers  ? 

A.  1 don’t  know  any  thing  about  that.  I have  no  immediate  con- 
nection in  any  way  with  Liverpool. 

By  Senator  Boyd  : 

Q.  How  many  pounds  constitute  a bale  ? 

A.  That  ranges  very  much  according  to  the  State  in  which  the  cot- 
ton was  raised.  The  Texas  cotton  is  very  heavy,  running  all  the 
way  from  480  up  to  600  pounds;  then  as  you  come  to  Louisiana 
and  Mississippi  it  is  not  quite  as  heavy  as  the  Texas,  but  still  very 
nearly;  then  when  you  come  into  Alabama  it  is  still  lower  down.  The 
Gulf  cotton  is  what  we  call  heavily-bodied  cotton,  and  weighs  more.  As 
you  go  in  to  the  uplands  the  bales  don’t  weigh  on  an  average  more  than 
about  440  to  450.  The  contract  in  our  Exchange  is  based  on  450 
pounds  to  the  bale;  that  is,  the  contract  reads  for  45,000  pounds,  in 
about  100  bales,  and  we  take  the  number  of  bales  coming  as  close  to 
45,000  pounds  as  we  can;  sometimes  it  will  run  over  on  a contract  a 
hundred  or  two,  and  sometimes  run  under  the  45,000  pounds  a hun- 
dred or  two  pounds,  when  the  contract  is  being  delivered  ; we  get  as 
close  as  we  can  to  it  without  dividing  a bale. 

Q.  There  is  no  necessary  standard  of  weight  for  a bale  of  cotton  ? 

A.  No,  sir. 

Q.  About  how  many  bales  usually  constitute  a cargo  such  as  you 
order  from  the  southern  ports  ? 

A.  They  vary  very  much.  I have'  shipped  on  little  brigs  as 
small  a quantity  as  800,  and  at  other  times  from  eight  to  ten  thou- 
sand bales.  There  was  a cargo  from  New  Orleans  the  other  day  of 
ten  thousand  bales,  one  cargo.  They  compressnt  very  hard;  they  have 
heavy  power  presses  so  that  they  get  an  immense  number  in  a 
vessel. 

Q.  It  all  depends  upon  the  capacity  of  the  vessel  ? 

A.  Yes,  sir. 

The  following  is  the  rule  in  regard  to  the  orighiaTmargins  as  it  ap- 
petirs  in  the  annual  report  of  the  New  York  Produce  Exchange  for 
the  year. 


854 


‘'Original  Margins. 

“ Rule  3. — Either  party  to  a contract  for  the  future  delivery  of  cot- 
ton shall  have  the  right  to  call  an  original  margin  of  from  one  to  five 
dollars  per  bale  at  the  time  of  signing  the  regular  contract  (section  73, 
by-laws),  or  at  any  time  prior  thereto,  and  may  also  demand  that  one 
dollar  per  bale  of  the  amount  so-called  shall,  within  one  hour  after  the 
receipt  of  such  demand,  be  deposited  with  the  superintendent  of  the 
Exchange,  in  current  funds  or  a certified  check.  The  party  calling 
must  put  up  and  deposit  an  amount  equal  to  that  called  by  him. 
Margins  may  be  called  and  shall  be  put  up  on  verbal  contracts  and  on 
a slip  as  memorandum  of  contract  in  all  respects  as  is  herein  pre- 
scribed in  case  of  a regular  contract. 

“ Provided  that  all  demands  for  original  margins  on  verbal  con- 
tracts or  slips  must  be  made  within  twenty-four  (24)  hours  after  the 
transaction  upon  which  such  original  margins  are  called.’’ 

Leivis  L,  Todd,  being  duly  sworn,  was  then  interrogated  and  testi- 
fied as  follows : 

By  Mr.  Chittenden  : 

Q.  Where  do  you  reside  ? 

A.  Forty-first  street.  New  York, 

Q.  Your  street  number  ? 

A.  132  to  136. 

Q.  What  is  your  business  ? 

A.  I am  president  of  a company. 

Q.  Of  what  company  ? 

A.  The  New  York  Stock  Company. 

Q.  Is  that  an  incorporated  company  ? 

A.  It  is. 

Q.  Under  what  act  is  it  incorporated  ? 

' A.  The  act  of  1848  and  the  amendments.  It  is  the  Limited  Lia- 
bility Act. 

Q.  What  is  the  business  declared  in  its  articles  of  incorporation  ? 

A.  Dealing  in  corporate  securities. 

Q.  What  is  its  capital  ? 

A.  ^100,000. 

Q.  Divided  into  shares  of  what  size  ? 

A.  $25  each. . 

Q.  Is  its  capital  paid  in  ? 

A.  It  is. 

Q.  In  money  ? 

A.  It  is. 

Q.  Certificate  filed  of  full  payment  ? 


855 


' A.  It  is. 

Q.  Where  is  the  office  of  the  company? 

A.  46  Broad  street. 

Q.  How  many  stockholders  are  there  ? 

A.  I could  not  tell  you,  sir. 

Q.  How  many  have  you  ever  known  to  be  stockholders  ? 

A.  I could  not  tell  you  ; I don’t  know  the  number  of  stockholders* 
Q.  Are  there  ten  ? 

A.  I don’t  know  the  number  of  stockholders. 

Q.  Who  is  the  secretary  ? 

A.  Theodore  L.  Hayward. 

Q.  Where  is  his  place  of  business  ? 

A.  46  Broad  street,  the  office  of  the  company. 

Q.  Who  is  the  treasurer  ? 

A.  Mr.  E.  W.  Todd. 

Q His  place  of  business  ? 

A.  The  office  of  the  company. 

Q.  Which  officer  of  the  company  would  know  the  number  and  name 
of  the  shareholders  ? 

A.  The  secretary. 

Q.  On  what  floor  is  the  office  at  46  Broad  street  ? 

A.  On  the  first  floor.  < 

Q. -How  many  rooms  does  the  company  occupy  ? 

A.  Nine. 

Q.  Nine  rooms  on  the  first  floor  ? 

A.  No,  sir. 

Q.  How  many  on  the  first  floor  ? 

A.  Three. 

Q.  Describe  their  size  as  near  as  you  are  able  ? 

A.  I could  not  do  it. 

Q*  Give  the  committee  the  best  description  you  can  of  their  size  ? 
A.  About  twenty-five  feet  in  width  ; about  ninety  feet  in  depth  in 
which  are  three  offices. 

Q.  Is  the  space  divided  up  about  evenly,  or  is  one  room  larger  than 
the  others  ? 

A.  I should  think  one  room  was  larger  than  the  other 
Q.  Is  not  one  room  about  as  large  as  the  other  two  ? 

A.  I should  think  it  was. 

Q.  'That  is  the  front  room,  is  it  not  ? 

A.  No,  sir. 

Q.  Which  room  is  that  ? 

A.  The  largest  room. 

Q.  Where  is  it  located? 

A.  On  the  first  floor. 

Q.  Rear  or  front  ? 


850 


A.  It  commences  at  the  front  and  runs  back. 

Q.  AVhich  is  the  room  in  which  business  is  done  with  the  public 
and  with  customers  generally? 

A.  All  of  the  rooms. 

Q.  In  which  of  the  rooms  is  the  largest  amount  of  the  business 
done  ? 

A.  In  the  largest  room. 

By  Senator  Boyd: 

Q.  In  which  of  the  rooms,  the  front,  middle  or  back  room  ? 

A.  It  is  not  divided  in  that  way.  The  front  room  is  the  smallest 
office  on  the  floor. 

By  Mr.  Chittenden  : 

Q.  Where  is  the  largest  ? 

A.  The  next  is  a small  office,  both  of  which  are  in  front,  and  the 
largest  of  the  rooms  is  in  the  rear. 

Q.  Give  us  as  near  as  you  can  the  length  of  that  largest  room  ? 

A.  About  ninety  feet. 

Q.  Describe  to  the  committee  how  that  largest  room  is  fitted  up  and 
furnished;  what  there  is  in  it  ? 

A.  Chairs,  desks,  office  furniture  generally. 

Q.  Any  thing  else  ? 

A.  Tickers. 

Q.  Any  thing  else,  any  blackbords  ? 

A.  No,  sir. 

Q.  Any  blackboards  in  any  of  the  rooms  ? 

A.  No,  sir, 

Q.  Any  place  where  you  quote  prices  ? 

A.  Yes,  sir. 

Q.  How  is  that  posting  done  ? 

A.  By  a small  card. 

Q.  Describe  how  it  is  done? 

A.  By  the  small  card. 

Q.  What  is  done  with  it : how  do  you  get  the  prices  and  what  do 
you  do  with  them  to  inform  the  public  about  them  ? 

A.  Prices  of  what  ? 

Q.  Any  thing? 

A.  Well,  the  prices  of  stocks  we  get  from  the  stock  ticker  — stock 
indicator. 

Q.  What  do  you  do  with  them  ? 

A.  We  post  them  on  a board. 

Q.  How  large  is  that  board  ? 


857 


A.  I should  say  about  five  by  ten. 

Q.  It  is  not  a blackboard  ? 

A.  No,  sir. 

Q.  What  color  is  it  ? 

A.  The  natural  color  of  the  wood. 

Q.  How  do  you  post  them  ? 

A The  board  is  constructed  with  a small  slot  in  which  a key  is 
placed,  which  holds  the  card  in  its  place. 

Q.  Now  that  is  for  stocks;  is  the  same  thing  done  for  the  price  of 
any  thing  else  ? 

A.  No,  sir. 

Q.  Are  the  prices  of  any  thing  but  stocks  posted  in  any  of  your 
offices  ? 

A.  No,  sir. 

Q.  Do  you  deal  in  any  thing  but  stocks  ? 

A.  No,  sir. 

Q.  You  do  not  deal  in  produce  at  all  ? 

A.  No,  sir. 

Q.  Nor  in  cotton  nor  oil  ? 

A.  No,  sir. 

Q.  And  have  not  since  the  company  started  ? 

A.  No,  sir. 

Q.  Now  you  said  there  was  some  chairs,  how  many  are  there  ? 

A.  I could  not  tell  you. 

Q.  Give  us  your  best  judgment?  About  how  many  chairs  are  there 
and  how  many  people  can  be  seated  in  that  large  room  ? 

A-  I should  think  twenty  or  thirty  might  be  seated  in  that  room. 

Q.  Could  not  fifty  ? 

A.  There  could  if  there  was  chairs  sufficient. 

Q.  Have  you  not  got  chairs  sufficient  ? 

A.  I don’t  think  we  have. 

Q.  Have  you  got  benches  ? 

A.  We  have  not. 

Q.  You  don’t  think  you  have  got  fifty  chairs  there  ? 

A.  No,  sir. 

Q.  Are  there  counters  or  desks  in  that  room? 

A.  Yes,  sir;  both. 

Q.  Is  there  a counter  running  along  in  front  of  this  board  that  you 
have  spoken  of  ? 

A.  There  is  not. 

Q.  What  is  in  front  of  that  board  ? 

A.  Nothing.  “ 

Q.  Do  the  counters  and  desks  occupy  the  whole  of  any  one  side  of 
a room  ? 


108 


858 


/ 


A.  They  do  not. 

Q.  Now  describe  to  the  committee  the  manner  in  which  business  is 
done  in  that  office,  by  the  company  of  which  you  are  president,  with 
the  public  ? 

A.  In  what  particular  line  ? 

Q.  Your  general  business  ? 

A.  Well,  it  is  the  buying  or  selling  of  any  of  the  railway  securities 
either  for  cash  or  on  a margin . 

Q.  Describe  the  general  way  in  which  your  business  is  being  done 
there  to-day  ? 

A.  If  a party  wishes  to  buy  stock  the  company  will  sell  it  to  him  at 
a price  they  name,  and  if  he  wants  the  stock  they  deliver  it  to  him. 
If  he  wishes  to  buy  on  margin,  we  take  his  margin  and  give  him  a re- 
fer it. 

Q.  Most  of  your  business  is  done  on  margins,  is  it  not  ? 

A.  A large  part  of  it. 

Q.  And  in  what  sums  do  you  receive  margins  ? 

A.  As  low  as  one  per  cent  on  the  par  value  of  the  security. 

Q.  I ask  in  what  sums  you  receive  margins  ? 

A.  As  low  as  five  dollars. 

Q.  Is  that  the  lowest  ? 

A.  That  is  the  lowest. 

Q.  You  do  not  receive  then  less  than  a margin  of  five  dollars  in 
any  case  ? 

A.  That  is  what  I stated. 

Q.  There  are  no  exceptions  ? 

A.  The  smallest  amount  of  margin  is  five  dollars. 

Q.  And  on  what  time  do  you  sell  for  future  delivery  ? 

A.  Anywhere  from  one  to  thirty  days. 

Q.  Do  you  not  sell  for  less  than  one  day'? 

A.  No,  sir. 

Q.  How  small  a number  of  shares  do  you  sell  ? 

A.  Five  shares. 

Q.  Suppose  a customer  wants  to  buy  upon  a margin,  he  delivers 
the  margin  to  you,  does  he  — he  pays  you  the  margin  ? 

A.  He  deposits  the  margin  with  the  treasurer  of  the  company. 

Q.  And  what  receipt,  if  any,  does  the  treasurer  give  him  ? 

A.  A receipt  for  that  margin. 

Q.  Does  tliat  receipt  state  the  contract  which  has  been  made  ? 

A.  Some  of  them  do,  and  some  do  not. 

Q.  Are  your  contracts  written  or  printed  ? 

A.  Printed  forms. 

Q.  Have  you  got  any  of  them  with  you  ? 

A.  I have  not. 


I 


859 


Q.  When  did  this  company  commence  business  at  46  Broad  street  ? 
A.  In  1879. 

Q.  And  it  has  been  there  ever  since  ? 

A.  Yes,  sir. 

Q.  About  what  is  the  daily  average  amount  of  margins  which  you 
receive  ? 

A.  I could  not  tell  you  from  memory. 

Q.  Have  you  any  idea  about  it  ? 

A.  Yes,  sir. 

Q.  Give  us  your  best  opinion  of  the  average  amount  of  margins  the 
company  receives  ? 

A.  Between  ten  and  forty  thousand  dollars. 

Q.  Per  day  ? 

A.  Yes,  sir. 

Q.  Does  your  company  keep  these  stocks  on  hand  in  which  you 
deal  ? 

A . Some  of  them  the  company  keeps  on  hand,  others  they  do  not. 
Q.  What  stocks  has  the  company  got  on  hand  to-day  ? 

A.  I could  not  tell  you. 

Q.  Do  you  know  ? 

A.  No,  sir. 

Q.  Do  you  know  that  it  has  any  ? 

A.  Yes,  sir. 

Q.  What  are  they  ? 

A.  I could  not  tell  you  from  memory. 

Q.  You  say  that  it  has  some  stocks  ; if  you  know  that  you  are  able 
to  tell  what  ones,  are  you  not? 

A.  No,*  sir,  I am  not  able  to  tell  what  stocks  they  have  on  hand  to- 
day. 

Q.  What  property  has  the  company  ? 

A.  Keal  estate. 

Q.  Do  you  understand  the  meaning  of  the  word  “ property?  ’’ 

A.  I could  not  tell  you  the  list  of  the  company’s  assets. 

Q.  Has  it  got  any  assets  ? 

A.  Yes,  sir. 

Q.  What  are  they  ? 

A.  Largely  in  cash. 

Q.  Has  it  got  any  thing  but  cash  ? 

A.  Yes,  sir. 

Q.  What? 

A.  Corporate  securities. 

Q.  To  what  amount  ? 

A.  I could  not  tell  you. 

Mr.  John’  T.  McGowan  — I appear  as  counsel  for  Mr.  Todd  and 
I think  this  examination  is  going  beyond  the  scope  of  any  thing  which 


8G0 


Mr,  Todd  is  required  to  testify  to  these  resolutions  and  I think  it  is 
proper  that  an  objection  should  be  entered  here  to  this  line  of  an  ex- 
amination. 

Senator  Browning — Upon  what  theory  do  you  make  your  objec- 
tion to  the  question  ? 

Mr.  McGowan  — Because  it  is  inquiring  into  the  private  busi- 
of  the  company.  What  has  this  committee  to  do  with  the  assets  of 
the  company  or  how  they  are  investpd  as  long  as  they  are  properly  in- 
vested ; if  the  business  of  the  company  is  not  2)roperly  managed  it  is  a 
proper  subject  for  the  Attorney-General. 

Senator  Browning  — Do  you  think  it  would  be  proper  for  the  At- 
torney-General to  make  an  inquiry  of  this  kind  ? 

Mr.  McGowan  — If  any  creditor  or  stockholder  of  the  company 
made  any  complaint  that  the  company  was  not  performing  its  proper 
legitimate  business,  it  would  be  proper  for  the  Attorney-General  to 
hear  parties  interested  and  if  he  thought  proper  to  institute  a proceed- 
ing to  dissolve  it. 

Mr.  Chittenden  — My  object  is  to  ascertain  the  volume  of  business 
of  this  company,  its  character  and  its  effect  upon  the  community.  If 
the  witness  declines  to  answer  I will  accept  that. 

Mr.  McGowan  — There  is  no  objection  to  his  stating  the  volume 
of  the  business  or  its  character.  Inquiry  was  made  in  regard  to  the 
particular  property  and  how  it  was  invested.  Your  committee  is  not 
here  to  make  any  inquiries  of  that  kind,  or  as  to  the  number  of  chairs 
and  desks  in  the  office. 

Mr.  Chittenden  — The  object  of  inquiring  as  to  the  number  of 
desks  and  chairs  is  to  ascertain  the  character  of  the  business  and  how 
it  is  transacted. 

Senator  Boyd  — We  are  very  happy  to  have  you  here,  Mr.  McGowan> 
and  to  receive  your  suggestions.  We  are  an  investigating  committee 
and  not  a court  of  law  and  we  want  to  get  out  all  the  facts  connected 
with  this  business  : Mr.  Todd  has  stated  that  he  deals  in  futures,  and 
that  the  chief  portion  of  the  property  of  the  company  is  in  stocks 
which  he  expects  to  sell,  I presume,  for  future  delivery,  and  that  being 
the  case,  I think  it  is  the  duty  of  the  committee  to  know  to  what  ex- 
tent he  is  engaged  in  the  business  of  selling  stocks  and  for  what  ac- 
count ho  does  sell  those  stocks  for  future  delivery.  I think  the  ques- 
tion is  perfectly  legitimate  before  an  investigating  committee.  If  Mr. 
Todd  or  his  comjiany  is  carrying  on  a legitimate  liusiness,  there  is  no 
reason  why  he  should  object  to  stating  what  their  property  consistsof. 
He  is  the  first  witness  who  has  appeared  before  this  committee  who 
has  made  any  objection  of  tliat  kind,  and  if  the  business  is  a legitimate 
and  upright  business  and  not  detrimental  to  the  public  interest,  he 
^should  liave  no  hesitation  in  stating  it. 


861 


Mr.  McGowA]sr  — I do  not  see  why  any  person  carrying  on  the 
business  of  a stock  broker  should  state  tlie  nature  and  character  of 
his  business  except  in  a general  way  so  that  the  committee  may  under- 
stand \he  way  the  business  is  conducted  ; I do  not  think  it  is  proper 
to  ask  Mr.  Todd  where  the  property  of  the  company  is  located  or  what 
it  consists  of. 

By  Senator  Browniis'g: 

Q.  Are  you  an  incorporated  company  ? 

A.  We  are. 

Q.  Under  the  general  laws  of  the  State  of  New  York  ? 

A.  Laws  of  1875. 

Q.  What  is  the  amount  of  capital  permitted  by  your  charter? 

A.  One  hundred  thousand  dollars. 

Q.  Does  the  charter  specify  how  it  shall  be  invested  ? 

A.  It  does  not. 

Q.  Or  whether  it  shall  be  invested  in  real  estate  or  personal  prop- 
erty, to  — the  one  hundred  thousand  dollars  ? 

A.  I think  there  is  no  authority  to  hold  real  estate. 

Senator  Brownii^’G  — I think  the  question  as  to  how  the  capital  of 
that  company  is  invested  is  a proper  one. 

By  Mr.  Chittende^st  : 

Q.  I understand  you  to  say  you  do  not  know  what  stocks  this  com- 
pany possesses? 

A.  At  the  present  time  I do  not  know. 

Q.  Who  of  your  company  knows  that  ? 

A.  The  secretary. 

Q.  Has  your  company,  to  your  knowledge,  any  substantial  property 
except  the  cash  and  stocks  you  have  named  ? 

A.  No,  sir. 

Q.  Do  you  know  any  of  the  stockholders  in  that  company  ? 

A.  Yes,  sir. 

Q.  How  much  stock  do  you  hold  ? 

Mr.  McGowan  — Is  that  proper  ? I object  to  the  question  as  irrele- 
vant and  improper,  and  that  it  is  not  within  the  scope  of  the  resolu- 
tions under  which  the  committee  act. 

Senator  Boyd  — The  committee  rule  that  it  is  a proper  question. 

The  Witness  — I decline  to  answer. 

Q.  Give  the  names  of  such  stockholders  in  the  company  as  you 
know  besides  yourself  ? 

A.  I decline  to  do  it. 

Q.  Why? 


8G2 


A.  For  the  same  reasons  given  ])y  Mr.  McGowan  for  declining  to 
answer  the  last  question. 

Q.  State  the  number  of  shares  of  stock  held  by  any  shareholder  in 
that  company  aside  from  yourself  ? 

A.  I decline  to  supply  that  information. 

Q.  Has  this  company  made  any  dividends  ? 

A.  They  have  not  ? 

Q.  Has  this  company  made  any  profits  ? 

A.  They  have.  ^ 

Q.  To  what  amount  at  the  present  time? 

Mr.  McGowan  objects. 

A.  I decline  to  answer. 

Mr,  McGowan  — The  ground  of  my  objection  is  that  it  is  irrele- 
vant, improper,  immaterial  and  incompetent. 

Senator  Boyd  — The  objection  is  overruled. 

Question  repeated. 

A.  That  I am  unable  to  state. 

Q.  Has  it  made  fifty  thousand  dollars  in  profits  at  the  present  time  ? 

Mr.  McGowan  objects  upon  the  same  ground. 

Objection  overruled. 

A.  I don’t  know. 

Q.  Have  you  no  knowledge  on  that  subject? 

A.  I have  not. 

Q.  Have  you  yourself  any  substantial  property  except  your  interest 
in  this  company  ? 

Mr,  McGowan  — I object  to  the  question  as  not  within  the  line  of 
this  inquiry. 

Mr.  Chittenden  — I am  seeking  to  see  upon  what  security  this 
gentleman  and  his  company  of  limited  liability  are  doing  a business 
which  entitled  them  to  receive  from  the  public  from  ten  to  forty 
thousand  dollars  a day  in  margins.  In  that  point  of  view  I think  it 
is  material. 

Mr.  McGowan  — I object  to  the  question  as  irrelevant,  immaterial 
and  improi)ei'- 

Olqection  overruled. 

A.  I have. 

Q.  What  ? 

A.  A house. 

(I  Where  ? 

A.  In  Forty- first  street. 

(2-  Wbiit  number  ? 

A.  VVZ  to  130. 


8G3 


Q.  What  is  its  value  ? 

A.  I don’t  know. 

Q.  Subject  to  any  mortgage  ? 

A.  Yes,  sir. 

Q.  What  amount  ? 

A.  $100,000. 

Q.  To  whom  ? 

A.  New  York  Life  Insurance  Company. 

Q.  Is  that  all  the  incumbrance  upon  it  ? 

A.  Yes,  sir. 

Q.  Have  you  any  other  property  ? 

A.  Yes,  sir. 

By  Senator  Boyd  : 

Q.  Do  you  own  the  lots  upon  which  the  house  is  built  also? 

A.  Yes,  sir. 

By  Senator  BROWNiiTG  : 

Q.  Your  cash  capital  is  $100,000  ; do  you  consider  yourself  per- 
sonally responsible  for  that  amount  ? 

A.  I am  not  personally  responsible,  it  is  a limited  liability. 

Q.  For  your  share  ? 

A.  Under  the  limited  liability  act,  a stockholder  is  not  responsible. 
Mr.  McGowan  — What  the  committee  want  is  what  you  consider 
yourself  worth  beyond  that  ? 

A.  I could  not  say ; I have  not  got  many  creditors. 

By  Mr.  Chittenden  : 

Q.  Are  the  other  shareholders  of  your  company  men  of  substantial 
property  ? 

A.  I could  not  tell  you,  I don’t  know  their  property. 

Q.  What  is  the  name  in  which  the  business  of  this  company  is 
transacted  ? 

A.  The  New  York  Stock  Company,  Limited. 

Q.  Is  there  any  sign  over  your  place  of  business  ? 

A.  The  New  York  Stock  Company,  Limited. 

Q.  Do  the  names  of  the  individuals  appear  in  your  ordinary  con- 
tracts — I mean  the  officers  of  the  company  ? 

A.  The  officers  of  the  company’s  names  appear  whenever  they  in- 
dividually sign  a contract  as  an  officer  of  the  company. 

Q.  What  about  is  the  average  number  of  transactions  in  your  office 
daily  ? 

A.  I could  not  tell. 


864 


Q.  Is  it  a hundred  or  five  hundred  ? 

A.  Sometimes  a Imndred,  sometimes  more  and  sometimes  less. 

Q.  About  what  is  the  average  of  margins  deposited  ? 

A.  I could  not  tell. 

Q.  Is  it  below  ten  dollars,  the  average  of  margins  deposited  ? 

A.  ily  an  individual  ? 

Q.  Yes. 

A.  No,  sir,  I should  think  not. 

Q.  Is  it  below  twenty  dollars  ? 

A.  I should  think  not. 

Q.  Is  it  below  fifty  dollars  ? 

A.  I should  think  not. 

Q.  What  sliould  you  think  was  the  average  amount  of  margin  de- 
posited by  each  individual  ? 

A,  I should  think  it  would  be  from  fifty  dollars  to  one  hundred 
dollars. 

Q.  Now  give  us  the  names  of  some  of  the  stocks  in  which  you  deal? 
A.  C.  C.  & I.  0. — Cleveland,  Columbus,  Cincinnati  and  Indian- 
apolis railway. 

Q.  Give  the  names  of  some  of  those  in  which  you  do  your  principal 
business  ? 

A.  Chicago,  Milwaukee  and  St.  Paul,  when  it  is  active. 

Q.  And  others  ? 

A.  Semi-occasionally  Pacific  Mail,  when  there  is  a spurt  in  it. 

Q.  Where  do  you  get  your  certificates  to  deliver  in  as  small  sums  as 
five  shares? 

A.  Buy  them. 

Q.  Did  you  ever  buy  as  small  a lot  as  five  shares  in  any  of  the  com- 
panies you  have  mentioned  ? 

A.  No,  sir,  we  buy  them  in  larger  lots  and  get  them  split  up. 

Q.  Have  you  ever  got  them  split  up  in  any  of  the  companies  you 
have  mentioned  in  as  low  certificates  as  five  shares  ? 

A.  Yes,  sir. 

Q.  Is  that  common  ? 

A.  Quite  common. 

Q.  What  is  your  part  in  connection  with  this  business  ? what  do 
you  do  ? 

A.  General  supervision. 

Q.  What  are  tlie  duties  of  that  general  supervision  ? 

A.  Looking  after  things  generally  to  see  that  they  all  go  straight. 

N 

By  Mr.  Biiownin^u. 

Q.  Do  they  always  go  straight  ? 


865 


Q.  Do  they  always  go  straight/? 

A.  Generally;  if  they  don’t,  I straighten  them. 

By  Mr.  Chittejtden  : 

Q.  Have  you  any  clerk  or  ofiBcer  whose  business  it  is  to  receive  and 
deliver  certificates? 

A.  No,  sir. 

Q.  Who  delivers  the  certificates  generally  ? 

A.  It  is  the  duty  of  the  secretary, 

Q.  Does  he  generally  deliver  the  certificates  of  the  stocks  in  which 
you  deal  ? 

A.  He  is  the  only  officer  of  the  company  that  does  deliver  them. 

Q.  Does  he  deliver  them  ? 

A.  Whenever  they  are  called  for  he  makes  the  delivery. 

Q.  When  did  you  ever  know'  one  to  be  called  for  last  ? 

A.  I could  not  tell  you  ; I have  not  been  in  the  office  to-day  at  all. 

Q.  Do  you,  personally,  know  of  any  delivery  of  a certificate  of 
stock  that  was  bought  by  your  company  aside  fron^itsown  stock  — of 
one  case  ? 

A.  Yes,  sir. 

Q.  What  was  it  in  ? 

A.  I could  not  tell  you,  sir. 

Q.  When  was  it  ? 

A.  Almost  daily. 

Q.  Well,  you  cannot  tell  any  particular  case  ? 

A.  No,  sir ; we  deal  in  odd  lots  of  stock  anywhere  from  three  to 
ten  shares  ; broken  lots  are  dealt  in  all  the  time  ; a party  comes  in  and 
wants  from  one  to  three  shares  of  stock ; another  man  comes  in  and 
has  them  to  sell;  we  buy  and  sell  as  low  as  one  share  oftentimes; 
it  is  a usual  thing  to  find  ten-share  lots,  that  come  from  the  other 
side.  Shares  that  go  over  the  other  side,  Erie,  etc.,  are  usually  in  ten- 
share  lots  and  oftentimes  they  come  back  here  in  that  way. 

Q.  What  is  the  purpose  of  this  arrangement  of  a board  with  a slot 
to  put  up  the  card  as  you  have  described  ? 

A.  To  show  the  present  price  and  the  past  prices  through  the  day 
of  those  securities  that  are  actively  dealt  in  in  the  New  York  Stock 
Exchange. 

Q.  A customer  can  see  that  by  going  to  the- stock  reports,can  he  not? 

A.  After  they  are  printed,  yes. 

Q.  Don’t  you  have  this  arrangement  of  the  board  and  these  tickets 
so  that  a number  of  persons  who  are  sitting  in  the  office  and  watch- 
ing the  market  may  know  how  it  goes  ? 

' 109 


806 


A.  The  purpose  is  that  any  one  ill  the  office  may  see  the  present 
price  of  any  security  and  also  see  the  price  at  which  that  security  has 
been  selling  at  evry  time  during  the  day. 

Q.  Do  you  not  generally  have  quite  a congregation  of  gentlemen 
sitting  there  watching  this  board  ? 

A.  We  gi'iierally  have  from  twenty  to  thirty  sitting  there. 

Q.  And  as  they  see  the  ticket  exposed  they  make  their  offers  or  bids, 
I suppose  ? 

A.  No,  sir,  not  usually. 

Q.  Well,  how  is  the  busiiiess  done  ? 

A.  The  company  name  a price  at  which  they  will  buy  or  sell ; if 
you  want  to  deal,  that  is  the  price  they  will  buy  or  sell  at. 

Q.  Does  not  some  officer  of  the  company  name  a price  at  which  the 
company  will  buy  or  sell  ? 

A.  Yes,  sir. 

Q.  And  he  stands  there  calling  out  this  price  from  time  to  time  ? 

A.  No,  sir. 

Q.  How  does  he  inform  the  crowd  ? 

A.  He  does  not^n  form  them  at  all ; if  a man  wants  to  buy  Pacific 
Mail  he  makes  inquiry  at  the  office  of  the  company  as  to  the  price  at 
which  the  company  will  sell  Pacific  Mail. 

Q.  Do  you  mean  to  say  there  is  no  announcement  to  the  congrega- 
tion of  prices  by  officers  of  the  company  other  than  this  ticket  ? 

A.  None  whatever. 

Q.  What  was  your  business  before  you  went  into  this  company  ? 

A.  A good  while  ago  ? 

Q,  No,  just  previous  to  it  ? 

A.  Just  previous  to  it  I was  interested  in  a carpet  mill. 

By  Senator  Boyd  • 

Q.  Are  you  a member  of  the  Stock  Exchange  ? 

A.  I am  not. 

Q.  Are  any  members  of  your  firm  members  of  the  Stock  Exchange  ? 

A.  No,  sir. 

Q.  Have  you  business  relations  with  any  members  of  the  Stock  Ex- 
change ? 

A.  We  liave. 

Q.  With  whom  ? 

A.  Tfiiat  is  a matter  of  our  private  business  which  I do  not  care  to 
state  ; whenever  we  want  to  buy  in  the  Exchange  we  employ  a broker, 
a member  of  the  Exchange,  to  buy  or  sell  whatever  we  may  want,  the 
same  as  any  other  individual. 

Have  you  any  firm  with  which  you  continually  transact  your 
business  ? 


867 


A.  No,  sir. 

Q.  Or  do  you  go  to  any  person  or  firm  indiscriminately  when  you 
want  to  make  purchases  ? 

A.  Yes,  sir,  when  we  want  to  make  purchases  we  send  out  to  a broker. 

Q.  By  what  Market  are  your  prices  regulated  or  according  to  what 
market  do  you  settle  with  your  customers  ? 

A.  The  Gold  and  Stock  Telegraph  Company  have  what  are  called 
tickers  which  record  — 

By  Senator  Browning: 

Q.  Are  your  transactions  decided  by  the  quotations  transmitted  to 
the  ticker  ? 

A.  They  come  out  of  the  ticker  continuously,  the  prices  of  stocks  in 
the  New  York  Stock  Exchange  at  the  moment ; when  any  of  our  cus- 
tomers want  to  buy  or  sell  we  name  a price  that  is  based  on  the  price 
of  the  New  York  Exchange  ; it  is  not  that  price  usually,  but  knowing 
that  that  is  the  market  price  we  name  a price  at  which  we  will  sell  a 
small  lot ; the  only  difference  between  our  dealing  and  the  Stock  Ex- 
change dealing  is  that  they  deal  in  hundred  share  lots,  which  is  the 
unit,  and  we  deal  in  fractional  lots,  any  thing  under  a hundred,  and 
we  charge  more  for  a fractional  lot  than  they  charge  for  a hundred 
shares,  from  a quarter  to  half  a cent  more. 

Q.  Do  you  complete  a transaction  sometimes  in  a day  ; for  instance 
a customer  puts  up  a margin  at  a certain  price  and  the  price  varies,  do 
you  settle  with  him  during  that  day  ? 

A.  Sometimes ; usually  a man  that  buys,  after  a time  when  the 
) market  is  either  up  or  down  he  sells  and  the  company  having  sold  to 
him  and  after  that  bought  again,  those  transactions  are  paired  off. 

Q.  What  per  cent  do  you  generally  accept  as  the  margin  on  the 
amount  purchased  ? 

A.  You  mean  what  the  average  per  cent  will  be? 

Q.  Yes,  sir. 

A.  From  three  to  five  per  cent  ; sometimes  as  high  as  ten  and  some- 
times as  low  as  one ; from  three  to  four  per  cent  would  be  a fair 
average. 

Q.  How  do  you  charge  your  commissions  ? 

A.  We  charge  no  commissions.  If  you  want  to  buy  we  sell  you  the 
stock  at  a point  above  the  present  market  price;  if  you  want  to  sell 
that  stock  wo  will  buy  it  below  the  market  price  — from  a quarter  to 
a half  a cent  above  or  below. 

Q.  Suppose  a man  has  bought  a lot  of  stock,  and  he  comes  in  and 
wants  to  settle,  how  do  they  settle;  what  do  they  settle  ? 


8G8 


A.  If  a man  has  bought  stock  and  wishes  to  dispose  of  it,  we  will 
make  him  an  offer  at  the  price  we  will  give  for  it,  not  up  to  the  mar- 
ket price,  generally  below  the  market  price,  as  shown  on  the  ticker 
of  hundred  share  lots. 

i 

By  Mr.  Chittenden: 

Q.  Suppose  he  has  bought  futures,  and  wants  to  settle  before  they 
mature,  how  do  you  fix  the  price  in  that  case? 

A.  He  can  either  buy  or  sell  against  it.  You  are  alluding  to  what 
is  called  a ^^put”  or  a ^^call.”  If  you  have  a put  or  a call  you  can 
either  buy  or  sell  the  stock  against  that  contract;  if  you  have  a call 
on  the  stock  that  is  a good  margin  to  go  short,  an  equal  number  of 
shares. 

Q.  In  your  case  you  say  you  sell  futures  ? 

A.  No,  sir  ; they  are  not  futures,  properly  speaking;  they  are  puts 
or  calls  ? 

By  Senator  Browning  : 

Q.  If  I come  into  your  office  and  put  up  a margin,  and  call  upon 
you  the  next  week  to  sell  me  a hundred  shares  of  Norwalk  and 
Danbury  railroad  stock  at  sixty-five,  and  the  next  day  it  goes  up  to 
sixty-eight,  how  can  I come  to  you  and  settle  and  get  the  balance 
coming  to  me ; can  I call  at  any  time  and  get  it  ? 

A.  Any  time. 

Q.  Suppose  it  goes  up  three  or  five  cents,  and  the  next  day  I 
come  in  and  say,  Todd,  I am  in  clover  ; J want  to  settle  ? 

A.  You  can  either  take  the  stock  or  take  the  difference  between  the 
price  at  which  you  bought  and  the  market  price. 

Q.  At  my  option  ? 

A.  Yes,  sir  ; or  what  very  frequently  they  do,  if  you  have  got  the 
stock,  you  sell  an  equal  number  of  shares,  and  having  bought  and  sold 
it  you  can,  at  any  time,  get  the  difference  between  the  price  at  which 
you  bought  and  the  price  at  which  you  sold. 

Q.  Without  any  commission  ? 

A.  Yes  ; no  commission. 

Q.  And  if  it  goes  down  five  cents  by  the  time  of  maturity,  I have  to. 
settle  with  you  ? 

A.  Yes,  you  are  held  to  the  amount  of  margin  you  put  up. 

Q.  TIow  long  does  that  margin  hold  good  ; until  it  is  exhausted? 

A.  Yes,  sir. 

Q,  Whether  tlie  confract  is  matured  or  not  ? 

A.  Yes,  sir  ; there  are  a great  variety  of  those  contracts. 


869 


By  Senator  Boyd: 

Q.  How  much  do  you  say  you  usually  take  in  a day  of  margins  ? 

A.  There  is  no  average  to  he  placed  on  it.  Sometimes,  if  the  mar- 
ket is  active,  there  would  be  a large  deal,  and  then  for  weeks  with  a 
very  dull  market  there  are  very  small  transactions. 

By  Mr.  Chitteitden'  : 

Q.  You  said  from  ten  to  forty  thousand  dollars  a day  ? 

A.  Forty  thousand  dollars  a day  is  as  high  as  I ever  knew  it;  for  in- 
stance the  day  before  Christmas  there  is  rarely  any  dealing  done,  a 
few  hundred  shares ; then  I have  known  some  months  our  dealings 
run  up  to  four  or  five  hundred  thousand  shares  a month  and  then 
down  to  thirty  or  forty  thousand  a month  ; there  is  no't  much  of  an 
average  to  be  placed  on  it. 

Q.  Out  of  that  how  much  do  you  keep  on  an  average  ? 

A.  In  other  words  you  want  the  gross  profit  on  those  transactions  ? 
Q.  Yes,  sir. 

A.  About  one-sixteenth  of  one  per  cent  is  the  gross  profit  the  com- 
pany makes  on  those  transactions,  which  amounts  to  six  dollars  and  a 
quarter  on  a hundred  shares  of  stock,  and  that  is  about  the  average 
percentage  of  gain  which  the  company  makes  in  those  transactions ; 
in  other  words,  the  company  makes  about  $6.25  on  every  hundred . 
Of  every  $100  of  margin  about  $94  is  naid  out.  The  company  make 
about  six  on  a hundred  shares. 

Q.  What  was  your  object  in  doing  business  in  the  name  of  the. 
Limited  Liability  Company  instead  as  of  individuals  ? 

A.  That  I might  more  easily  associate  other  parties  with  me. 

Q.  In  the  transaction  of  this  business  do  you  issue  circulars? 

A.  No,  sir,  we  do  not. 

By  Senator  Boyd  : 

Q.  What  is  the  general  business  and  social  condition  of  your  cus- 
tomers ? 

A.  That  is  a broad  question. 

By  Senator  BRO-VYinKG : 

Q.  Do  you  do  business  with  minors  ? 

A.  No,  sir. 

Q.  All  men  ? 

A.  Yes,  sir;  usually  brokers,  bankers  and  business  men  on  the 
street  ; the  same  class  of  people  you  see  speculating  in  other  offices  on 
the  street. 


870 


By  Senator  Boyd: 

Q.  A large  number  of  young  men  ? 

A.  Messengers  coming  from  other  offices  bringing  orders. 

By  Senator  Browning  : 

Q.  You  do  not  allow  minors  to  do  business  in  your  office  ? 

A.  No,  sir,  we  do  not  allow  minors  in  the  office. 

Q.  Except  as  a messenger  brings  an  order  from  some  reliable 
house  ? 

A.  Yes,  sir;  we  have  for  several  years  kept  for  the  most  of  the  time 
a door-keeper  to  exclude  that  class. 

By  Senator  Boyd  : 

Q,  Is  it  not  true  that  you  generally  have  some  broker  on  the  floor 
of  the  Exchange  to  manipulate  prices  in  your  interest  ? 

A.  No,  sir. 

By  Senator  Browning  : 

Q.  Do  you  mean  you  never  bear  down  or  bull  the  market  ? 

A.  No,  sir,  it  does  itself  generally  ; w^e  are  not  interested  in  the 
course  the  market  takes  in  the  Exchange.  If  you  understand  the 
term,  we  are  long  and  short  of  the  same  stocks  at  the  same  time. 
One  gentleman  comes  in  to  buy  and  another  gentleman  comes  in  to 
sell  the  same  stock.  We* buy  it  of  one  and  sell  it  to  the  other  at  a dif- 
ference at  about  one-half  of  one  per  cent  above  or  below  the  market 
price.  If  the  price  goes  up  those  that  are  long  of  the  stocks  make  a 
gain  but  it  is  at  the  expense  of  those  who  are  short.  A rule  in  our 
dealings  we  about  average  — about  the  same  quantity  of  shares  will  be 
sold  as  we  buy,  and  in  the  majority  of  instances  it  makes  no  difference 
with  U9  whether  the  market  goes  up  or  down. 

Q.  How  often  have  your  company  declared  dividends  ? 

A.  It  never  has  declared  any  dividends 
Q.  Who  are  the  incorporators  of  the  company  ? 

A.  I am  one  of  the  incorporators ; I could  not  tell  you  the  names 
of  all  from  memory, 

Q.  Do  you  know  how  many  there  are  ? 

A.  My  impression  is  there  are  eleven  or  thirteen  ; I don’t  know. 

Q.  Do  they  reside  in  New  York  ? 

A.  Yes,  sir,  most  of  them. 

3>y  Senator  Boyd  : , 

Q.  Have  any  of  them  any  other  business  besides  this  ? 

A.  Yes,  sir. 


871 


Q.  What  kind  of  business  ? 

A.  I could  not  tell  you. 

Q.  Are  any  of  them  brokers  ? 

A.  Yes,  sir. 

Q.  Do  you  remember  the  names  of  the  brokers  ? 

A.  I could  not  tell  you  from  memory.  I would  be  pleasea  to  sup- 
ply the  committee  with  a copy  of  the  articles  of  incorporation,  by- 
laws, etc.,  and  the  names  of  the  incorporators. 

Mr.  Chittenden  — What  is  more  desirable  for  the  public  is  the 
names  of  the  present  stockholders. 

Senator  Boyd — Could  you  supply  the  committee  with  that  infor- 
mation ? 

A.  Yes,  sir,  through  the  secretary  with  the  names  of  the  stock- 
holders and  the  number  of  shares  each  hold. 

Q.  Will  you  do  that  to-morrow  ? 

A.  Yes,  sir. 

By  Mr.  Chittenden  : 

Q.  Then  if  I understand  you  a considerable  portion  of  your  Dusiness 
consists  in  dealing  in  what  are  called  puts  and  calls  ? 

A.  Yes,  sir. 

Q.  And  your  business  differs  from  that  of  ordinary  brokers  in  this, 
that  you  sell  puts  and  calls  on  a smaller  number  of  shares  than  they 
do? 

A.  That  is  so. 

Q.  And  you  sell  them  on  as  small  a number  of  shares  as  five,  though 
you  think  the  average  is  about  twenty-five  ? 

A.  That  is  about  so. 

By  Senator  Boyd: 

Q.  Do  outside  parties  transact  business  with  each  other  through  you 
as  brokers,  or  does  each  customer  transact  his  business  with  your  con- 
cern ? 

A.  Mostly  each  customer  transacts  with  our  concern. 

By  Senator  Browning  : 

Q.  There  is  no  membership  card  of  admission  ? 

A.  No,  sir. 

By  Mr.  Chittenden  : 

Q.  You  have  got  your  certificate  of  incorporation  and  by-laws 
’ printed  ? 

A.  Yes,  sir. 


872 


By  Senator  Browning  : 

Q.  Have  you  ever  refused  to  pay  any  of  your  losses  ? 

A.  No,  sir. 

Q.  No  lawsuits  pending  against  you  ? 

A.  No,  sir,  we  certainly  do  business  very  long  if  we  had. 

By  Senator  Boyd  : 

Q.  What  is  the  average  amount  of  your  losses  daily  ? 

A.  They  don’t  run  that  way  ; we  do  business  for  a profit.  We  sup- 
ply facilities  for  speculating  in  stocks  and  generally  do  it  to  a profit. 
Adjourned  to  December  27,  1882,  at  ten  o’clock,  a.  m. 


New  York,  Wednesday,  December  27,  1882. 

The  committee  met  pursuant  to  adjournment  at  the  Metropolitan 
Hotel,  New  York  city. 

Samuel  Jacoby y being  duly  sworn,  was  then  interrogated  and  testi- 
fied as  follows  : 

By  Mr.  Chittenden  : 

Q.  Are  you  the  treasurer  of  the  New  York  Stock  Exchange  ? 

A.  Yes,  sir. 

Q.  How  long  have  you  been  treasurer  ? 

A.  Since  1879. 

Q.  Is  the  book  which  I show  you  the  annual  report  of  the  Exchange 
for  the  year  1881  ? 

A.  Yes,  sir. 

Q.  This  report  states  that  the  Exchange  has  twelve  managers,  a 
president,  vice-president,  treasurer,  secretary,  superintendent,  counsel 
and  consulting  chemist,  is  that  right  ? 

A.  That  is  correct. 

Q.  Do  you  remember  of  its  standing  committees? 

A.  No,  I do  not. 

Q.  There  are  about  twenty  are  there  not  ? 

A.  They  are  all  enumerated  in  there  ? 

Q.  Accurately  enumerated  here  ? 

A.  Yes,  sir. 

Q.  I notice  by  your  report  in  the  year  1881,  that  the  expense  of 
operating  the  Exchange  for  the  year  1881  was  $76,898.12,  is  that  an 
accurate  statement  ? 

A.  Yes.  sir. 

Q.  J notice  that  the  cost  of  gra,in  inspection  for  sixteen  months, 
stated  on  page  86,  is  $68,821,  is  that  accurate? 


873 


A.  There  is  a balance  of  it  to  the  credit  of  the  new  account. 

Q.  Please  state  what  the  expenses  were  for  those  sixteen  months? 

A.  $55,582.93. 

Q.  The  Exchange  is  engaged  in  the  erection  of  a building,  is  it  not? 
A.  Yes,  sir. 

Q.  State  the  cost  of  the  site  of  that  building  ? 

A.  Total  cost  of  the  building  site  approximates  $650,000. 

Q.  What  is  the  contract  cost  of  the  building  to  be? 

Aws,  About  two  million  dollars. 

Q.  In  addition  to  that  there  was  purchasad  at  a later  period  the 
rear  of  some  lots  upon  Stone  street  was  there  not? 

A.  One  on  Stone  street,  and  one  in  the  rear  of  the  Exchange. 

Q.  What  was  the  cost  of  the  purchase  on  Stone  street  ? 

A.  I believe  $20,000. 

Q.  And  what  was  the  cost  of  that  in  the  rear  of  the  Exchange  ? 

A.  $150,000. 

Q.  That  in  the  rear  of  the  Exchange  was  the  rear  of  two  lots  that 
fronted  on  another  street  ? 

A.  On  Broad  street. 

Q.  About  what  proportion  of  those  lots  did  this  purchase  include 
half  of  them  ? 

A.  That  I really  could  not  tell. 

Q.  It  was  shown  during  the  negotiations  of  that  purchase  that  those 
lots  had  been  sold  within  two  or  three  years  previously  for  about 
-$58,000,  was  it. not  ? \ 

A.  That  I could  not  tell,  but  I know  the  whole  property  when  it 
was  bought  by  Mr.  Popham,  I believe  the  whole  property  was  bought 
for  about  $68,000  or  $70,000. 

Q.  And  the  half  of  it  sold  for  — 

A.  The  rear  half  was  sold  for  $150,000. 

Q.  That  was  the  least  valuable  half,  was  it  not  ? 

A.  Before  the  Exchange  was  built  it  was,  but  after  the  Exchange 
■was  built  — 

Q.  State  whether  you  would  consider  that  sale  a reasonable  illustra- 
tion of  the  increase  in  the  value  of  property  in  the  neighborhood, 
caused  by  the  building  of  the  Exchange  ? 

A.  I think  it  was. 

Q.  When  did  the  Exchange  commence  business  ? 

A.  That  I could  not  tell ; I was  not  here  until  1866, 

Q.  Tell  me,  if  you  can,  the  cost  of  seat  in  the  Exchange  or  what 
^ members  were  required  to  pay  annually  in  the  year  1872  ? 

A.  Two  hundred  dollars  each. 

Q.  Those  were  the  annual  dues,  were  they  not  ? 

110 


874 


A.  No,  the  annual  dues  were  from  twe'ntj-five  dollars  to  thirty  dol- 
lars. 

Q.  Now  was  that  price  raised  in  February,  1873  ? 

A.  The  initiation  fee  was  raised  to  $500  the  1st  of  February,  1873. 

Q.  Was  it  raised  in  February,  1881  ? 

A.  Yes,  sir. 

Q.  To  what  sum  ? 

A.  I believe  it  was  $1,000. 

Q.  State  whether  a vote  was  passed  limiting  the  membership  after 
January  1,  1882,  to  3,000  ? 

A.  Yes,  sir. 

Q.  Was  a vote  also  passed  fixing  the  initiation  fee  at  $10,000  ? 

A.  At  $2,500,  not  at  $10,000. 

Q.  Is  it  not  stated  in  your  report  for  that  year  as  follows:  Finally 
the  Board  decided  to  submit  to  the  members  at  an  informal  ballot 
three  plans  that  had  been  proposed,  to-wit : the  limitation  of  the 
membership  to  3,000,  making  the  initiation  fee  $10,000  after  January 
1,  1882,  and  the  issuing  of  building  certificates.  This  informal  ballot 
took  place  November  12th,  and  resulted  in  favor  of  limiting  the  mem- 
bership to  3,000,  by  a vote  of  1,162  for  this  proposition  to  303  for  the 
other  two  plans.  An  equally  emphatic  expression  was  received  through 
the  medium  of  postal  cards  from  members  unable  to  be  present.  So 
great  was  the  interest  evinced  in  the  matter,  that  before  the  announce- 
ment of  the  vote,  310  applications  for  the  300  vacancies  had  been  filed 
and  by  the  close  of  ’Change,  two  days  later,  $1,000,000  had  been  de- 
posited, being  for  eighty-seven  more  memberships  than  could  be 
granted  at  $2,500.”  Is  that  correct? 

A.  I don’t  remember  this  ten-thousand  dollar  clause. 

Q.  Does  not  that  ten-thousand  dollar  clause  apply  to  memberships 
after  the  1st  of  January  and  after  the  3,000  has  been  filled  ? 

A.  I remember,  yes,  sir;  there  was  such  a proposition  made,  but  I 
don’t  think  there  was  a vote  taken  on  that,  although,  itsays  here  there 
was. 

Q.  Was  there  not  a vote  afterward  taken,  fixing  the  price  at  $10,000 
and  the  membership  at  3,000  ? 

A.  It  was  taken  at  the  same  time  when  the  $2,500  initiation  fee 
was  passed. 

Q.  No  person  can  be  admitted  to  membership  in  the  Exchange  un- 
less he  purchases  the  interest  of  some  member,  can  he  ? 

A.  Yes,  sir. 

Q.  What  is  the  market  value  of  seats  in  the  Exchange  now  ? 

A.  I have  heard  of  sales  within  the  last  few  days  at  $2,050  and  $2,700. 


875 


Q.  The  margins  which  are  deposited  in  the  Exchange  are  deposited 
with  yon  as  treasurer,  are  they  not  ? 

A.  Deposited  directly  in  the  bank  ; they  go  through  the  treasurer’s 
books. 

Q.  What  are  the  margins  per  bushel  on  wheat,  rye  and  barley  ? 

A.  Well,  it  depends  entirely  upon  the  market  price;  generally  from 
five  to  ten  cents  a bushel. 

Q.  Please  turn  to  page  185  ? 

A.  That  is  the  original,  ten  cents  I believe  on  wheat,  rye  and  bar- 
ley and  five  cents  on  corn,  and  the  further  margins  from  time  to  time 
are  to  cover  any  variation  in  the  market  value  from  the  contract  price 
Q.  How  much  a tierce  on  lard  ? 

A.  Two  dollars. 

Q.  And  a dollar  a barrel  on  pork  and  half  a cent  a pound  on  al^ 
other  meats  ? 

A.  Yes,  sir. 

Q.  Now,  what  is  the  margin  on  petroleum? 

A.  I don’t  know. 

By  Senator  : 

Q.  Do  you  deal  in  petroleum  down  there? 

A.  Yes,  sir,  a great  deal  in  petroleum. 

By  Mr.  Chittenden"  : 

Q.  What  was  the  amount  of  margins  deposited  during  the  year 
1881  ? 

A.  $10,716,838. 

Q.  Can  you  give  the  amount  deposited  so  far  during  the  year  1882  ? 
A.  I can  only  give  you  the  deposits  we  had  yesterday,  $1,855,441. 

Q.  What  I want  is  the  aggregate  amount  ? 

A.  That  I have  not  taken  a memorandum  of. 

Q.  Is  it  larger  or  smaller  than  it  was  last  year  ? 

A.  I suppose  it  to  be  larger. 

Q.  Will  you  give  us  the  best  approximation  ? 

A.  I could  not  state  any  amount ; I might  send  it  up  to  you. 

Q.  I wish  you  would  send  the  aggregate  amount  of  margins  to  the 
present  time ; what  are  the  commissions  required  to  be  paid  on 
wheat,  for  example,  to  the  broker  who  buys  or  sells,  by  outside  parties  ? 
A.  Well,  some  charge  two  dollars  and  a half  for  a boat-load. 

Q.  Is  there  no  limitation  by  the  rules  or  by-laws  of  the  Exchange 
upon  the  commissions  to  be  charged  by  members  ? 

A.  I don’t  believe  we  have,  no. 

Q.  They  have  the  right  to  charge  whatever  they  please  ? 

A.  Not  whatever  they  please  ; they  generally  charge  up  to  one- 


870 


eighth  of  a cent  per  bushel  and  as  low  as  two  dollars  and  a half  'for  a 
boat-load. 

Q.  Highest  one-eighth  of  a cent  per  bushel  on  all  grain  ? 

A.  Yes,  sir  ; that  is  where  brokers  give  up  their  own  names. 

Q.  I don’t  know  as  you  understand  me  ; suppose  a person  not  a 
member  employs  a member  to  make  a purchase  of  wheat  for  an  out- 
sider, do  the  rules  of  the  Exchange  prescribe  any  rate  of  commission 
which  the  broker  must  charge  his  customer  ? 

A.  I don’t  believe  they  do. 

Q.  Are  margins  deposited  upon  all  sales  for  future  delivery  in  the 
Exchange  ? 

A.  No,  only  when  they  are  asked,  only  when  the  parties  ask  t ave 
them  deposited  ? 

Q.  Parties  in  high  credit  and  of  capital  are  not  usually  required  to 
deposit  margins  ? 

A.  No,  sir. 

Q.  They  are  usually  deposited  by  parties  of  moderate  means  or  of 
questionable  character  ? 

A.  Yes,  sir ; although  some  of  the  larger  houses  here  are  required 
to  deposit  margins  also. 

Q.  I notice  that  on  page  66  of  this  report  for  1881,  it  is  stated 
that  at  a large  enthusiastic  meeting  of  the  New  York  Produce  Ex- 
change, held  May  23,  1881,  the  following  protest  against  tlie  passage 
of  the  proposed  bill  imposing  a tax  upon  broker’s  sales  was  unani- 
mously adopted  ; and  among  other  lesolutions  stated  here  is  this. 

Resolved,  that  we  indignantly  protest  against  the  appointment  of 
commissioners,  as  proposed  in  said  bill,  who  shall  be  vested  with  power 
to  demand  access  to  the  broker’s  books,  and  to  the  names  of  all  parties 
for  whom  he  transacts  business.”  Were  you  present  at  that  meeting? 

A.  No,  sir ; I heard  of  it;  it  was  a public  meeting  there. 

Q.  What  practical  objection  is  there  to  having  the  names  of  parties  • 
engaged  in  sales  of  grain  and  produce  for  future  delivery  known  ? 

A.  I could  not  see  any  objection. 

Q.  This  business  of  the  Produce  Exchange  has  been  a prosperous 
business,  largely  increasing  in  these  last  four  or  five  years,  has  it  not  ? 

, A.  Yes,  sir. 

Q.  And  a largo  part  of  the  business  consists  of  purchases  and  sales 
for  future  delivery,  does  it  not? 

A.  Yes,  sir. 

Q.  Do  you  not  think  it  is  equitable  and  right  that  a business  like 
that,  having  sucli  prosperity  and  magnitude,  and  being  so  largely  con- 
nected with  futures,  should  pay  a reasonable  tax  ? 

A.  You  mean  a broker’s  tax  ? 

Q.  Yes,  sir;  whetlier  it  is  not  fair  and  right  that  brokers  making 
these  extensive  sales  for  future  delivery,  should  pay  a reasonable 
tax  ? 


i 


877 

A.  Well,  I could  not  very  well  answer  this  question,  because  I am 
not  familiar  with  the  profits  the  brokers  make,  and  the  large  majority 
of  the  brokers  only  get  two  dollars  and  a half  for  each  transaction. 

Q.  Suppose  the  tax  was  adjusted  at  a percentage  upon  their  gross 
commissions.  I assume  that  the  tax  is  to  be  a fair  one,  and  to  be  im- 
posed not  only  upon  sales  in  the  Produce  Exchange,  but  upon  all 
similar  sales.  I ask  whether  it  is  not  just  that  that  business  should 
bear  some  portion  of  the  burdens  of  taxation  ? 

A.  I must  say  I am  not  a competent  judge  upon  this  point. 

Q.  Have  you  with  you,  and  will  you  furnish  to  the  committee  the 
forms  used  by  you  in  connection  with  the  deposit  of  margins  ? 

A.  I have. 

The  witness  produces  three  papers  which  are  marked  Exhibits  1,  2 
and  3,  of  this  date. 

By  Senfitor  Browning  : 

Q.  When  was' that  sale  to  Mr.  Popham? 

A.  About  four  years  ago. 

Q.  Who  is  Mr.  Popham  ? 

A.  He  was  in  the  lard  refining  business.  He  is  now  dead. 

Q.  Was  he  a member  of  the  Produce  Exchange  at  the  time  ? 

A.  Yes,  sir. 

Q.  A member  of  the  building  committee  ? 

A.  No,  sir. 

Q.  Was  he  afterward  a member  of  the  building  committee  ? 

A.  No,  sir. 

t ).  And  he  sold  the  property  to  the  building  committee  ? 

A.  His  heirs ; yes,  sir,  after  his  death. 

Q.  After  Mr.  Popham  purchased  that  property,  did  he  occupy  it  ? 

A.  Yes,  sir. 

Q.  Himself  ? 

A.  One  portion  of  it;  and  then  the  front  part  he  rented  to  the 
Pennsylvania  railroad  and  the  upper  part  was  rented  for  offices,  and 
the  rear  part  he  occupied  himself  in  the  lard  refining  business. 

Q.  Do  you  believe  there  was  any  collusion,  directly  or  indirectly,  in 
that  transaction  between  Mr.  Popham  and  the  building  committee  of 
the  Exchange  by  which  some  parties  may  have  made  money  out  of 
that  ? 

A.  No,  sir ; most  emphatically  no  ; one  member  of  the  building 
committee  proposed  to  take  that  very  same  lot  which  the  Exchange 
took  at  the  same  price. 

Q.  Who? 

A.  Mr.  Armour ; and  paid  the  same  amount  within  one  year  from 
the  date  of  purchase ; he  made  the  same  proposition  as  to  the  lot  on 


87S 


Stone  street  that  cost  $20,000,  but  we  did  not  accept  that  proposition, 
and  we  are  offered  now  $50,000  for  the  same  lot  which  we  paid  $20,000 
for. 

Q.  What  was  the  amount  of  margins  deposited  in  1881  ? 

A.  $10,716,838. 

Q.  Can  you  tell  me  what  the  selling  value  of  the  property  was 
that  that  $10,000,000  represented  ? 

A.  It  is  impossible. 

Q.  Did  that  represent  five  per  cent  of  the  selling  value  ? 

A.  We  assume  that  the  margins  amount  to  five  per  cent. 

Q.  About  five  per  cent  of  the  selling  value  ? 

A.  Y es,  sir ; on  wheat  of  course  it  is  more ; you  may  take  an  aver- 
age of  six  or  seven  per  cent. 

Q.  Ten  millions  average  about  six  or  seven  per  cent  of  the  selling 
value  ? 

A.  Yes,  sir. 

By  Mr.  Chittenden  : 

Q.  The  subject  of  this  purchase  was  submitted  to  some  vote  of  the 
Exchange,  was  it  not,  before  it  was  consummated  ? 

A,  It  was  submitted  to  the  board  of  managers  and  afterward,  I 
believe,  to  the  members  of  the  Exchange. 

Q.  And  the  whole  subject  of  the  relations  of  this  property  and  of 
the  Exchange  to  the  owners  and  all  that  was  investigated,  was  it  not? 

A Yes,  sir. 

Q.  And  the  managers  voted  to  make  the  purchase  ? 

A.  Yes,  sir. 

Leonard  Hazeltine  re-called: 

By  Mr.  Chittenden: 

Q.  In  your  former  examination  you  spoke  of  something  that  you 
called  a corner  existing  in  corn  in  the  Produce  Exchange  in  November 
last,  and  you  stated  the  price  at  wh\ch  that  was  closed  at  $1.10;  at 
what  date  was  corn  worth  that  in  this  market,  at  what  date  was  that 
corner  closed  ? 

A.  I object  to  vour  statement  of  what  I stated;  I did  not  state  it 
was  a corner ; I was  very  particular  to  explain  that  it  was  a so-called 
corner. 

Q.  Then  I will  call  it  a so-called  corner  ? 

A.  The  price  of  corn  the  last  day  of  the  month  was  from  $1.09  to 
$1.10,  and  also  several  days  before  the  last  end  of  the  month  ; I don’t 
recollect  the  dab*. 


879 


Q.  What  month  ? 

A.  November. 

Q.  AVhat  was  it  on  the  10th  of  December  ? 

A.  I could  not  possibly  tell  you. 

Q.  Have  you  no  knowledge  on  the  subject  ? 

A.  I have  no  recollection. 

Q.  Can  you  not  tell  within  five  cents  what  it  was  ? 

A.  I could  not;  I can  tell  what  it  is  to-day  ; I can’t  tell  you  what  it 
was  on  any  day  without  reference  to  my  books. 

Q.  AVhat  is  it  to-day  ? 

A.  About  sixty-eight  and  one-half. 

Q.  Did  it  immediately  after  the  first  of  December  fall  off — the  price  ? 

A.  Yes,  sir. 

Q.  Did  it  fall  off  as  low  as  seventy-five  within  ten  days  after  the  first 
of  December  ? 

A.  I should  think  it  did ; below  that  I should  think  ; I should  say 
it  went  down  as  low  as  seventy-two  and  one-half. 

Q.  At  what  price  did  you  purchase  first  with  reference  to  that 
delivery  ? 

A.  Something  in  the  neighborhood  of  eighty  or  eighty-five  cents  last 
July. 

Q.  State  whether  you  call  that  a corner  in  corn  ? 

A.  I do  not. 

Q.  What  do  you  call  it  ? 

A.  I call  it  an  excessive  demand  over  supply. 

Q,  An  excessive  demand  for  speculation  ? 

A.  For  the  fulfillment  of  contracts ; yes,  you  might  call  it  specula" 
tion  I suppose. 

Q.  Was  there  any  excessive  demand  for  consumption  at  that  time? 

A.  There  was  a good  consumptive  demand;  I don’t  know  what  you 
mean  by  excessive;  there  was  a good,  fair  demand;  corn  was  selling  in 
Liverpool  at  that  time  on  the  basis  of  a dollar  a bushel  in  New  York, 
adding  freights. 

Q.  Have  you  known  a corner  in  this  corn  market  within  the  last  three 
years,  that  you  call  a corner? 

A.  I have  not. 

Q.  Do  you  know  any  thing  about  a sudden  rise  in  the  price  of  corn 
that  took  place  in  September,  1881  ? 

A.  I don’t  recall  it  to  remembrance. 

Q.  Do  you  remember  an  occasion  when  some  change  was  made  by 
the  Chicago  Produce  Exchange  that  caused  a large  decline  in  the  price 
of  corn  ? 

A.  I don’t  recall  to  remembrance. 


880 


Q.  Do  you  not  remember  the  time  in  September,  1881,  when  it  was 
reported  that  some  parties  in  this  city  liad  purchased  about  twenty 
million  bushels  of  corn  with  the  intention  of  making  a corner — of  rais- 
ing the  price  ; don’t  you  know  any  thing  about  that  ? 

A,  I recollect  there  was  some  such  rumor  ; I don’t  recollect  the  time 

Q.  Last  September,  1881  ? 

’ A.  I don’t  recollect  it  ; you  mean  September  a year  ago  ? 

Q.  Yes  ? 

A.  I don’t  recollect  it. 

Q.  Did  you  have  any  connection  with  it  personally? 

A.  I don’t  recollect  that  I did. 

Q.  You  are  familiar  with  the  manner  in  which  this  business  is 
transacted  in  the  Produce  Exchange,  are  you  not  ? 

A.  Yes,  sir. 

Q.  And  have  been  since  its  organization  ? 

A.  Well,  I have  been  for  a great  many  years. 

Q.  Your  firm  is  one  of  the  largest  dealers  upon  that  Exchange  ? 

A.  I would  hardly  arrogate  that ; we  are  large  dealers. 

Q.  Well,  how  many  bushels  of  grain  does  your  firm  handle  in  the  • 
course  of  a year  ? 

A.  I could  not  tell  you  ; very  largely  ; millions. 

Q.  Can  you  not  give  any  approximation  ? 

A.  I could  not,  sir. 

Q.  Don’t  you  figure  it  up  at  the  end  of  a year  ? 

A.  I don’t  know  as  I ever  did. 

Q.  Are  the  sales  of  grain  for  future  delivery  in  connection  with  the 
Exchange  usually  recorded  on  the  books  of  the  Exchange  ? 

A.  They  are  not  usually,  except  we  have  two  calls  ; what  are  called 
calls  of  grain,  one  at  a quarter  before  twelve  and  one  at  three,  and 
records  of  the  trades  made  at  these  times  are  recorded,  but  none 
others.  You  mean  officially  recorded  by  the  Exchange  ? 

Q.  Yes? 

A.  Keporters  get  what  they  can. 

Q.  Now,  what  proportion  of  the  actual  sales  for  future  delivery 
should  you  think  were  recorded  officially  by  the  Exchange  ? 

A.  T should  think  a very  small  proportion. 

Q.  Prol)ably  not  more  than  one-tenth  ?. 

A.  1 should  say  not  that.  It  is  a transaction  which  takes  half  an 
hour,  and  it  has  against  it  the  other  transaction  of  from  ten  to  four 
o’clock. 

i).  '’I'hero  is  no  obligation  by  the  rules  of  the  Exchange  for  member 
to  recor(l  tlieir  sales,  is  there? 

A.  Xo,  sir;  the  usual  custom  is  to  give  them  to  the  reporters  ;is 


881 


you  come  off  of  the  floor,  and  they  are  published  in  the  papers. 
There  is  no  official  record  kept. 

Q.  Are  margins  deposited  in  all  cases  of  sales  that  are  made  at  the 
call,  as  you  term  it  ? 

A.  I should  say  not a very  small  percentage,  I think. 

Q.  Parties  in  strong  credit  and  with  abundant  capital  are  not 
usually  required  to  deposit  margins  ? 

A.  Not  usually,  sir. 

Qs  How  is  it  with  the  general  business  of  your  firm;  are  you  gen- 
erally required  to  deposit  margins  ? 

A.  We  are  not. 

Q.  I find  reported  in  the  annual  report  of  the  Produce  Exchange 
for  1881,  sales  of  wheat  on  call  at  forty-four  millions  four  hundred 
and  ninety-two  thousand  bushels.  Is  there  anyway  now  of  ascertain- 
ing the  quantity  of  wheat  that  was  sold  by  members  of  the  Exchange 
aside  from  these  sales  ? 

A.  I should  say  not ; there  is  a Produce  Exchange  paper,  a market 
report,  w’hich  summarizes  the  sales  of  these  calls  and  also  what  the 
’•  members  report,  which  may  give  you  approximately  the  information 
you  require. 

Q.  You  yourself  have  no  definite  idea  of  the  quantity  of  wheat  jfor 
instance  that  is  dealt  in  for  future  delivery  in  the  course  of  a year  ? 

A.  I have  not. 

Q.  Or  of  corn  ? 

A.  No,  sir. 

Q.  Except  you  say  you  do  not  think  that  one-tenth  of  these  sales 
are  recorded  ? 

A.  That  is  a mere  matter  of  judgment ; I think  that  would  be  a 
large  proportion  myself. 

Q.  It  is  also  reported  here  that  the  margins  deposited  in  1881  are 
ten  million  seven  hundred  and  sixteen  thousand  dollars ; that  don’t 
necessarily  imply  that  those  margins  are  deposited  for  the  sales  made 
on  call  does  it  ? 

A.  No,  sir. 

Q.  That  covers  outside  sales  that  are  not  reported  ? 

A.  It  would  cover  all  transactions  ; no  margin  would  be  called  for 
unless  there  was  some  transaction  whether  made  on  or  off  the  call,  and 
those  margin  calls  are  not  necessarily  original  margins  upon  the  origi- 
nal transactions,  but  they  are  represented  by  the  fluctuations  in  the 
market ; for  instance  a party  had  sold  a hundred  thousand  bushels  of 
wheat  and  the  market  had  gone  down  he  would  probably  be  called  to 
the  market;  in  that  way  these  margin  calls  are  larger  than  they  other- 
wise would  be. 

Ill 


882 


Q.  Do  you  know  what  the  margins  by  the  rules  of  the  Exchange 
are  on  petroleum  ? 

A.  I do  not. 

Q.  I noticed  reported  in  the  papers  this  morning  a decision  of  the 
committee  of  arbitration  of  the  Exchange  in  the  case  between  your 
firm  and  Lane  & Son ; are  you  familiar  with  the  facts  out  of  which 
that  arbitration  grew  ? 

A.  I am. 

Q.  Will  you  state  what  the  sale  was  which  your  firm  made  to  Lane 
& Son,  when  it  was  and  its  terms  ? 

A.  1 would  prefer  not  to  state  that  until  the  award  is  settled  ; the 
award  has  not  been  settled  yet,  and  I prefer  not  to  be  quoted  as  giving 
any  expression  of  my  views  in  the  case  until  it  is  finally  settled  ; J ob- 
ject to  any  publicity  of  the  question  until  it  is  settled ; I have  no  ob- 
jection to  giving  you  the  award,  but  as  to  any  statement  of  facts  in  re- 
lation to  it  I do  not  desire  to  give  them. 

Mr.  Chittenden’  — I submit  to  the  committee  whether  the  witness 
should  not  be  required  to  answer. 

The  Witness  — This  is  an  award  growing  out  of  a transaction  be- 
tween Messrs.  Lane  & Son  and  ourselves;  the  case  has  been  arbitrated 
and  the  award  has  been  substantially  in  our  favor  ; the  parties  have 
not  yet  paid  the  amount  of  the  award;  we  have  tendered  them  the 
amount  due  them  by  the  award ; until  the  affair  is  settled  by  the  pay- 
ment of  the  award  by  both  partias  I do  not  think  it  fair  that  I should 
give  any  expression  of  opinion  about  it. 

f 

By  Senator  Boyd  : 

Q.  Do  you  object  because  you  think  your  firm  would  sustain  any 
pecuniary  loss  by  reason  of  any  statement  ? 

A.  1 think  they  might ; I am  perfectly  willing  to  give  you  all  the 
information  you  ask  in  a fair  way  of  the  matters  under  discussion,  but 
I am  not  willing  to  jeopardize  any  interest  I have. 

By  Mr.  Chittenden: 

Q.  Suppose  we  waive  that  for  a moment.  What  do  you  claim  was 
the  contract  which  you  made  with  Lane  & Son  in  reference  to  that 
corn  ? 

A.  I don’t  make  any  claim  ; I do  not  desire  to  be  interviewed  in  re- 
lation to  that  question;  it  is  not  a matter,  it  seems  to  me,  that  comes 
within  the  scope  of  this  investigation  ; it  is  a matter  that  I consider 
would  jeopardize  my  interest,  if  publicity  was  given  to  it. 

Mr.  Chittenden — My  purpose  is  this:  It  is  announced  in  the 
])aperH,  apparently  by  the  authority  of  a committee  of  this  Exchange, 


883 


that  that  committee  has  awarded  as  damages  to  Ilusted  & Hazeltine, 
the  sum  of  14,246  — as  damages  to  Hasted  & Hazeltine  for  selling  a lot 
of  corn  which  Lane  & Son  had  previously  bought  of  Husted  & Hazel- 
tine,  had  paid  for,  and  which  had  been  delivered  to  them.  In  other 
words,  it  is  an  award  of  damages  against  them  for  selling  their  own 
property  for  $4,000.  It  is  a case  of  future  delivery,  and  it  seems  to  me 
a case  of  such  extraordinary  character,  where  a party  is  mulcted  in 
damages  for  the  sale  of  his  own  property,  that  it  is  a proper  question 
for  investigation. 

The  witness  produces  a copy  of  the  award,  which  is  handed  to  Mr. 
Chittenden. 

Q.  At  my  request  you  have  handed  me  a paper  which  reads  as  fol- 
lows : “ That  deliveries  were  made  in  accordance  with  the  rule  of  the 
New  York  Produce  Exchange,  and  that  Husted  & Hazeltine  must  pay 
Lane  & Son  the  full  amount  of  claim,  $17,336.31,  with  interest  from 
November  24, 1882  ; that  the  charges  of  fraud  and  conspiracy  against 
Lane  & Son  have  not  been  sustained,  but  that  16,332Yf ^ bushels  of 
corn  originally  purchased  for  shipment  by  Lane  & Son,  and  not 
shipped,  have  been  delivered  by  them  on  grain  warehouse  receipts  Nos, 
848  and  849,  and  Lane  & Sons  shall  pay  Husted  & Hazeltine  $4,246.36, 
with  interest  from  November  29,  1882,  being  the  difference  between 
the  price  paid  by  Lane  & Son  to  Husted  & Hazeltine,  and  the  settling 
price  on  day  of  delivery.  Fees  to  arbitrators,  $225  ; to  notary,  $3.50  ; 
in  all,  $228.50,  to  be  paid,  one-half  by  each  party.  New  York,  De- 
cember 23,  1882.  Signed  in  the  presence  of  William  H.  Pierson, 
Treasurer;  G-eorge  0.  Martin,  George  S.  Scott,  D.  D.  Mangum,  J.  F. 
Fuller,  J.  E.  Hicken.”  State  to  the  committee  what  the  sale  was  by 
Husted  & Hazeltine  to  Lane  & Son,  out  of  which  this  award  grew  ? 

The  Witness  — Now,  Mr.  Chairman,  I object  to  answering  any 
questions  in  relation  to  this  award  on  the  ground  that  the  award  has 
not  been  paid  and  my  statement  may  jeopardize  me  either  before  the 
committee,  where  it  may  hereafter  come,  or  in  other  ways,  therefore  I 
desire  not  to  be  called  upon  to  answer  any  questions  in  relation  to  it. 

The  Ohairmak  — The  object  of  this  committee’s  work  is  to  inves- 
tigate the  whole  system  of  making  corners  and  dealing  in  futures  with 
reference  to  its  effect  upon  commerce  and  its  influence  upon  the  pub- 
lic welfare  ; it  is  publicly  claimed  that  this  system  of  compelling  settle- 
ments is  a great  evil,  and  here  is  a case  where  a settlement  has  been  com- 
pelled, and  I think  it  is  altogether  within  the  province  of  this  committee 
to  investigate  this  case  ; I do  not  see  where  your  firm  can  sustain  any 
loss  or  injury  by  reason  of  your  answering  the  question,  for  the  simple 
reason  that  this  matter  has  already  been  adjudicated  upon  by  the  arbi- 
tration committee,  from  the  judgment  already  entered,  it  is  a matter 
of  public  record,  the  Press  has  made  it  known  to  the  world,  and  I do , 


884 


not  see  that  your  stating  tlie  contract  transaction  out  of  which  it  aroso 
can  jeopordize  you  in  tlie  slightest  degree,  the  committee  must  there- 
fore hold  that  it  is  your  duty  to  answer  the  question. 

The  Witness  — I decline  to  answer  it. 

Senator  Boyd  — I will  here  state  that  of  course  that  ends  the  matter. 
By  Mr.  Chittenden  : 

Q.  Does  not  this  award  give  Ilusted  & Hazeltine  over  $4,000  in  dam- 
ages against  Lane  & Son  for  the  sale  by  Lane  & Son  of  their  own  prop- 
erty ? 

A.  For  the  same  reason  I decline  to  answer;  I decline  to  be  inter- 
rogated on  that  question. 

Q.  Had  not  Lane  & Son  purchased  and  paid  for  the  corn  in  that 
transaction  out  of  which  this  grew  ? 

A.  I make  the  same  answer. 

Q.  Ilt^l  not  the  firm  of  Husted  & Hazeltine  delivered  that  corn  to 
Lane  & Co.  ? 

A.  I make  the  same  answer. 

Q.  Did  not  Husted  & Hazeltine  retain  from  Lane  & Son  the  sum  of 
$16,000  and  over,  due  to  Lane  & Son  upon  another  transaction  under 
a claim  of  damages  for  the  sale  of  the  corn  mentioned  in  this  award? 

A.  1 make  the  same  reply. 

Q.  Are  transactions  of  the  kind  indicated  by  this  award  common 
in  the  Produce  Exchange  ? 

A.  I should  think  they  were  very  uncommon  ; you  mean  the  liti- 
gation growing  out  of  that? 

Q.  No,  sir  ; I mean  the  case  of  a claim  for  damages  against  a man  for 
the  sale  of  property  that  he  has  bought  and  paid  for  ? 

A.  I decline  to  answer  that. 

Q.  Will  you  explain  to  the  committee  how  any  claim  for  damages 
against  Lane  & Son  in  this  case  on  the  part  of  your  firm  arose  ? 

A.  You  have  asked  me  that  question,  in  different  forms,  about  eight 
or  nine  times,  and  I make  the  same  reply  each  time. 

Q.  Is  it  true  that  corn  is  sometimes  worth  less  for  immediate  than 
it  is  for  future  delivery  in  this  market  ? 

A.  Yes,  sir. 

Q.  Explain  wliy  that  is  ? 

A.  That  is  very  manifest  why  grain  might  be  worth  less  to-day  than 
on  a future  day,  because  there  would  be  the  cost  of  the  money  to  carry 
it,  tlie  storage  and  the  interest.  At  other  times  it  may  be  worth  a 
great  deal  more  on  account  of  scarcity;  prospective  supplies  make 
future  months  worth  less. 

(2-  At  the  time  of  the  transaction  mentioned  in  this  award,  was 
there  a reputed  corner  in  corn  in  this  market? 


885 


A.  I cannot  answer  that. 

Q.  Why  not? 

A.  Because  I don’t  know. 

Q.  Was  there  any  actual  corner? 

A.  Not  under  my  definition  of  the  term  corner.” 

Q.  Well,  please  state  your  definition  of  the  term  “ corner.” 

A.  I stated  that  in  my  direct  testimony  fully;  I cannot  state  it  any 
fuller. 

Q.  At  that  time  were  you  engaged  largely  in  the  purchase  of  corn 
— say  for  a month  or  six  weeks  before  the  29th  of  November,  1882  ? 

A.  Yes,  sir. 

Q.  Were  you  interested  with  other  parties  in  the  purchase  of  corn  ? 

A.  That  I decline  to  answer.  % 

Q.  Had  not  your  firm  and  several  others  formed  an  association  for 
the  purchase  of  a large  quantity  of  corn  with  the  view  of  putting  up 
the  price  ? 

A.  No. 

Q.  Had  you  made  %uch  an  arrangement  or  agreement  with  any 
other  person  ? 

A.  I decline  to  answer  any  questions  as  to  agreements  between  my 
customers  and  myself ; I don’t  think  it  comes  within  the  scope  of 
your  investigation. 

Q.  Were  you  not  engaged  in  the  six  weeks  previous  to  the  29th  of  No- 
vember in  an  attempt  to  make  a corner  in  corn  in  this  market  ? 

A.  I have  explained  that  whole  thing  in  my  direct  testimony,  given 
reasons  why  I came  to  buy  so  much  ’corn;  I cannot  state  it  any 
fuller. 

Q.  I repeat  the  question  ? ^ 

A.  I cannot  make  any  further  answer  than  I gave  to  the  committee 
at  my  former  examination. 

Q.  How  much  corn  had  you  and  your  associates  purchased  at  that 
time,  on  the  29th  of  November,  up  to  that  time,  in  that  deal  ? 

A.  I cannot  state  that  any  fuller  than  I did  in  my  former  examina- 
tion. 

Q.  You  stated  that  your  firm  had  purchased  something  over  two 
million  of  bushels  ; what  I want  now  is  the  whole  amount  purchased  ? 

A.  That  is  all  I know  any  thing  of,  what  my  own  firm  did. 

Q.  Do  you  say  your  firm  was  not  interested  with  any  other  person 
or  firm  in  that  transaction  ? 

A.  I did  not  say  so. 

Q.  I asked  you  whether  they  were  ? 

A.  You  asked  mo  that  before  and  I told  you  I would  not  answer 
it. 


886 


Q.  Did  not  other  persons  or  firms  with  which  your  firm  was  inter- 
ested make  large  purchases  of  corn  within  six  weeks  previous  to  the 
29th  of  November,  1882? 

A.  Not  that  I know  of. 

Q.  Do  you  know  whether  they  did  or  not? 

A.  I should  have  been  liable  to  know  if  they  had.  I have  received 
no  account  of  any  such  purchases  by  firms  with  which  we  are  inter- 
ested. 

Q.  Was  your  firm  conducting  that  transaction  of  deal  fora  party  of 
other  persons  ? 

Q.  I have  stated  that  I decline  to  answer  any  questions  relating  to 
any  transactions  between  my  customers  and  myself. 

Q.  Do  decline  to  answer,  then,  because  it  would  subject  you  to 
prosecution  ? ^ . 

A.  It  would  subject  me  to  ridicule  and  ignominy. 

Q.  You  do  not  refuse  because  it  would  subject  you  to  any  prosecu- 
tion ? 

A.  It  would  degrade  me  to  do  it,  and  I would#not  do  it. 

Q.  Why  would  it  degrade  you  ? 

A.  I decline  to  answer  that. 

Q.  Is  it  an  honest  business  ? 

The  WiTi^ESS  — Mr.  Chairman,  I think  I have  some  protection 
here  ; I think  these  questions  are  being  put  in  the  way  of  a petty  police 
court.  I am  a gentleman  and  merchant,  and  do  not  think  I come  here 
to  be  brow-beaten  by  a lawyer. 

Senator  Boyd  — As  I stated  before,  the  object  of  this  committee  is 
to  investigate  this  system,  concerning  which  a great  deal  of  complaint 
has  been  made.  If  firms  or  business  men  are  engaged  in  a reputable 
business,  they  of  course  should  have  no  hesitation  in  stating  every 
thing  connected  with  it.  The  public  in  this  country  are  in  favor  of 
legitimate  business ; they  love  to  foster  legitimate  business,  but  if 
there  is  any  thing  that  should  not  see  the  light  of  day,  the  people  of 
this  State  are  determined  to  see  it,  understand,  and  form  their  con- 
clusions in  regard  to  it  themselves.  I do  not  think  the  questions  are 
at  all  improper  ; I think  tliey  are  calculated  to  disclose  any  thing  that 
might  be  detrimental  to  the  public  interests.  If  there  is  nothing  detri- 
mental to  the  public  interests  in  your  mode  of  transacting  business,  I 
do  not  see  why  you  should  have  any  hesitation  to  answer.  If  there  is, 
of  course  you  can  state  so,  and  we  have  no  power  to  compel  immediate 
answers;  but  I will  state  here  that  any  refusal  to  answer  proper  ques- 
tions will  be  considered  as  contempt  of  the  Senate,  of  which  this  com- 
mittee is  a ])art,  and  I hope  you  will  consider  the  matter  and  take  time 
— we  will  give  you  the  time  necessary  — and  answer  in  such  a way  as 


887 


you  deem  it  your  duty  as  a good  citizen  and  an  upright  business 
man. 

The  WiT^TESS  — I recognize  the  right  of  the  committee  to  ask  all 
proper  questions.  I recognize  that  the  committee  are  treating  me 
courteously  ; I recognize  the  fact,  also,  that  I am  dealing  with  my 
customers  in  good  faith  and  propriety,  and  it  is  not  proper  for  me  to 
say  Avho  gives  me  an  order  to  buy  or  sell  a load  of  grain  to-day  to  be 
published  to  all  the  trade.  I am  dealing  Avith  gentlemen.  It  is  simply 
a question  of  propriety  Avith  me  Avhether  I shall  disclose  the  proper 
secrets  of  my  oAvn  business.  I think  it  is  not.  I submit  that  they  are 
unfair  questions  to  ask,  and  I claim  the  protection  of  the  committee. 

Senator  Boyd  — It  is  a matter  of  public  notoriety  and  report  that 
what  is  alleged  to  have  been  a corner  was  created  in  corn  in  this  city 
last  year,  and  that  the  price  of  corn  was  forced  up  from  eighty-seven 
cents  to  $1.10. 

The  Witness — I explained  that  fully  in  my  former  examination  ; 
gave  the  reason  why  more  corn  was  bought. 

Mr.  Chittenden  — I am  inquiring  of  this  witness  as  to  a transac- 
tion which  is  not  one  month  old. 

Senator  Boyd — One  in  which  the  public  are  very  much  interested^ 
because  it  affects  the  price  of  the  absolute  necessaries  of  life.  The 
millions  of  consumers  in  this  country  want  to  know  what  prices  they 
are  paying,  and  whether  those  prices  are  legitimate. 

The  Witness  — I stated  fully  that  it  did  not  affect  the  consumer  at 
all. 

Senator  Boyd  — That  is  your  conclusion,  but  other  people  may  dif- 
fer from  you,  and  therefore  I think  it  is  the  duty  of  this  committee  to 
investigate  and  ascertain  the  facts  so  as  to  be  able  to  see  whether  your 
conclusion  is  correct  or  not. 

The  Witness — I understand  you  to  rule  that  it  is  proper  for  me  to 
^eveal  the  names  of  the  customers  and  persons  with  whom  I had  deal- 
ings in  November  corn  ? 

Senator  Boyd  — I think  it  is  necessary. 

By  Mr.  Chittenden  : 

Q.  What  objection  is  there  to  your  disclosing  to  the  public,  and  to 
this  committee,  the  names  of  the  gentlemen  for  whom  you  deal  upon 
the  Produce  Exchange  ? 

A.  I hardly  think  it  is  worth  while  to  answer  that ; I have  answered 
it  already  ; it  is  too  manifest.  I am  dealing  with  these  gentlemen  and 
it  is  not  a proper  thing  for  me  to  divulge  their  names. 

Q.  Why  not  ? 

A.  Because  it  is  a matter  the  public  has  nothing  to  do  with,  and  it 


888 


is  a matter  of  notoriety  tliey  would  not  want,  and  I would  not  permit 
them  to  have. 

Q.  You  consider  the  business  in  which  they  are  engaged  to  be  an 
honorable  business  ? 

A.  I do. 

Q.  A^ou  consider  it  to  be  a part  of  the  legitimate  trade  of  the  times  ? 

A.  Yes,  sir  ; just  as  honorable  as  your  profession.  There  is  just 
as  much  impropriety  in  your  asking  for  transactions  with  my  custom- 
ers as  in  my  asking  for  transactions  with  yours. 

Q.  Have  they  requested  you  to  conceal  their  names  ? 

A.  They  have  not. 

Q.  How  do  you  know  they  have  any  objections  ? 

A.  I don’t  know  that  they  have  ; I have  got  some  sense  of  propriety 
myself. 

Q.  Is  not  your  real  objection  to  the  fact  that  persons  engaged  in 
speculating  do  not  like  to  have  the  fact  known  ? 

A.  That  is  not. 

Q.  Then  you  decline  to  state  the  names  of  any  of  the  persons  for 
whom  your  firm  transact  business  ? 

A.  I think  I have. 

Q.  And  you  decline  to  state  the  character  of  the  business  you  trans- 
act for  them  ? 

A.  I have  not  done  that. 

Q.  Are  you  willing  to  do  that  ? 

A.  I have  stated  that  I bought  corn. 

Q.  Answer  the  question  ; are  you  willing  to  disclose  the  character 
of  tile  business  that  you  transact  ? 

A.  I don’t  know  what  you  mean  by  character ; if  you  will  make 
your  question  more  explicit  I will  answer  you. 

Q.  Give  the  facts  to  this  committee  in  regard  to  the  business  you 
transact  for  your  customers  ? 

A.  Not  beyond  what  I have  given  in  my  former  examination,  which 
was  very  full. 

Q.  Is  your  firm  selling  futures  now  in  corn  or  wheat  or  grain  ? 

A.  If  you  want  a literal  answer,  I don’t  know;  I have  not  been 
down  town  for  about  two  hours. 

Q.  Is  that  all  the  answer  you  can  give  to  that  question  ? 

A.  If  you  want  a literal  answer  that  is  the  best  I can  give. 

Q.  Is  your  firm  engaged  from  time  to  time  during  the  present  month 
in  tlie  sale  of  fii lures  iu  grain  ? 

A,  I sliouhi  say  they  were  ; yes,  sir. 

Q.  What  number  of  Imshels  of  wlieat  have  you  sold  for  future 
delivery  wliich  are  not  delivered,  the  contracts  outstanding  at  tiic 
present  time  ? 


889 


A.  I don’t  know,  sir. 

Q.  Give  it  to  the  committee  as  near  as  you  can  ? 

A.  Well,  it  is  insignificant ; I don’t  know  ; it  don’t  amount  to  any 
thing. 

Q.  Does  it  amount  to  a million  bushels  ? 

A.  No,  not  to  one  hundred  thousand  ; very  little. 

Q.  Is  your  firm  buying  from  time  to  time  for  future  delivery  ? 

A.  Yes. 

Q.  What  amount  have  you  got  bought  at  the  present  time  that  is 
not  delivered  ? 

A.  That  I decline  to  answer, 

Q.  Is  it  5,000,000  bushels? 

A.  I said  I declined  to  answer  any  questions  as  to  how  much  prop- 
erty I have  got,  bought  or  sold,  the  amounts;  I' don’t  think  it  is  a 
proper  question  to  ask.  * 

Q.  Can  you  remember  in  what  transactions  your  firm  was  engaged 
in  August  and  September,  1881  ? 

A.  We  were  in  the  grain  business. 

Q.  Can  you  remember  the  particular  transactions  of  those  two  months? 

A.  I cannot. 

Q.  Can  you  remember  any  of  them  ? 

A.  I don’t  recollect  any  now. 

Q.  Do  you  not  know  that  on  the  2d  and  3d  of  October,  1881, 
corn  fell  off  about  ten  cents  a bushel  from  seventy-two  and  seventy- 
three  cents  ? 

A.  I don’t  recollect  it. 

Q.  Do  you  not  remember  of  any  change  made  by  the  Chicago  Pro- 
duce Exchange  in  their  rules  which  was  a matter  of  extended  public 
discussion  at  that  time  ? 

A.  I have  answered  that  question,  that  I did  not. 

Q.  Who  is  the  correspondent  of  your  company  in  Chicago  ? 

The  WiTN’ESS  — I submit,  Mr.  Chairman,  that  that  is  not  a proper 
question. 

Senator  Boyd  — I think  it  is  a proper  question. 

A.  Well,  we  have  a number  of  them. 

Q.  The  principal  one  ? 

A.  I won’t  answer  it ; I don’t  think  it  is  a fair  question  at  all. 

Q.  Is  it  the  firm  of  Hobbs  & Co.  ? 

A.  I will  say  no. 


112 


890 


New  York,  Fiuday,  December  29,  1882. 

The  Committee  met  pursuant  to  adjournment  at  the  Metropolitan 
Hotel. 

Mr.  Chittenden — I have  here  a letter  from  Mr.  Jacoby  in  which 
he  states  that  the  margins  deposited  in  the  Produce  Exchange  from 
January  1,  1882,  to  December  16,  1882,  amount  in  the  aggregate  to 
$17,470,287.50. 

William  J.  Hutchinson,  being  duly  sworn,  was  then  interrogated,  and 
testified  as  follows  : 

By  Mr.  Chittenden  .• 

Q.  Where  do  you  reside  ? 

A.  In  New  York. 

Q.  What  is  your  business  ? • 

A.  Stocks  and  banking;  I am  not  in  active  business. 

Q.  Were  you  a member  of  the  late  firm  of  Kennedy,  Hutchinson  & 
Company  ? 

A.  Yes,  sir,  there  were  two  firms  of  that  name. 

Q.  *When  did  the  last  of  those  firms  dissolve  ? 

A.  The  last  of  the  firms  were  placed  in  the  hands  of  a receiver,  I 
think  it  was  in  August ; I won’t  be  sure  of  the  month. 

Q.  Was  your  firm  at  any  time  connected  with  the  purchase  of  a con- 
siderable amount  of  what  is  called  the  common  stock  of  the  Hannibal 
& St.  Joe  railroad  ? 

A.  Yes,  sir. 

Q.  Keferring  to  the  time  when  there  was  a large  increase  in  the  value 
of  that  stock,  when  did  the  purchases  in  reference  to  that  transaction 
commence  ? 

A.  I think  it  was  about  the  month  of  February,  1881. 

Q.  What  was  the  price  of  the  stock  at  that  time  ? 

A.  In  the  neighborhood  of  50. 

Q.  What  number  of  shares  were  there  of  the  common  stock  ? 

A.  Ninety-one  thousand  and  some  odd  ; I forget  the  exact  amount. 

Q.  Did  the  firm  with  which  you  were  connected  make  large  pur- 
chases of  that  stock  ? 

A.  Yes,  sir. 

Q.  About  how  many  shares  did  it  purchase  ? 

A.  Well,  it  is  impossible  to  say  the  number  of  shares  we  bought  and 
sold;  I think  the  amount  we  accumulated  was  about  forty  thousand 
shares,  lield  in  our  offices  in  New  York  and  Boston. 

(2.  During  the  time  that  you  were  buying  and  selling  this  stock  was 


891 


there  a considerable  short  interest  in  the  stock  — had  a good  deal  of 
the  stock  been  sold  short  ? 

A.  There  was  from  the  time  the  purchases  commenced  up  until  per- 
haps along  in  the  month  of  August  or  September  when  it  became 
cornered.  ’ 

Q.  Have  you  any  means  of  telling  the  extent  of  those  short  sales, 
the  number  of  shares  ? 

A.  I think  the  actual  short  interest  at  the  time  it  was  cornered  was 
somewhere  in  the  neighborhood  of  12,000  or  13,000  shares,  possibly 
15,000  ; I am  only  speaking  from  memory. 

Q.  When  did  the  price  of  that  stock  begin  to  appreciate  rapidly, 
about  what  time  in  the  year  ? 

A.  In  the  latter  part  of  April  I think  the  price  of  the  stock  was 
about  58  and  by  the  middle  of  June  it  was  in  the  neighborhood  of  85 
to  90. 

Q.  Now  go  right  on  after  the  middle  of  June  and  state  in  a general 
way  the  fluctuations  in  the  price  of  that  stock  ? 

A.  The  stock  fluctuated  between  85  and  90  up  until  possibly  about 
the  5th  or  8th  of  September,  1881,  and  one  day  it  very  rapidly  ad- 
vanced from  95  to  135  bid  ; the  next  morning  it  sold  at  200  and 
within  the  next  two  or  three  days  I think  the  stock  was  bid  up  to 
350  ; that  is  merely  from  hearsay  ; we  had  nothing  to  do  with  that 
transaction ; it  was  bid  up  by  outside  parties  ; but  I am  quite  sure  it 
was  quoted  at  350. 

Q.  Who  bid  it  up  ; was  it  not  the  parties  that  had  sold  short  ? 

A.  No,  sir,  I think  it  was  bid  up  by  the  party  who  held  the  stock ; 
I think  he  gave  the  order  to  do  that,  but  I am  not  positive. 

Q.  Who  was  the  person  or  firm  that  put  up  that  stock  ? 

A.  That  is  a difiScult  thing  to  answer. 

Q.  Who  was  the  person  for  whom  your  firm  bought  this  stock  ? 

A.  John  R.  Duff  of  Boston,  and  E.  D.  Bangs  of  Boston,  with  whom 
Mr.  Duff  had  an  account ; they  had  an  account  of  some  five  or  six 
thousand  shares  with  us. 

Q.  Was  Mr.  Duff  at  that  time  an  officer  of  the  road  ? 

A.  Not  at  the  time  the  stock  was  cornered. 

Q.  Did  he  become  such. 

A.  Yes,  sir  ; at  the  election  i'n  December,  I think,  he  was  made 
vice-president  and  elected  a director. 

Q.  Is  he  still  connected  with  the  road  ? 

A.  No,  sir. 

Q.  How  long  did  he  remain  ? 

A.  I think  he  resigned  as  vice-president  and  director  in  the  month 
of  September  when  the  stock  was  sold  to  Mr.  Gould,  the  control  of 
the  road  ; the  last  of  September. 


892 


Q.  Was  the  control  of  the  road  sold  to  Mr.  Gould  at  that  time  ? 

A.  Yrs,  sir. 

Q.  And  Mr.  Duff  went  out  with  the  other  officers  ? 

A.  No,  sir,  all  the  other  officers  did^  not  go  out;  Mr.  Duff  and  one 
or  two  of  the  directors. 

Q.  Enough  to  change  the  control  of  the  road? 

A.  Yes,  sir,  and  since  then  there  has  been  an  election  by  which  it 
has  been  more  radically  changed. 

Q.  How  long  after  the  corner  was  made  did  the  stock  remain  at 
this  high  price  ? 

A.  The  stock  was  in  the  market  at  90  and  was  sold  at  42  to  Mr.  Gould 

Q.  It  dropped  back  immediately  to  about  90  ? 

A.  It  gradually  dropped  from  150  to  par  and  then  was  gradually 
manipulated  down  to  90. 

Q.  Has  that  stock  ever  paid  a dividend  ? 

A.  I think  it  paid  a dividend;  if  you  can  tell  me  the  time  Mr. 
Tweed  was  in  control  of  the  city  politics  ; it  was  before  that  when 
the  stock  was  held  by  Boston  people,  the  preferred  and  the  common 
stock  were  both  dividend-paying  stocks ; I cannot  give  you  the  dates. 

Q.  How  long  have  you  been  in  Wall  street? 

A.  Since  1856. 

Q.  Have  you  known  of  other  corners  being  made  there  ? 

A.  Yes,  sir. 

Q.  Well,  instance  some  of  them  ? 

A.  There  was  a stock  called  Paairie  du  Chein  was  cornered ; that 
was  when  I Avas  quite  young  in  Wall  street,  but  lately  there  was  the 
corner  in  North-Avest  common  stock. 

Q.  Who  was  reputed  to  have  conducted  that  corner  ? 

A.  I think  Mr.  Gould,  and  I don’t  know  whether  I care  about  this 
name  being  taken  in  the  notes,  a genffeman  who  is  dead. 

Q.  How  much  was  that  stock  put  up  by  that  corner  ? 

A.  I think  it  sold  at  $250. 

Q.  And  started  from  what  ? 

A.  Somewhere  in  the  neighborhood  of  eighty  or  eighty-five. 

Q.  Was  there  a large  short  interest  in  that  at  the  time  ? 

A.  It  was  rumored  that  the  short  interest  was  very  large. 

Q.  And  the  shorts  lost  a very  large  amount  of  money  ? 

A.  Yes,  sir,  a very  large  amount ; it  was  so  reported. 

Q.  Do  you  know  any  thing  about  the  process  of  what  is  publicly 
called  locking  up  money  in  Wall  street  ? ’ . 

A.  Yes,  sir. 

(.1.  What  is  the  general  purpose  of  it? 

A.  'To  affect  the  stock  market,  to  lower  the  price  of  stocks. 

(}.  Describe  to  tin;  (!ommitteo  the  process  of  doing  that,  commenc- 


893 


ing  with  lending  the  money  in  the  Exchange,  if  that  is  the  beginning 
of  the  process  ? 

A.  Well,  there  is  one  way  it  is  done  to  aflfect  the  price  of  money  and 
the  price  of  stocks,  say  for  a day,  by  parties  going  to  the  Stock  Ex. 
change  in  the  morning  and  borrowing,  say  anywhere  from'five  to  ten 
millions  of  dollars,  and  at  three  o’clock  not  taking  the  money,  simply 
paying  the  rate,  so  that  the  money  cannot  be  reloaned.  Then  there  is 
another  way  of  locking  up  greenbacks  ; parties  draw  their  checks  on  a 
bank,  demand  greenbacks  and  take  them  out  of  the  bank  and  lock 
them  up. 

Q.  Is  it  not  sometimes  done  by  parties  who  have  control  of  a good 
deal  of  money,  commencing  by  loaning  money  at  low  rates  and  putting 
out  a large  amount  and  making  a very  easy  money  market,  and  then 
afterward  borrowing  all  the  money  they  can,  refusing  to  loan  any  more 
and  suddenly  calling  in  the  outstanding  loans  ? 

A.  Yes,  sir,  that  is  done  at  times.  They  usually  get  a good  line  of 
stocks  out  first,  though. 

Q.  Well,  the  effect  of  that  is  to  make  a tight  money  market  and 
throw  stocks  on  the  market  ? 

A.  Yes,  sir. 

Q.  And  to  depreciate  the  price  ? , 

A.  Yes,  sir,  that  is  usually  the  object;  shake  out  the  weak  holders. 
If  money  is  worth  one-eighth  or  one-quarter  per  cent  a day,  it  is  very 
unpleasant.  ' 

Q.  Are  these  various  processes  of  making  a close  money  market  and 
locking  up, money  uncommon,  or  do  they  happen  several  times  a year  ? 

A.  They  happen  several  times  a year  ; depends  upon  the  position  of 
prominent  operators  in  the  stock  market. 

Q.  Is  it,  or  not,  practicable  for  half  a dozen  of  the  prominent  opera- 
tors in  Wall  street,  acting  together,  to  virtually  control  the  stock 
market  for,  say  a week  or  ten  days  together,  whenever  they  desire  to 
do  so  ? 

A.  Well,  that  depends  upon  circumstances;  sometimes  they  do  and 
sometimes  they  do  |not ; it  depends  a good  deal  upon  the  vsituation 
of  outside  affairs. 

Q.  Are  there  not  times  when  that  is  practicable  ? 

A.  Yes,  sir  ; there  are  times  when  the  strong  men  get  together,  and 
they  can  do  a great  deal  toward  controlling  it. 

Q.  What  is  a fair  day’s  transaction  in  stocks  on  the  Exchange  when 
business  is  what  you  term  good ; how  many  shares  are  bought  and 
sold  ? 

A.  Well,  it  varies;  sometimes  I should  say  running  from  300,000 
shares  to  800,000  ; 800,000  when  business  is  very  active,  but  even  then 
the  whole  amount  of  shares  are  not  reported ; cannot  possibly  be. 


894 


Q.  Of  course  there  are  no  means  of  ascertaining  the  transactions; 
they  arc  not  reported  ? 

A.  No,  sir. 

Q,  Are  purchases  for  actual  investment  usually  reported  on  the 
Exchange,  or  are  they  usually  private  ? 

A.  There  is  no  way  to  discriminate  ; the  only  way  to  ascertain  that 
is  from  the  brokers  themselves ; you  cannot  tell  if  a man  buys  500 
shares  of  stock  whether  it  is  speculative  or  for  investment. 

Q.  Well,  you  have  been  in  Wall  street  a good  while  ? 

A.  Yes,  sir. 

Q.  What  percentage  of  the  transactions,  in  your  judgment,  is  for 
actual  investment,  and  what  percentage  is  speculative  ? 

A.  I think  that  is  a question  I cannot  answer,  because  there  are  houses 
which  do  what  is  called  an  investment  business,  and  other  houses  that 
do  entirely  a speculative  business,  and  there  is  no  means  of  forming 
any  correct  opinion. 

Q.  A pretty  large  proportion  of  the  transactions  are  speculative  ? 

A.  Yes,  sir. 

Q.  A good  deal  more  than  half  ? 

A.  More  than  seven-eighths,  I should  judge. 

Q.  W*hat  are  the  lowest  commissions  which  brokers  are  allowed  to 
charge  outside  parties  who  are  not  members  ? 

A.  One-eighth  per  cent  on  the  par  value. 

Q.  Is  there  not  a kind  of  business  known  as  the  twelve  and  a half 
business  for  a hundred  shares  ? 

A.  That  is  it. 

Q.  What  is  the  business  known  in  Wall  street  among  brokers  as  the 
two  dollar  business  ? 

A.  That  is  where  a member  of  the  board  receives  an  order  to  buy 
stocks  for  another  member  and  at  three  o’clock  gives  up  the  name  of  a 
house  for  whom  he  bought  the  stock. 

Q.  That  is,  he  is  permitted  to  make  that  transaction  at  the  rate  of 
two  dollars  a hundred  shares  ? 

A.  Yes,  sir  ; provided  he  gives  up  the  principal  before,  three  o’clock. 

Q.  When  did  you  say  you  went  into  Wall  street  ? 

A.  In  1856. 

Q.  In  1856  what  was  a seat  worth  in  the  Stock  Exchange  ? 

A.  I cannot  tell  you,  sir:  they  were  admitted  at  that  time  by  paying 
a certain  amount  of  money  ; I think  it  was  $5,000  to  principals,  and 
$5,000  for  clerks  ; the  seats  at  that  time  were  not  saleable. 

Q.  What  are  seats  i!i  the  Stock  Exchange  worth  now  ? 

A.  About  $50,000. 

(2.  Has  there  been,  or  not.  a very  lai-ge  increase  in  the  transactions 
it)  the  Stock  Exchatige  within  the  last  fifteen  years? 

A.  Yes,  sir  ; :i  vcnw  large  increase. 


895 


Elisha  A.  Packer^  being  duly  sworn,  was  then  interrogated  and  tes- 
tified as  follows: 

By  Mr.  Chittenden'  : 

Q.  Where  do  you  reside  ? 

A.  New  York. 

Q.  What  is  your  business  ? 

A.  I am  in  the  coal  business,  buying  and  selling  coal. 

Q.  Are  you  engaged  in  it  as  an  individual  or  a corporation  ? 

A.  As  an  individual  firm. 

Q.  The  name  of  the  firm  ? 

A.  Packer,  Knowlton  & Co. 

Q.  How  long  have  you  been  in  and  acquainted  with  the  coal  busi- 
ness ? 

A.  Some  thirty-five  years. 

Q.  You  have  been  in  it,  practically,  all  your  business  life,  I sup- 
pose ? 

A.  Yes,  sir. 

Q.  And  in  your  business  have  you  been  led  to  observe  the  produc- 
tion and  consumption  of  coal,  the  prices  of  its  transportation,  and  its 
market  price  from  year  to  year  ? 

A.  I have  ; yes,  sir. 

Q.  You  are  pretty  familiar  with  the  whole  subject,  I suppose  ? 

A.  I think  I am  ; yes,  sir. 

Q.  Do  you  know  about  what  the  actual  sales  of  coal  in  New  York 
city  are,  annually,  at  the  present  time  ? 

A.  No,  I cannot  tell,  sir  ; I have  not  seen  a correct  statement  made 
of  it,  and  I do  not  know  that  any  attempts  have  ever  been  made  to  ascer- 
tain precisely  what  the  amount  is. 

Q.  Could  you  give  any  idea  of  the  number  of  tons  ? 

A.  If  I were  going  to  gfiess  at  it,  I should  say  2,000,000  of  tons ; 
•2,500,000,  perhaps. 

Q.  What  are  the  principal  sources,  or  localities,  from  which  that 
supply  is  derived  ? 

A.  From  Schuylkill  county,  Pennsylvania;  I refer  to  anthracite 
coal,  I have  no  experience  in  bituminous  ; the  sources  of  supply  are 
from  the  Schuylkill  county.  Carbon  and  Luzerne;  those  three  coun- 
ties furnish,  probably,  nineteen-twentieths  of  all  the  anthracite  coal  ; 
and  the  new  county  of  Lackawanna. 

Q.  Are  these  counties  adjoining,  all  in  the  same  section  of  Pennsyl- 
vania ? 

A.  Yes,  sir. 


Q.  Do  you  know  a coal  company  called  the  Pennsylvania  Coal  Com- 
pany ? 

A.  I do ; yes,  sir. 

Q.  Is  that  a large  company  ? 

A.  Well,  it  is  not  one  of  the  largest. 

Q.  Does  that  company  own  coal  mines  ? 

A.  It  does. 

Q.  Where  are  its  coal  fields  situated  ? 

A.  In  Luzerne  and  Lackawanna  counties,  Pennsylvania. 

Q.  Is  there  a special  name  given  to  the  coal  which  they  mine  ? 

A.  Theirs  is  called  the  Pittston  ; that  is  their  trade-mark,  I believe. 

Q.  Do  they  mine  all  the  Pittston  coal,  or  are  there  others  ? 

A.  There  are  many  others ; in  fact,  there  are  three  or  four  large 
companies  that  mine  in  the  vicinity  of  Pittston,  but  they  have  a dif- 
ferent name;  for  instance,  the  Delaware  and  Lackawanna  is  called 
Scranton. 

Q.  What  is  called  Pittston  coal  is  the  coal  mined,  transported ^nd 
sold  by  the  Pennsylvania  Company  ? 

A.  Yes,  sir ; we  consider  that  as  a trade-mark,  belonging  to  them. 

Q.  Is  there  a kind  of  coal  called  the  Scranton  coal,  in  the  same  sense? 

A.  Yes,  sir. 

Q.  And  that  is  mined,  transported  and  sold  by  the  Delaware  and 
Lackawanna  Company  ? 

A.  Yes,  sir. 

Q.  What  coals  are  mined  and  sold  by  the  Delaware  and  Hudson  Ca- 
nal Company  ? 

A.  They  call  theirs  under  the  general  name  of  the  Lackawanna 
coal ; it  is  mined  in  the  same  region  that  the  Pittston  and  Scranton 
coals  are  mined. 

Q.  What  is  the  coal  called  that  is  mined  and  sold  by  the  Eeading 
Company  ? • 

A.  That  comes  under  the  general  name  of  the  Schuylkill  coal. 

Q.  State  whether  the  coals  mined  and  sold  by  these  four  companies 
constitute  a large  proportion  of  the  coal  brought  to  the  New  York 
market  ? 

A.  Yes,  sir,  they  do. 

Q.  What  percentage  of  the  whole  amount  of  coal  brought  here 
should  3'ou  say  that  those  four  companies  control  ? 

A.  1 can  give  tlie  names  if  necessary  of  all  the  corporate  companies 
that  send  coal  here  ; tliere  are  only  two  others  besides,  the  Lehigh 
Valley  and  the  Wilkesbarre,  both  of  which  send  their  coal  over  the 
New  Jersey  Central  ; the  coal  of  the  Lehigh  Valley  is  owned  more  by 
individuals;  j)robal)l_y  thi'ee-fourths  or  seven-eighths  of  the  coal  that 
the  New  J<*rsey  Central  railroad  transports  is  owned  by  individuals. 

Q.  Do  tliey  transport  the  coal  from  the  mines  in  the  neighborhood 
(J  Ilethlehem  ? 


897 


A.  It  passes  through  Bethlehem,  but  Bethlehem  is  not  in  the  coal 
region. 

Q.  I refer  to  the  mines  of  Governor  Packer  ? 

A.  He  was  interested  in  the  Lehigh  and  the  Wilkesbarre  both. 

Q.  Do  these  six  companies  you  have  named  substantially  j:) reduce 
and  bring  to  this  market  all  the  coal  that  is  brought  here  ? 

A.  They  do ; yes,  sir. 

Q.  And  except  the  individuals  you  have  referred  to  connected  with 
one  company,  do  the  other  five  companies  own  and  control  the  au- 
^ thracite  coal  fields  so  far  as  they  are  known  ? 

A.  They  do,  substantially. 

Q.  Do  you  know  what  amount  of  money  the  Reading  Company,  for 
example,  claim  to  have  invested  in  their  coal  fields  ? 

A.  I think  about  $40,000,000  (forty  millions  of  dollars). 

Q.  And  what  amount  has  the  Pennsylvania  Coal  Company  ? 

A.  I think  about  five  millions  ; that  is  my  recollection, 

Q.  And  the  Delaware  and  Hudson  Canal  Company  ? 

A.  It  would  be  pretty  difficult  to  say  how  much  they  had  in  coal 
because  they  are  largely  interested  in  railroads  ; I can  only  judge  by 
their  capital,  but  they  undoubtedly  own  considerably  more  of  coal 
properties  than  the  Pennsylvania  Company. 

Q.  Well,  the  Delaware  and  Lackawanna,  how  much  do  they  own  ? 

A.  I think  they  own  still  more  than  the  Delaware  and  Hudson. 

Q.  So  that  these  large  companies,  as  you  understand  it,  own  sub- 
stantially the  coal  mines  except  in  some  few  cases  where  they  are 
owned  by  individuals  ? 

A.  Yes,  sir. 

Q.  Do  these  companies  act  together  in  arranging  for  the  amount  of 
coal  that  is  to  be  mined  and  sent  to  the  market  ? 

A.  Well,  it  is  sometimes  the  case,  sir.  ^ 

Q.  Do  they  not  control  the  subject  of  the  transportation  of  anthra- 
cite coal,  practically  ? 

» A.  They  do. 

Q.  And  it  depends  upon  them  to  say  how  much  coal  shall  be  trans- 
ported at  any  given  time  ? 

A.  It  would  with  the  consent  of  the  individual  miners  who  send  coal 
over  their  roads;  they  would  have  no  right  to  say  to  me  that  I should 
stop  my  mine  and  they  would  not  furnish  me  facilities  to  transport 
my  coal. 

Q.  Do  not  these  large  companies  shut  down  and  only  work  their 
mines  a certain  number  of  days  in  the  week? 

^ A.  That  is  sometimes  the  case. 

113 


898 


Q.  And  very  frequently? 

A.  It  has  happened  in  the  last  year  perhaps  three,  four  or  five  times. 

Q.  Do  you  know  what  the  railroads  usually  pay  the  owners  of  mines 
per  ton  for  anthracite  coal? 

A.  The  old  leases  were  about  twenty-five  cents  per  ton. 

Q.  How  long  ago  was  that  ? 

A.  Say  in  the  last  twenty  years. 

Q.  Have  you  any  knowledge  now  of  railroads  being  paid  more  than 
twenty-five  cents  a ton  ? 

A.  Yes,  sir;  in  the  Lehigh  region  it  is  fifty  cents  and  in  the  Wilkes- 
barre  the  leases  made  within  the  last  five  years  would  probably  average 
thirty- five  cents. 

Q.  What  is  the  average  cost  of  mining  coal  per  ton  ? 

A.  That  varies  of  course  ; some  pay  a higher  rate  than  others. 

Q.  Say  take  it  during  the  last  two  years  ? 

A.  I should  say  about  a dollar  and  a quarter. 

Q.  For  mining  it  ? 

A.  Y^es,  sir. 

Q.  That  is  in  addition  to  the  transportation  ? 

A.  Y^es,  sir;  that  is  mined  and  put  on  the  cars. 

Q.  What  is  the  distance  from  the  coal  fields  to  the  points  on  the 
Hudson  and  New  York  bay  where  this  coal  is  delivered  by  the  cars  ? 

A.  I should  think  the  average  would  be  about  one  hundred  and  fifty 
miles. 

Q.  A large  proportion  of  the  coal  that  supplies  New  England  and 
the  Champlain  Valley  is  shipped  by  water  directly  from  the  points  on 
the  Hudson  and  New  York  bay  where  the  railroads  deliver  it  ? 

A.  Yes,  sir. 

Q.  Now  take  the  coal  that  is  distributed  in  New  York  ; how  is  that 
brought  here  from  these  ports  where  it  is  delivered,  in  lighters? 

A.  In  what  may  be  considered  lighters,  in  barges. 

Q.  Is  there  any  regular  tariff  of  freight  on  coals  from  the  coal  fields 
to  tide-water  ? 

A.  It  fluctuates;  it  is  based  upon  the  price  of  coal,  as  a general 
thing. 

Q.  Price  of  coal  where  ? 

A.  At  tide-water. 

Q.  Do  you  mean  to  say  that  where  there  is  a large  demand  which 
raises  the  price  of  coal  at  tide-water,  the  prices  of  transportation  are 
increased  ? 

A.  1 do;  yes,  sir. 

(^.  What  reason  is  there  for  that  ? 


899 


A.  Well,  it  is  thought  to  be  a fair  and  equitable  arrangement  after 
an  experience  of  a good  many  years  ; it  is  what  we  individual  miners 
have  been  striving  for  a great  many  years,  and  the  last  four  or  five 
years  we  induced  the  railroad  companies  to  base  it  upon  the  price  of 
coal  as  being  more  just  and  equitable. 

Q.  ^^ow  take  coal  at  the  lowest  price  ; what  are  the  lowest  rates  you 
have  known  of  transportation  ? 

A.  Per  mile  ? 

Q.  Per  ton  ; you  may  give  it  either  way  ? 

A.  The  lowest  I remember  would  be  about  half  a cent  a ton  a mile* 

Q.  How  high  have  you  known  it  ? 

A.  During  the  war  — 

Q.  I mean  the  last  three  or  four  years  ? 

A.  I should  think  about  one  and  a quarter  cents  a ton  a mile  would 
be  about  the  maximum.  ^ 

Q.  Then  the  price  of  transportation  varies  according  to  the  price  of 
coal  from  seventy-five  cents  to  two  dollars  a ton  ? 

A.  Yes,  sir. 

Q.  Now  this  freight  is  paid  simply  for  hauling  the  coal  in  cars,  is  it 
not  ? 

A.  It  is  for  the  use  of  the  cars  in  hauling. 

■ Q.  Do  the  railroad  companies  own  the  cars  ? 

A.  Yes,  sir. 

Q.  Who  loads  them  ? 

A.  They  are  loaded  by  the  miner. 

Q.  Who  unloads  them  ? 

A.  They  are  unloaded  by  the  companies.  This  rate  they  charge,  as 
a general  thing,  includes  the  shipping,  putting  the  coal  on  board  the 
vessel.  If  vessels  are  scarce  it  is  put  on  the  wharf  and  then  they  have 
to  reship  it. 

Q.  In  loading  a vessel  the  coal  is  dumped  right  into  the  shute  from 
the  car  ? 

A.  Yes,  sir  ; the  cost  is  not  much,  four  or  five  cents  a ton. 

Q.  What  is  anthracite  coal  worth  in  New  York  at  the  present  time 
at  wholesale  ? 

A.  At  the  shipping  port  on  the  bay  here? 

Q.  Yes,  sir. 

A.  About  four  dollars  and  a quarter. 

Q.  What  has  been  the  average  price  for  the  last  two  years  ; name 
the  sums,  the  fluctuations  from  the  lowest  to  the  highest  ? 

A.  My  present  recollection  would  hardly  extend,  I think,  beyond 
1881. 

Q,.  Take  it  for  1881  ? 


900 


A.  I should  think  the  fluctuation  would  be  about  seventy-five  cents 
in  the  course  of  tlie  season,  say  from  $3.75  to  14.50. 

Q.  Those  are  the  prices  which  the  wholesale  dealers  have  to  pay  for 
it  at  tide- water  ? 

A.  Yes,  sir. 

Q.  That  is  for  twenty-two  hundred  and  forty  pounds  ? 

A.  Yes,  sir. 

Q.  Now  what  is  the  cost  of  lighterage,  of  bringing  it  from  tide-water 
to  the  wholesale  yards,  per  ton  ? 

A.  Probably  about  twenty  cents  a ton  ; for  delivering  it  along  side 
the  yard. 

Q.  What  I want  to  get  at  is  the  cost  of  getting  a ton  of  coal  where 
it  is  delivered  by  the  railroads  and  put  into  an  ordinary  coal  yard  in 
the  city  ? 

A.  They  don’t  do  that.  Their  responsibility  ceases  when  they  get 
it  along  side  the  wharf.  We  don’t  in  any  case  deliver  it  to  the  yard  ; 
we  have  nothing  to  do  with  carting  it  about  the  city  ; we  sell  it  to  the 
retailer  alongside  his  dock  and  then  he  discharges  it  himself,  which 
costs  him  about  fifteen  cents  a ton,  and  then  he  hauls  it  to  his  yard. 
There  are  very  few  yards  on  the  water,  they  are  mostly  inland  ; it  costs 
from  thirty-five  to  fifty  cents  a ton. 

0.  He  hauls  it  to  his  yard,  or  delivers  it  to  his  customers,  as  he 
chooses  ? 

A.  Yes,  sir  ; generally  to  his  yard,  because  it  requires  re-screening; 
it  is  not  always  in  a condition,  direct  from  the  boat,  to  be  delivered  to 
customers. 

Q.  What  is  the  general  price  charged  by  the  retailers  to  their  cus- 
tomers for  the  same  kind  of  coal  of  which  you  have  been  speaking  ? 

A.  I think  they  get  a profit  of  about  half  a dollar. 

Q.  But  don’t  you  know  the  price  ? 

A.  The  price  fluctuates.  There  are  some  who  have  been  long  estab- 
lished in  the  business  who  get  from  twenty-five  to  fifty  cents  a ton 
more  than  others  because  they  have  got  a set  of  customers. 

Q.  What  I want  to  get  is  the  price  that  is  ordinarily  charged  now 
by  retailers  of  this  kind  of  coal  ? 

A.  I should  think  the  price  would  be  now  about  five  dollars  and  a 
half,  but  I don’t  remember  to  have  inquired  the  price  for  a month  or 
two. 

Q.  And  that  is  for  2,000  pounds  ? 

A.  Yes,  sir. 

Q.  Is  there  at  the  present  time  any  practical  competition  in  the 
})usin(\ss  f)f  mining  and  transporting  anthracite  coal  to  this  market  ? 


901 


\ 

A.  Well,  only  the  competition  that  would  naturally  exist  between 
these  five  large  carrying  companies. 

Q.  Have  they  not,  for  the  last  five  years,  made  uniform  rates  ? 

A.  No,  sir,  1 think  not;  tliere  is  no  combination  for  fixing  prices. 

Q.  I want  to  know  whether  there  is  not  an  arrangement  by  which 
these  several  companies  charge  the  same  price  per  ton  per  mile  for 
coal  ? 

A.  I am  not  aware  of  any.  If  it  is  based  on  the  price  of  coal  I don^t 
see  how  that  is  hardly  possible.  Some  roads  are  longer  than  others. 

Q.  Wliat  road  is  your  coal  transported  over  ? 

A.  I bring  my  coal  over  three  roads  — the  Lehigh  Valley,  the  New 
Jersey  Central,  and  the  Delaware  and  Lackawanna. 

Q.  Do  you  not  pay  those  roads  the  same  price  per  mile  for  trans- 
porting ? 

A.  No,  I think  not. 

Q.  What  do  you  pay  each  one  of  them  ? 

A.  I think  my  tolls  for  the  present  month  on  the  Delaware,  Lacka- 
wanna and  Western  railroad  would  be  one  hundred  and  ninety-five 
cents;  on  the  Lehigh  Valley  they  would  amount  to  — they  have  a 
different  way  of  getting  at  their  tolls  ; for  instance,  their  starting 
point  is  from  Mauch  Chunk,  and  they  charge  a certain  rate  of  tolls 
over  the  lateral  roads  to  Mauch  Chunk  and  then  a stated  rate  from 
there  down,  which  is  to-day  $1.40  on  the  average. 

Q.  Do  you  know  what  it  costs  you  per  ton  to  get  your  coal  trans- 
ported from  the  place  where  they  take  it  ? 

A.  I think,  over  the  Lehigh  Valley,  from  the  different  mines,  $1.90. 

Q Now  the  other  road  ? 

A.  Well,  I think  the  rates  of  the  Lehigh  Valley  to-day  are  lower 
than  the  other  two  roads. 

Q,  What  does  it  cost  you  over  the  New  Jersey  Central,  at  the  pres- 
ent time  ? 

A.  I should  think  about  1.95. 

Q.  Then  it  runs  from  $1.90  to  $1.95  ? 

A.  Yes,  sir;  on  the  Delaware,  Lackawanna  and  Western  road  it 
don’t  make  any  difference  where  the  colliery  is  situated,  they  charge 
the  same  price  from  a colliery  that  is  fifteen  miles  farther  away  than 
another ; but  the  Lehigh  Valley  manage  a little  different,  they  have  a 
rate  from  each  colliery. 

Q.  Don’t  it  strike  you  that  $1.95  is  a pretty  liberal  price  for  freight 
on  a ton  of  coal  one  hundred  and  fifty  miles  ? 

A.  Well,  yes,  it  is  a liberal  price  I should  say;  but  judging  from 
the  dividends  the  companies  are  declaring  I should  not  say  it  was  an 
excessive  rate. 


902 


Q.  What  did  you  say  was  the  estimated  cost  of  mining  coal  ? 

A.  I think  about  a dollar  and  a quarter,  say  for  the  last  six  months* 

Q.  How  much  is  paid  to  the  miner  a ton  for  mining? 

A.  That  varies  according  to  the  condition  of  the  mine. 

Q.  Well,  about  what  would  be  the  average? 

A.  I should  think  they  are  getting  what  would  pay  them  two  dol- 
lars and  a half  a day. 

Q.  Are  not  miners  ordinarily  paid  by  the  ton  for  mining  coal  ? 

A.  They  are  in  some  cases  but  in  others  not. 

Q.  Are  they  not  usually  ? 

A.  Perhaps  in  the  majority  of  cases  they  are. 

Q.  Now  what  is  about  the  average  payment  per  ton  ? 

A.  I really  could  not  say,  sir. 

Q.  You  spoke  of  yourself  as  a miner  of  coal  in  connection  with  con- 
tracts with  railroads,  do  you  actually  own  mines  and  mine  your  own 
coal  ? 

A.  Yes,  sir. 

Q.  Where  are  your  mines  situated? 

A.  We  have  one  in  the  Lehigh  region. 

Q.  Now  take  that  mine  ? 

A.  If  the  committee  will  give  me  an  opportunity  I will  ascertain 
precisely;  I leave  that  to  my  superintendents  at  the  mines. 

Q.  So  you  do  not  know  ? 

A.  I really  could  not  say. 

Q.  Well,  is  it  twenty-five  cents  a ton  P 

A.  I should  say  three  times  that,  sir, 

Q.  You  can  obtain  that,  what  you  have  paid  during  1881  and  1882, 
can  you  not  ? 

A.  Yes,  sir ; do  you  want  to  know  what  we  have  paid  in  the  difler- 
ent  regions? 

Q.  Yes,  sir;  what  the  committee  want  to  get  at  is  the  average  price 
paid  to  the  miners  themselves  who  mine  the  coal  for  their  labor  ? 

A.  I will  ascertain  and  see  that  you  have  it  within  three  or  four 
days. 

Q.  It  would  be  better  if  you  can  give  them  a general  idea  without 
confining  it  to  your  own  mines. 

By  Senator  Boyd  : 

Q.  Please  describe,  if  you  know  what  the  miner’s  duties  are,  from 
the  time  he  commences  to  mine  the  coal  until  his  duties  cease  — in 
other  words,  does  the  miner  not  only  mine  the  coal  but  is  it  his  duty 
to  carry  it  to  the  mouth  of  tlie  pit  and  load  it  into  the  cars  to  be 
fihipped  ? 


903 


A.  The  actual  miner  who  cuts  the  coal  does  not  put  the  coal  in  the 
cars  at  all,  ho  has  his  helpers  to  do  that,  who  do  not  probably 
get  more  than  one-half  the  price  per  day  he  gets. 

Q.  Do  the  proprietors  of  the  coal  mines  make  contracts  with  cer- 
tain persons  to  mine  their  coal,  which  persons  employ  subordinates  to 
do  the  work  ? 

A‘.  We  really  employ  them  ; that  is  we  would  not  allow  our  miners 
to  pay  what  we  might  consider  an  exorbitant  rate  for  their  men  ; we 
keep  it  in  our  control  and  it  is  usually  included  in  the  same  charge. 

Q.  Do  you  fix  the  rate  of  wages  that  these  miners  and  laborers  re- 
ceive ? 

A.  Yes,  sir. 

Q.  What  are  those  wages  on  an  average  ? 

A.  They  are  not  paid  ordinarily  by  the  ton,  sometimes  by  the  cubic 
yard  and  in  different  ways ; there  are  hardly  two  mines  but  what  have 
great  difference  in  the  management  of  the  men  in  that  respect ; they 
all  pay  about  the  same  rate  finally,  otherwise  some  would  be  short  of 
men  and  others  would  have  a surplus. 

Q.  You  stated  a few  moments  ago  that  the  charge  of  mining  a ton 
of  coal  was  81.75  ? 

A.  About  81.25  for  the  last  six  months  ; what  the  average  was  for 
a term  of  years  I don’t  remember. 

Q.  State  what  the  duties  are  of  the  person  who  receives  that  81.25  ? 

A.  One  would  be  cutting  the  coal,  another  loading  it  into  the  car, 
and  then  we  have  our  own  mules  to  draw  it  to  the  foot  of  our  slopes ; 
there  is  no  one  man  that  is  paid  for  putting  the  coal  on  the  car  and 
drawing  it  to  the  foot  of  the  slopes ; it  goes  through  two  gr  three  dif- 
ferent hands,  some  in  our  employ  and  some  probably  in  the  control 
of  the  miner. 

Q.  What  does  it  cost  from  the  time  the  mining  operation  com- 
mences to  place  it  in  the  car,  per  ton  ? 

A.  I think  about  81.25. 

Q.  There  are  two  different  kinds  of  anthracite  coal  in  the  market, 
red  ash  and  white  ash,  what  is  the  difference  between  those  two  differ- 
ent kinds  of  coal  ? 

A.  In  respect  to  the  cost  of  mining  ? 

Q.  Yes,  sir? 

A.  I should  say  no  difference. 

Q.  Any  difference  in  the  cost  of  transportation  ? 

A.  Yo,  sir. 

Q.  What  is  the  difference  in  the  price  as  sold  by  the  retailer  ? 

A.  The  red  ash  coal  would  probably  bring  about  twenty-five  cents 


more  at  wholesale  than  whit(5  ash,  and  I think  it  retails  at  about  half 
a dollar  more. 

Y.  What  is  the  cause  of  that  difference  in  price  ? 

A.  Simply  because  for  a great  many  purposes  the  red  ash  coal  is 
preferred.  For  instance,  the  red  ash  is  heavier  than  white  ash  on  ac- 
count of  the  admixture  of  iron,  and  for  an  open  grate  is  considered 
preferable;  the  red  ash  don’t  tly  about  the  room,  and,  for  that  reason, 
is  considered  pleasanter  for  an  open  grate  ; and  then  there  is  less  of  it, 
the  quantity  is  limited. 

Q.  By  whom  is  the  difference  in  price  fixed  ? 

A.  By  the  owners  of  the  mine. 

Q.  And  what  is  the  relative  quantity  of  each  produced  ? 

A.  The  amount  of  red  ash  coal  is  very  limited  ; 1 don’t  suppose  that 
it  would  amount  to  five  per  cent  of  the  total  amount  of  the  anthracite 
coal  mined,  possibly  about  that  figure. 

Q.  It  has  been  stated  that  the  proprietors  of  mines  have  been  in  the 
habit  of  limiting  the  amount  of  coal  sent  into  the  market  for  the  pur- 
pose of  controlling  prices,  what  do  you  know  about  that  ? 

A.  That  is  sometimes  done.  When  we  have  found  that  the  coal  was 
accumulating  we  would  say  work  half  the  time  for  a week  or  a fort- 
night to  reduce  the  stock.  Indirectly,  no  doubt,  it  has  its  effect  on 
the  price,  because  if  we  continued  to  accumulate  the  stock  the  price 
would  go  down. 

Q.  And  this  is  done  in  the  interest  of  the  proprietors  of  the  mines  ? 

A.  The  proprietors  of  the  mines  and  the  transportation  companies, 
undoubtedly. 

Q.  And  Uie  interest  of  the  public' is  not  taken  into  consideration  at 
all? 

A.  I am  not  aware  that  it  is,  but  at  the  same  time  I don’t  think  the 
public  suffer  from  that  course. 

Q.  It  is  done  for  the  purpose  of  keeping  up  the  price,  you  say  ? 

A.  It  is  done  by  the  companies  in  the  aggregate  as  it  would  be  done 
by  an  individual;  if  he  found  that  his  stock  was  being  filled  to  over- 
flowing, he  would  be  apt  to  stop  as  a natural  consequence,  unless  he 
forced  it  on  the  market,  and  that  has  not  been  considered  good  policy 
even  by  purchasers  of  coal ; what  they  prefer  is  a steady  price. 

Q.  Is  there  an  agreement  usually  entered  into  by  all  the  coal  com- 
panies to  restrain' the  production  of  coal  for  that  purpose  ? 

A.  Well,  it  is  sometimes  done. 

(2.  They  enter  into  a combination  ? 

A.  There  is  no  meeting  for  that  purpose.  For  instance,  some  indi- 
viduals may  form  the  opinion  that  there  is  too  much  coal  being  mined, 
the  stock  1,00  large,  and  he  will  go  around  to  the  olficers  of  the  other 


905 


compiinies  and  convince  them  of  the  propriety  of  holding  np  for  a day 
or  two. 

Q.  Then  there  is,  to  all  intents  and  purposes,  a combination  en- 
tered into  ? 

A.  If  you  please  to  call  it  so. 

Q.  For  the  purpose  of  keeping  up  the  price  and  lessening  the  pro- 
duction ? 

A.  I shall  not  object  to  your  construction  of  it. 


New  York,  January  6,  1883, ) 

111  Broadway,  j 

To  the  Honorable  Committee  of  the  Senate  on  Corners  and  Futures  : ” 

Gentlemen  : — When  I was  before  you  on  the  29th  of  December 
last,  as  there  were  some  questions  asked  me  which  I was  not  able  to 
answer  on  the  moment,  1 was  requested  to  reply  in  writing  which  I 
now  proceed  to  do.  I find  by  a pretty  careful  inquiry  that  my  esti- 
mate of  the  expense  of  putting  coal  in  cars  was  under  the  actual  cost 
I learn  by  referring  to  the  annual  report  of  the  Philadelphia  & Bead" 
ing  Coal  and  Iron  Co.,  that  their  cost  for  putting  coal  in  cars  was 
$1.49 yfo-  per  ton.  I also  learn  that  individual  operators  (as  we  term 
the  owners  of  the  mines)  make  their  cost  from  $1.50  to  $1.75  per  ton. 
Probably  there  are  no  two  operators  who  make  the  expense  exactly 
alike  — the  cost  varying  by  the  width  of  the  vein,  the  depth  of  the 
mine,  and  its  freedom  from  faults,  etc.,  etc.  I think  it  an  under- 
estimate to  put  the  cost  of  coal  in  cars  at  $1.50  per  ton  ready  for 
market.  The  miners  or  cutters  of  the  coal  get  about  one-half  of  this 
sum.  It  is  impossible  to  say  how  much  a ton  the  laborers  in  the 
anthracite  region  receive,  as  it  varies  in  and  about  every  mine.  While 
the  amount  paid  is  by  the  yard  or  wagon  it  finally  resolves  itself, 
into  a charge  per  day,  which  is  from  $2.50  to  $3.00  for  eight  hours 
work,  while  ordinary  laborers,  not  considered  skilled  labor,  receive 
about  half  the  above  wages  for  ten  hours’  work. 

To  the  cost  of  putting  coal  in  cars  should  be  added,  I think,  fifteen 
cents  per  ton  for  taxes,  insurance,  wear  and  tear  of  plank  and  to  a 
sinking  fund  to  absorb  the  original  cost  of  the  same.  This,  I believe, 
answers  all  the  interrogatories  put  to  me.  I desire  to  correct  my  testi- 
mony as  to  the  cost  of  mining  red  ash  coal ; coal  known  in 
market  as  a deep  red  ash  coal  costs  some  twenty-five  cents 
a ton  more  to  mine  than  white  ash,  on  account  of  the  vein 
being  thinner  and  softer,  and  the  coal  being  mined  from  a greater 
depth.  Eespectfully  submitted, 

E.  J.  PACKER. 


906 


George  L.  Pease,  being  duly  sworn,  was  then  interrogated  and  testi- 
fied as  follows  : 

By  Mr.  Oiiittenden’  * 

Q.  Your  residence  ? 

A.  325  Clinton  avenue,  Brooklyn. 

Q.  Your  business  ? ' 

A.  Manufacturer  and  merchant. 

Q.  Are  you  one  of  the  trustees  of  the  estate  of  Alonzo  Follett? 

A.  I am  one  of  the  assignees. 

Q.  You  knew  Mr.  Follett  personally  did  you  not? 

A.  I did. 

Q.  AYhen  did  he  fail  ? 

A.  On  the  23d  of  September  he  made  an  assignment. 

Q.  How  long  previous  to  that  had  you  known  him  7 

A.  Several  years ; I should  say  five  or  six  years. 

Q.  Wliat  was  his  business  ? 

A.  Note  broker. 

Q.  Was  his  business  large  or  small  ? 

A.  Very  large. 

Q.  Was  it  not  the  largest  note  brokerage  business  that  you  knew  of 
, in  the  city  ? 

A.  I think  it  was  with  one  exception. 

Q.  Had  he  an  extensive  acquaintance  with  banks,  trust  companies 
and  capitalists  ? 

A.  lie  had. 

Q.  Had  he  the  reputation  of  skill  and  ability  in  forming  these 
acquaintances  and  impressing  such  men  favorably  ? 

A.  He  had. 

Q.  Were  his  customers  among  the  largest  and  best  mercantile  firms 
in  the  city  ? 

A.  I think  he  had  the  best  lot  of  customers  of  any  broker  in  the 
city  ; that  is  my  private  opinion. 

Q.  His  customers  supposed  him  to  be  a person  of  large  capital  did 
they  not  ? 

A.  I can  answer  for  myself.  He  made  a statement  to  me  shortly 
before  he  failed. 

il.  State  whether  that  statement  impressed  you  with  the  belief  that  ^ 
he  liandled  large  capital  and  was  in  good  easy  circumstances? 

A.  That  was  the  impression  I gained  from  his  statement. 

Q.  You  have  made  considerable  examination  of  his  books  since 
you  Ix'carne  an  assignee,  have  you  not  ? \ 


907 


A.  I have. 

Q.  From  those  books  and  from  other  sources  state  whether  it  turned 
out  that  Mr,  Follett  had  sold  large  amounts  of  the  notes  of  his 
customers  and  received  and  used  the  money  himself  ? 

A.  He  did  that,  sir. 

/Q.  When  Mr.  Follett  failed  did  he  also  cause  the,  failure  of  other 
persons  or  firms,  or  did  they  fail  in  connection  with  him  ? 

A.  My  present  impression  is  that  there  has  been  but  three  failures 
of  persons  that  were  in  any  way  connected  with  him,  two  of  them 
certainly  failed  before  he  did  and  one  about  that  he  failed.  I did  not 
think  of  the  endorsers  ; there  were  two  indorsers  and  one  party  who 
speculated  with  him  and  loaned  him  notes  ; I don’t  think  you  can 
call  him  an  indorser. 

Q.  And  then  there  were  two  firms  or  one  firm  and  a corporation  ? 

A.  The  corporation  went  down  with  him,  and  the  other  two  parties 
I think  failed  before  he  did. 

Q.  Did  they  not  claim  to  have  failed  in  consequence  of  Follett  not 
making  returns  to  them  of  their  money  ? 

A.  Yes,  sir. 

Q.  They  were  large  manufacturing  concerns,  were  they  not  ? 

A.  The  one  that  failed  before  he  did  was  a large  manufacturing 
concern,  the  other  was  a speculator,  and  the  one  that  failed  after  him 
was  a large  manufacturing  concern. 

Q.  What  amount  in  the  aggregate  of  paper  negotiated  by  Follett 
went  to  protest  in  consequence  of  his  failure  ; was  it  between  two  and 
three  millions  of  dollars  ? 

A.  It  was. 

Q.  State  whether  or  not  that  paper  was  held  by  a large  number, 
some  twenty  or  more,  banks  or  trust  companies,  in  Yew  York  and  vi- 
cinity ? 

A.  It  was  held  by  a large  number  of  banks  and  trust  companies  ; 
the  number  I could  not  without  computation  give  you. 

Q.  You  have  never  ascertained  the  number? 

A.  No,  sir  ; it  was  a large  number,  however. 

Q.  How  long  previous  to  his  failure  had  Mr.  Follett  been  in  busi- 
ness as  a note  broker  ? 

A.  I think  about  eight  years. 

Q.  Where  was  his  place  of  business  ? 

A.  9 Wall  street. 

Q.  In  the  examination  of  his  books  and  papers  has  it  come  to  your 
knowledge  that  Mr.  Follett  previous  to  the  1st  of  October,  1881,  was 
engaged  in  grain  speculation  in  connection  with  the  Produce  Ex- 
change ? 


908 


A.  He  was  engaged  in  grain  speculation,  I don’t  know  any  thing 
farther  than  that,  through  certain  Ijrokers  ; whether  tliey  were  mem- 
bers of  the  Produce  Exchange  or  not  I don’t  know. 

Q.  Ill  the  course  of  that  he  and  his  associates  appeared  to  have  pur- 
chased a very  large  quantity  of  corn,  did  they  not  ? 

A.  Yes,  sir. 

Q.  Have  you  ever  conversed  with  Mr.  Follett  about  that  specula- 
tion ? 

A.  I think  I did  at  one  time. 

Q.  Did  he  tell  you  whether  or  not  they  hoped  to  make  a corner  in 
corn,  he  and  his  associates  ? 

A.  Do  you  mean  conversation  prior  to  that  or  since  then  ? 

Q.  At  any  time  ? 

A.  I think  I have  had  conversation  with  him  since  that  time  ; I 
don’t  know  as  the  word  “corner”  was  used,  but  in  it  the  matter  of 
buying  on  a margin  or  something  of  that  nature  was  alluded  to. 

Q.  And  buying  for  the  purpose  of  putting  up  the  price  of  corn  ? 

A.  He  w'as  very  reticent , I was  a customer  of  his  and  I accused  him 
of  speculation,  and  he  mentioned  that  he  once  in  a while  did  a little 
at  it ; my  object  in  having  the  conversation  w'as  to  find  out  whether 
I was  doing  business  with  a man  who  worked  on  a sound  basis,  or  a 
speculator. 

Q.  Did  he  tell  you  why  the  price  of  corn  went  down,  did  he  give 
you  a history  of  the  action  of  the  Chicago  Produce  Exchange  in  that 
respect  ? 

A.  I could  not  say  that  he  told  me ; I was  in  Chicago  at  the  time 
myself. 

Q.  There  was  a fall  in  the  price  of  corn  about  the  first  days  of  Oc- 
tober, 1881,  was  there  not,  as  yon  understood  ? 

A.  Yes,  sir  ; I was  in  Chicago  at  that  time. 

Q.  Can  you  explain  to  the  committee  what  the  action  was  in  the 
Produce  Exchange  that  caused  that,  what  they  did  ? 

A.  I was  told  by  a party  in  Chicago  that  was,  I suppose,  interested 
in  the  speculation,  that  the  committee  had  met  and  established  a set- 
tling price,  an  arbitrary  price  to  settle. 

Q.  For  November  corn  ? 

A.  I could  not  mention  the  months. 

Q.  Did  you  learn  that  that  price  was  sixty-three  cents  ? 

A.  It  was  sixty  odd  cents. 

Q.  And  it  was  very  much  less  than  the  then  market  price  of  corn? 
was  it  not  ? 

A.  My  iin|)r(‘s.si()n  is  that  it  was  about  fourteen  cents. 


909 


Q,  In  consequence  of  that,  corn  went  down  very  rapidly,  did  it  not  ? 

A.  Yes,  sir. 

Q.  Have  you  learned  from  an  examination  of  Follett’s  books  whether 
he  and  his  associates  met  with  a^loss  in  that  transaction  ? 

A.  I have. 

Q.  That  was  the  aggregate  loss  as  appears  from  the  books  of  Follett 
and  his  associates  ? 

A.  I don’t  know  that  I have  any  right  to  tell  that. 

Q.  I think  so;  it  is  known  to  hundreds  of  people  ; it  has  been  stated 
to  me ; I know  it  to  have  been  over  four  hundred  thousand  dollars  ? 

A.  I could  tell  you  exactly  but  as  an  assignee — you  say  a little  four 
hundred  thousand  dollars,  I shall  say  you  are  a good  Yankee. 

Q.  Have  you  ever  ascertained  how  much  corn  Follett  and  his  as- 
sociates bought  and  sold  in  that  transaction  ? 

A.  I have  not. 

Q.  You  have  never  learned  that  it  was  over  twenty  millions  of 
bushels  ? 

A.  I have  heard  that  fact,  but  whether  officially  from  a knowing* 
source,  I don’t  know  ; I have  heard  a great  many  stories. 

Q.  This  occurred  in  September,  1881  ? 

A.  It  did. 

Q.  And  he  failed  in  September,  1882  ? 

,A.  Yes,  sir. 

Q.  State  whether  you  have  traced  other  large  losses  in  Follett’s 
business  by  speculation  ? 

A.  I have. 

Q.  State  whether  or  not  this  loss  in  corn  is  the  first  flarge  and  sub- 
stantial loss,  I mean  the  first  in  time  that  you  have  met  with  in  your 
investigation  ? 

A.  It  is  not  the  first. 

Q.  How  large  a loss  in  any  one  transaction  have  you  found  before 
this  in  point  of  time  ? 

A.  I have  found  losses  I should  judge  of  twenty-five  or  thirty  thou- 
sand dollar's,  and  some  of  those  are  what  you  might  call  legitimate 
losses,  although  they  were  not  legitimate  ; it  was  lost  in  commercial 
paper  that  be  had  guaranteed. 

Q.  I am  asking  as  to  his  losses  in  speculation,  whether  this  was  not 
the  first  substantial  loss  in  outside  speculation  ? 

A.  Yes,  sir ; this  is  the  first  of  any  moment. 

Q.  Are  you  able  to  give  any  estimate  as  to  the  amount  of  debts  due 
by  Follett  when  he  failed  ^ 

A.  Yes,  sir. 

Q,  About  how  much  ? 


910 


A.  His  direct  liability  was  about  one  million  eight  hundred  thousand 
dollars,  and  his  indirect  or  contingent  liability  was  about  nine  million 
and  a half. 

Q.  That  contingent  liability  is  on  paper  that  he  has  guaranteed  or 
become  liable  for  ? 

A.  Yes,  sir  ; that  is  the  case  on  the  face  of  it;  there  will  be  much 
of  that  which  was  guaranteed  that  will  be  contested  by  the  assignee. 

Q.  From  your  present  information  is  it  your  belief  that  Follett’s 
estate  will  pay  a dividend  exceeding  ten  per  cent  upon  his  liabilities? 

A.  Ho,  sir,  I do  not. 

Q.  State  whether  you  find  that  during  the  year  previous  to  his  fail- 
ure he  met  Avith  losses  in  stock  speculations  ? 

A.  He  did  frequently. 

Q.  Were  you  as  a merchant  dealing  with  him  in  his  business  as  a 
note  broker  during  the  two  years  previous  to  his  failure  r 

A.  I was. 

Q.  Did  you  know  any  thing  about  his  being  engaged  in  these  out- 
side speculations  down,  say,  to  the  month  of  September,  1883  ? 

I did  not  positively;  I had  my  suspicions  ; it  Avas  always  denied 
Avhen  I asked  the  question. 

Q.  Denied  by  him  ? 

A.  Yes,  sir,  and  those  around  him. 

Q.  Had  you  known  that  he  was  speculating  in  grain  and  stocks, 
Avould  you  have  given  him  commercial  paper  to  sell  for  you  ? 

A.  Ho,  sir,  nor  any  other  man  I Avould  not. 

Q.  Don’t  you  think  that  Avould  be  the  answer  of  most  of  the  reput- 
able merchants  that  dealt  with  Mr.  Follett  ? 

A.  It  would  be  the  unanimous  verdict. 

By  Senator  Boyd  : 

Q.  Do  you  know  hoAV  much  the  market  price  of  corn  was  increased 
during  the  pendency  of  the  Follett  speculation  in  Corn  ? 

A.  You  mean  a year  ago  last  September  ? 

Q.  Yes,  sir. 

Mr.  Chittenden'  I have  that  accurately  from  another  source. 

The  Witness — From  memory  I could  say  fifteen  or  twenty  cents  a 
bushel. 

Elmore  If.  Walker,  being  duly  sAvorn,  Avas  then  interrogated  and 
testified  as  follows  : 

By  Mr.  Chittenden  : 

Q.  Wle*?v*  do  you  reside  ? 


911 


A.  Brooklyn. 

Q.  Your  business  ? 

A.  Statistician  of  the  New  York  Produce  Exchange. 

•Q.  How  long  have  you  been  statistician  of  the  Exchange  ? 

A.  Since  18G9. 

Q.  Do  you  make  up  the  tables  which  are  published  in  the  annual 
reports  of  the  Exchange  ? 

A.  They  are  made  up  under  my  supervision  ; I make  up  a great 
many  myself. 

Q.  Do  you  have  access  to  the  reports  of  daily  sales  and  transactions 
that  are  recorded  in  the  Exchange  ? 

A.  It  is  part  of  my  business  to  go  on  ’Change  and  get  the  sales,  and 
they  are  reported  in  the  daily  market  report. 

Q.  You  gather  them  up  from  day  to  day  and  finally  tabulate  them 
and  they  are  published  ? 

A.  Yes,  sir,  they  are  published  daily. 

Q.  Is  the  book  now  before  you  the  Report  of  the  Exchange  for  the 
year  1881  ? 

A.  It  is. 

Q.  Please  turn  to  page  53.  Can  you  state  to  the  committee  the 
number  of  bushels  of  wheat  that  appear  to  have  been  sold  on  the  call 
for  future  delivery  in  the  Exchange  during  the  year  1881  ? ^ 

A.  I cannot  state,  except  as  the  cash  sales  are  included  in  it  ; there 
is  a table  in  which  it  gives  the  total  sales  for  the  year,  page  394  of  that 
book. 

Q.  I find  it  stated  in  the  annual  report,  on  page  52,  that  the  sales 
of  grain  at  the  calls  this  year  have  exceeded  one  hundred  millions  of 
bushels  or  fully  one-third  more  than  last  year  ; while  the  margins  de- 
posited against  contracts  for  future  delivery  were  upwards  of  ten  mil- 
lions of  dollars  or  two-thirds  more  than  for  the  preceding  year  ; the 
course  and  growth  of  this  business  on  our  Exchange,  which  is  appa- 
rently destined  to  assume  immense  proportion  will  be  seen  by  the  fol- 
lowing table.”  Under  it  is  given  in  the  year  1881,  44,492,000  bushels 
of  wheat ; I asked  you  whether  that  does  or  does  not  show  that  there 
were  sold  of  wheat  at  the  calls  for  future  delivery  that  year  44,492,000 
bushels  ? 

A.  I have  not  kept  a separate  record  in  my  department;  you 
will  notice  this  is  taken  from  the  address  of  the  president;  the 
figures  of  receipts  are  taken  from  the  statistical  reports  which 
I make  up,  but  the  account  of  the  business  at  the  calls  I do  not 
keep  a record  of  ; that  is  kept  in  the  superintendent’s  department  ex- 
cept I take  the  sales  that  are  on  the  calls  both  cash  and  for  forward 
delivery  and  the  sales  of  the  calls,  both  cash  and  for  forward  delivery, 
and  keep  them  separate. 

Q.  According  to  this  statement  on  page  53,  there  was  sold  on  the 


call  44,492,000  bushels  of  wheat  and  41,912,000  bushels  of  corn,  were 
there  not  ? 

A.  Yes,  sir. 

Q.  Now  can  you  give  the  number  of  bushels  of  wheat  and  corn  sold 
on  the  calls  during  the  year  1881  ? 

A,  I cannot,  not  here ; I can  give  you  the  total  amount  of  cash 
sales  including  sales,  on  and  off  calls,  and  that  yo^  will  find  on  page 
394. 

Q.  Well,  what  was  the  total  amount  of  cash  sales  on  the  call  and  off 
the  call. 

A.  The  cash  sales  are  chiefly  off  calls,  very  little  cash  business  on 
the  calls,  and  then  the  business  for  forward  delivery  is  quite  as  much 
or  more  off  calls  than  on. 

Q.  What  was  the  amount  of  cash  sales  off  the  call  and  on  the  call 
so  far  as  you  are  able  to  ascertain  ? 

A.  I should  think  about  ten  per  cent  ef  the  total  saleSjbut  I cannot 
give  you  the  exact  record  here. 

Q.  Can  you  give  me  the  total  amount  of  sales  of  wheat  for  all  pur- 
poses in  1881,  that  are  reported  ? 

A.  488,366,200  bushels. 

Q.  ^nd  now  the  quantity  of  corn  ? 

A.  233,839,000. 

Q.  You  say  you  cannot  distinguish  the  cash  sales  from  the  future 
sales  ? 

A.  Not  here  ; they  have  to  be  taken  off  every  day  ; they  are  kept 
separate  in  the  daily  market  reports. 

Q.  In  your  judgment  they  would  not  exceed  ten  per  cent  ? 

A.  Not  more  than  that,  I should  think. 

Q.  Now  you  do  not  mean  to  say  that  this  includes  all  the  sales  made 
in  New  York  by  members  of  the  Produce  Exchange  ? 

A.  All  the  sales  so  far  as  reported. 

Q.  It  was  stated  by  Mr.  Hazeltine  that  but  a small  proportion  of 
the  sales  were  reported,  what  do  you  say  about  that  ? 

A.  I think  they  are  very  closely. 

Q.  TIow  are  the  sales  not  made  on  the  call  reported,  how  do  you  get 
them  ? 

A.  You  get  them  by  going  to  the  different  merchants,  you  have  got 
to  go  over  the  whole  floor  to  the  different  merchants  and  brokers. 

Q.  Do  you  mean  to  say  you  apply  to  each  one  every  day  ? 

A.  Yes,  sir  ; a half  a dozen  times. 

Q.  State  if  you  please  the  crop  of  wheat  for  the  year  1881  ? 

A.  About  381,000,000. 

(2-  And  of  corn  ? 


913 


A.  1,120,000,000. 

Q.  Now  that  wheat  crop,  how  many  bushels  came  to  New  York  in 
1881 ; 1 want  you  to  convert  the  flour  into  bushels? 

A.  70,084,000  bushels. 

Q.  How  much  of  that  was  exported  ? 

A.  Received  as  to  wheat  alone  at  New  York,  44,297,000,  without 
the  flour;  the  flour  they  don’t  sell  on  options  at  all,  it  is  all  cash  busi- 
ness. 

Q.  Well,  then,  this  5,730,000  barrels  of  flour  that  came  to  New  York 
does  not  enter  into  speculative  business  on  the  Exchange  one  way  or 
the  other  ? 

A.  No,  sir. 

Q.  Then  the  wheat  that  came  to  New  York  and  that  is^dealt  in  upon 
the  Exchange  for  cash  and  futures  would  be  about  44,000,000  bushels  ? 

A.  44,297,000  bushels. 

Q.  Now  how  much  was  exported  ? 

A.  The  wheat  exported  was  41,788,000  bushels. 

-Q.  Then  it  results  that  there  was  about  3, OOO, 000  bushels  of  wheat 
sold  for  consumption  in  New  York  during  the  year  1881,  does  it  not  ? 

A.  There  was  probably  more  than  that  difference,  because  there 
were  stocks  on  hand  at  the  commencement  of  the  year,  the  milling 
trade  of  New  York  consumes  usually  from  four  ^to  five  million  bushels  ; 
you  have  to  take  the  stocks  at  the  commencement  of  the  year  and  at 
the  close. 

Q.  Now,  how  much  corn  came  to  New  York  in  1881  ? 

A.  45,932,000  bushels. 

Q.  What  number  of  bushels  of  corn  were  exported  ? 

A.  31,614,000  bushels. 

Q.  It  would  result  from  that  that  there  were  some  twelve  to  fifteen 
million  bushels  of  corn  sold  for  home  consumption,  would  it  not  ? 

A.  Approximating  thet. 

Q.  In  the  export’  trade  are  the  sales  usually  for  cash  or  for  future 
delivery  ? 

A.  The  sales  are  both  for  cash  and  future  delivery. 

Q.  Well,  about  what  proportion  should  you  judge  are  for  cash  ? 

A.  I should  judge  that  more  than  half  are  for  cash. 

Q.  That  applies  both  to  corn  and  wheat,  does  it  not  ? 

A.  Yes,  sir.  _ 

Q.  Well,  for  home  consumption  what  paoportion  is  sold  for  cash 
and  what  for  future  delivery  ? 

A.  The  actual  amount  consumed  ? 

Q.  Yes. 

A.  I think  that  is  mostly  cash. 


914 


Q.  Then  speculative  sales  of  wheat  and  corn  would  be  confined  Uy 
about  half  the  amount  of  both  annually  exported,  would  they  not  ? 

A.  I should  think  so,  from  one-third  to  one-half.  For  instance, 
parties  buy,  where  they  expect  a steamer  or  vessel  at  a certain  time 
they  take  an  option  of  delivery  at  such  a time,  instead  of  waiting  un- 
til the  steamer  gets  in. 

Q.  Now  give  me  half  the  amount  of  wheat  and  corn  exported  in 
bushels  ? 

A.  Half  the  amount  of  wheat  exported  is  about  20,800,000,  and  of 
corn  half  of  the  amount  is  about  fifteen  or  sixteen  millions  of  bushels. 

Q.  Now  those  sums  fairly  represent  the  number  of  bushels  as  well 
as  you  can  estimate  that  would  ^form  the  basis  of  future  or  option 
sales  ? 

A.  I should  think  so,  the  actual  receipts  and  the  actual  exports. 

Q.  Can’t  you  give  an  approximate  estimate  as  to  the  number  of 
bushels  of  wheat  and  corn  sold  for  future  delivery!  in  1881  ? 

A.  I say  probably  of  the  total  sales  about  iiineoy  per  cent  were  for 
forward  delivery.  • 

Q.  And  the  total  sales  were  how  much  ? 

A.  The  total  sales  of  wheat  in  1881  were  488,364,200  bushels. 

Q.  Now  ninety  per  cent  of  the  whole  would  be  what  ? 

A.  375,000,000. 

Q.  And  that  number  of  futures  and  options  is  sold  on  a basis  of 
how  many  million  bushels  of  wheat. 

A.  20,000,000  for  export  and  5,000,000  for  home  consumption,  about 
25,000,000  for  export  and  home  consumption. 

Q.  Now  in  the  same  way  what  were  the  total  sales  of  corn  ? 

A,  233,839,000  bushels. 

Q.  And  do  you  think  ninety  per  cent  of  that  was  for  future  deliv- 
ery ? 

A.  I think  it  was. 

Q.  Please  compute  ninety  per  cent  and  give  me  the  number  of 
bushels  ? 

A.  About  190,000,000  bushels. 

Q.  And  half  the  amount  of  exports  in  bushels  is  how  much  ? 

A.  About  sixteen  millions. 

Q.  14,000,000  against  190,000,000? 

A.  And  there  is  the  home  consumption  besides.  The  difference  be- 
tween the  receipts  and  the  exports  will  not  show  the  actual  home  con- 
sumption because  the  stocks  at  the  commencement  of  the  year  may 
be  (li  lie  rent. 

Q.  The  number  of  bushels  of  wheat  reported  as  sold  here  largely 
exceed  the  whole  ((uantity  of  wheat  brought  to  this  port  do  they  not? 


A.  Yes,  sir,  they  exceed  the  whole  crop  of  the  country. 

Q.  Now  according  to  your  estimate  this  wheat  exported,  every 
bushel  of  it,  would  be  sold  about  twenty  times  over  in  this  market. 

Do  you  think  that  that  number  of  sales  is  at  all  necessary  to  legiti- 
mate trade  ? 

A.  I suppose  legitimate  trade  could  be  accomplished  without  quite 
as  much  of  it. 

Q.  Is  not  that  number  of  sales  and  selling  the  same  thing  over 
and  over  again  the  direct  result  of  speculation  ? 

A.  I suppose  most  of  it  is  speculation,  a very  large  ’proportion  of  it 
at  least. 

Q.  Are  these  speculations  in  a general  way  carried  on  by  members 
of  the  Exchange  for  themselves,  or  are  they  upon  orders  of  outside 
parties  ? 

A.  I think  generally  on  orders  from  outside  parties. 

Q.  Now  suppose  an  outside  party  wants  to  buy  or  sell  a thousand 
bushels  of  wheat  for  future  delivery  — 

A.  They  don’t  sell  any  thing  short  of  8,000  bushels. 

Q.  Well,  take  8,000  bushels  for  future  delivery;  what  amount  of 
■commission  or  brokerage  on  that  transaction  will  he  be  required  to 
pay,  by  the  rules  of  the  Exchange  ? 

A.  I don’t  know  what  the  regulations  are  in  that  respect. 

Q.  Don’t  you  know  what  the  commissions  are  ? 

A.  I am  not  practically  in  the  business. 

Q.  By  the  rules  of  the  Exchange,  members  are  required  to  charge 
outsiders  a certain  commission,  are  they  not  ? 

A.  They  have  no  regular  rules  as  to  commission,  I think,  except 
they  have  what  they  observe  as  between  themselves.  I think  the  rate 
as  usually  charged  by  brokers  now  is,  in  some  instances,  two  dollars  a 
load  or  two  dollars  and  a half  a load. 

Q.  I am  not  seeking  for  that  at  all ; what  I want  to  ascertain  is  the 
commission  which  outside  parties  wishing  to  speculate  have  themselves 
to  pay  to  their  brokers  ? 

A.  I think  the  brokers  charge  about  one-eighth  of  one  per  cent  a 
bushel. 

Q.  Then  the  commission  on  8,000  bushels  would  amount  to  how 
much  ? 

A.  It  would  be  ten  dollars. 

Q.  Is  the  rate  the  same  on  corn  ? 

A.  I believe  it  is. 

Q.  The  same  on  all  grains  ? 

A.  I think  so. 


91G 


Q.  Every  time  a load  of  grain  is  sold  are  not  the  commissions  on 
each  sale  necessarily  reckoned  as  a part  of  the  cost  of  the  load  of 
grain  ? 

A.  It  would  cost  so  much  more,  I suppose,  to  the  man  who  bought 
the  grain  and  paid  the  commissions. 

Q.  Then  if  a load  of  grain  was  sold  twenty  times  over  the  commis- 
sions would  amount  to  two  and  one-half  cents  a bushel  ? 

A.  My  business  is  to  report  the  actual  sales.  My  impression  is  a 
good  deal  of  this  business  is  done  at  about  two  dollars  or  two  dollars 
and  a half  a load. 

Q.  For  outside  parties  ? 

A.  I don’t  know  whether  they  make  that  distinction  as  to  outside 
parties  or  not. 

Q.  What  we  want  to  ascertain  is  what  it  costs  the  public  ? 

A.  Some  of  the  commission  men  can  tell  you  all  about  that. 

Q.  There  are,  I believe,  about  3,000  members  of  the  Exchange  at 
the  present  time  ? 

A.  Nearly  that ; I think  not  quite. 

Q.  Those  members,  either  as  individuals  or  belonging  to  firms,  are 
all  engaged  in  handling  the  grain  and  other  materials  dealt  in  on  the 
Produce  Exchange,  are’  they  not  ? 

A.  A great  many  of  them  are  members  without  being  present ; not 
more  than  half  of  the  members  are  present,  I think  usually;  some  of 
them  are  out  of  town  millers,  some  out  of  the  State. 

Q.  A great  many  are  engaged  in  this  business  ? 

A.  They  are. 

Q.  Have  they  any  other  means,  those  who  are  engaged  in  this  busi- 
ness and  wlio  confine  themselves  to  it  — have  they  any  other  way  of 
making  profits  except  by  commissions  in  the  rise  of  the  grain  of  pro- 
duce in  which  they  deal  ? 

A.  I don’t  think  they  usually  have,  unless  they  are  speculators;  I 
don’t  think  tliey  have  any  other  source  except  commission. 

Q.  Now  the  amount  of  commissions  paid  a year  is  very  large,  is  it 
not  ? • 

A.  It  must  be  pretty  large  on  such  a large  amount  of  grain. 

Q.  Now,  I ask  you  whether  the  aggregate  amount  of  those  commis- 
sions is  not  necessarily  charged  upon  the  grain  and  produce  and  paid 
ultimately  by  the  consumer? 

A.  Not  necessarily  paid  by  the  consumer;  it  may  be  paid  partly  out. 
of  the  pockets  of  the  persons  who  are  speculators. 

Q.  It  is  either  paid  by  the  consumer  or  lost  by  the  speculator? 

A.  Jt  must  be  one  of  tlie  two. 


917 


Q.  Is  not  the  same  true  of  the  entire  cost  of  supporting  the  Ex- 
•change,  the  entire  annual  cost?  Must  not  that  be  added  to  the  price 
which  the  consumer  pays?  ' 

A.  No,  you  could  not  add  more  than  what  the  commissions  were; 
he  could  not  add  his  other  expenses  to  it. 

Q.  Is  the  cost  of  running  the  Exchange,  the  annual  expenses  of  the 
Exchange,  paid  out  of  the  commissions  in  any  way  ? 

A.  I suppose  the  man  uses  the  commissions  to  help  pay  it. 

Q.  This  speculative  business  has  increased  very  largely  within  the 
last  few  years,  has  it  not? 

A.  There  has  always  been  more  or  less  of  it,  not  on  the  basis  of 
calls,  not  in  this  city  ; it  is  about  four  years  I think  since  it  first  com- 
menced. 

Q.  In  your  judgment  would  not  the  report  on  page  53  fairly  illus- 
trate the  increase  of  this  business  ? 

A.  No,  I don’t  think  it  fairly  illustrates  it,  because  I think  it  is 
larger  for  the  past  year  than  for  last  year. 

Q.  By  this  table  in  1877  the  wheat  sold  was  15,061,000  bushels,  and 
in  1881,  it  was  44,492,000  bushels;  now  my  question  is  whether  up 
to  1881  and  from  the  year  1877,  that  table  would  not  fairly  illustrate 
the  increase  of  the  business  ? 

A.  For  those  years,  yes,  sir. 

Q.  You  say  that  this  year,  the  increase  is  larger  still  in  proportion? 

A.  Yes,  sir ; it  is  for  eleven  months  of  this  year. 

Q.  Can  you  state  for  the  eleven  months  of  this  year  the  sales  of 
wheat  on  the  Exchange  ? 

A.  Total  sales  at  the  New  York  Exchange  for  forward  deliveries  for 
eleven  months  of  this  year  are  about  613,000,000  bushels. 

Q.  And  of  corn? 

A.  391,000,000. 

Q.  And  that  613,000,000  is  based  upon  the  crops  of  how  much  ? 

A.  The  crop  of  the  past  year  T suppose  is  about  510,000,000  but  the 
sales  include  a part  of  the  previous  crop.  This  is  for  the  calendar 
year  and  those  for  the  crop  year;  they  don’t  match  into  each  other 
exactly. 

Q.  What  quantity  of  wheat  came  to  New  York  in  the  eleven  months 
of  1882’?  . 

A.  Forty-two  and  one  half  millions. 

Q.  And  what  was  the  amount  of  exports  ? 

A.  35,600,000. 

Q.  Then  by  the  theory  you  have  adopted,  the  sales  of  613,000,000 
would  be  based  upon  about  17,000,000  of  wheat  exported, would  they  not? 

A.  17,000,000  for  the  cash  sales,  yes,  sir. 


918 


Q.  Seventeen  and  one-half  millions  for  cash,  and  seventeen  and  one- 
' half  millions  for  futures.  Now  what  quantity  of  corn  came  here  in 
1882? 

A.  In  the  eleven  months  of  1882,  14,100,000  bushels. 

Q.  How  much  of  that  was  exported  ? 

A.  7,800,000  bushels. 

Q,  In  your  opinion  is  not  ninety  per  cent  of  the  business  done  upon 
the  Produce  Exchange  a speculative  business  ? 

A.  I slufuld  think  it  was  so  far  as  wheat,  corn  and  oats  are  con- 
cerned ; in  flour  it  is  a cash  trade,  which  might  be  extended  to  lard 
and  pork  as  well. 

Q.  Are  you  familiar  with  the  warehouse  system  in  connection  with 
the  Exchange  ? 

A.  I know  they  have  warehouses  here  that  they  store  grain  in,  that 
is  about  all  that  I know  about  it*. 

Q.  The  Exchange  designates  certain  warehouse  for  the  storage  of 
grain,  does  it  not  ? 

A.  I don’t  know,  I don’t  have  any  thing  to  do  with  that  department. 

Q.  Don’t  you  know  that  warehouse  receipts  are  only  good  for  the 
delivery  of  the  grain  which  is  shipped  to  these  few  designated  ware" 
houses  ? 

A.  I know  they  have  a system  by  which  they  issue  receipts  and 
those  represent  the  grain,  but’  as  to  the  details  of  it  I am  not  ac- 
quainted with  them  ; my  duties  do  not  make  it  necessary  for  me  to  in- 
vestigate it. 

Q.  Don’t  you  know  whether  those  receipts  are  confined  to  the  ware- 
houses designated  by  the  Produce  Exchange  ? 

A.  I have  no  recollection  of  what  rule  there  is  in  regard  to  that. 

Q.  Suppose  a person  not  connected  with  the  Exchange  goes  to  a 
warehouse  which  is  not  connected  with  the  Exchange  and  deposits  a 
load  of  wheat,  8,000  bushels,  and  gets  that  warehouse’s  receipt  for  the 
deposit,  negotiable  receipt,  is  that  receipt  a good  delivery  on  the  Pro- 
duce Exchange  ? 

A.  I really  cannot  tell  you,  sir.  Any  man  in  the  trade  will  post  you 
fully  in  regard  to  that. 

Q.  I find  on  pages  202'and  203  of  this  report  of  1881,  a statement 
entitled  the  regular  warehouses  for  the  storage  of  graded  grain ‘desig- 
nated by  the  board  of  managers  , do  you  suppose  that  statement  to 
show  the  warehouses  so  designated  in  1881  ? 

A.  I suppose  that  is  published  authoritatively. 

Q.  Now  do  you  know  personally  about  the  contracts  existing  be- 
tween the  Produce  Exchange  and  the  railroad  companies  ? 

A.  1 do  not. 


919 


Q.  Connected  with  the  storage  and  issue  of  receipts  ? 

A.  I don’t  know  any  thing  about  this  matter  of  storage. 

Q.  Have  you  means  of  giving  the  prices  of  wheat  and  corn  from  day 
to  day  during  the  last  two  years  ? 

A.  They  are  given  every  day  in  this  report. 

Q.  I want  to  know  the  price  of  corn  on  the  1st  day  of  July,  1881  ? 

A.  On  the  1st  day  of  July  the  range  for  that  day  was  from  fifty-five 
and  three-fourths  to  fifty-six  and  one-fourth. 

Q.  Is  there  any  difference  between  the  price  for  immediate  delivery 
and  for  shipment  ? 

A.  I cannot  say. 

Q.  Now  give  me  the  price  on  the  1st  day  of  August  ? 

A.  The  range  was  from  fifty-seven  and  seven-eighths  to  fifty-eight 
and  one-fourth. 

Q.  Now  the  1st  day  of  September  ? 

*A.  Seventy-one  and  one-half  to  seventy-one  and  three-fourths. 

Q.  On  the  2d  of  September  ? 

A.  Seventy-one  and  one-half  to  seventy-one  and  three-eighths  ; the 
3d  of  September  seventy  and  three-fourths. 

Q.  Now  the  1st  of  October? 

A.  Seventy-four  and  one-fourth  to  seventy-six. 

Q.  Was  there  not  a considerable  falling  off  in  the  price  of  corn  in 
the  first  week  of  October,  1881  ? 

A.  It  went  from  seventy-four  and  one-fourth  to  seventy-six,  the 
range  on  October  1st  to  seventy- two  and  seven-eighths,  on  the  seventh 
and  on  the  eighth  it  was  from  seventy  and  one-half  to  seventy-two  ; 
on  the  tenth  sixty-nine  and  three-fourths  to  seventy-one  and  one- 
fourth.  These  are  the  cash  prices.  We  do  not  put  in  the  book  the 
option  prices  at  all. 

Q.  Where  can  the  committee  ascertain  the  option  prices  for  corn  be- 
tween June  and  November,  1881,  and  between  .lugust  and  December, 
1882  ? 

A.  I can  furnish  them  to  you;  I can  draw  off  what  the  range  of 
prices  is  every  day  right  through  for  each  month. 

Q.  I wish  you  would  do  that.  I want  July,  August,  September  and 
October,  1881. 

Q.  Do  you  know  of  a transaction  in  wheat  that  has  been  called  the 
Keene  corner  ? 

A.  Only  from  rumor. 

Q.  When  did  that  occur  ? 

A.  I think  two  years  ago. 

Q.  There  were  large  fluctuations  in  the  price  of  wheat  in  that  con- 
nection, were  there  not  r 


920 


A.  I don’t  remember  now. 

Q.  Does  it  ever  liappen  here  that  corn  for  immediate  delivery  and 
‘use  costs  more  to  purchase  at  the  Exchange  than  corn  for  export  oji 
the  same  day  ? 

A.  I suppose  the  seller  sometimes  makes  a distinction  l)ei,ween  that  ; 
it  is  not  a usual  course  of  trade. 

Q.  That  occurs  when  people  are  trying  to  raise  the  price  of  corn  ? 

A.  I suppose  the  object  is  to  sustain  the  price  of  whatever  they  are 
dealing  in. 

Q.  How  great  differences  of  that  sort  in  corn  per  bushel  have  you 
known  ? 

A.  I cannot  call  to  mind  now  any  particular  instance  only  I know 
that  such  concessions  have  been  made  to  sell  the  lowest  for  export.  I 
think  during  the  fore  part  of  this  present  year  wheat  quite  frequently 
sold  for  export  at  a less  price  than  they  would  sell  it  to  dealers  at 
home. 

Q.  How  much  per  bushel  ? 

A.  I think  usually  the  differences  is  quite  small. 

Q.  How  much  was  it  in  that  case  ? 

A.  I think  from  one  to  two  cents. 

Q.  Now  was  there  not  such  an  occasion  that  happened  in  corn 
within  the  last  month  ? 

A.  I think  there  was  so  reported. 

Q.  And  what  was  the  difference  then  ? 

A.  It  was  said  to  be  from  12  to  14  cents  a bushel. 

Q.  That  is,  corn  would  be  sold  to  be  shipped  out  of  the  country,  ex- 
ported, for  from  12  to  14  cents  a bushel  less  than  it  could  be  bought 
for  immediate  delivery  here  ? 

A.  That  was  so  reported.  I have  no  personal  knowledge  of  it  ex- 
cept from  hearsay  ? 

Q.  Now  what  was  the  price  of  corn  for  delivery  here  at  that  time 
was  it  at  or  about  the  time  that  corn  reached  11.10  a bushel  ? 

A.  It  was  about  $1.10,  yes,  sir  ; it  was  $1.10  for  two  or  three  days. 

'Q.  And  then  it  fell  back  to  what  ? 

A.  It  has  fallen  to  sixty-eight  or  sixty-nine  cents. 

Q.  It  was  $1.10  the  first  days  of  the  month  ? 

A.  Yes,  sir. 

Q.  Now  take  the  last  four  years  and  su])pose  there  had  been  no 
speculation  in  corn  but  its  market  had  been  governed  by  the  ordinary 
rules  of  supply  and  demand,  from  your  knowledge  on  the  subject,  do 
you  Ixdieve  there  has  been  any  period  when  the  juice  would  have  been 
highei’  than  seventy-five  cents  a bushel  ? 

A.  I hardly  think  within  the  last  fifteen  or  twenty  years  there  has 


921 


been  any  time  when  there  was  not  any  sjoeciilation,  even  before  the 
system  of  calls  was  adopted. 

Q.  I want  to  find  out  if  I can  what  would  be  a fair  average  price  of 
corn  in  the  market  governed  by  the  ordinary  rules  of  supply  and  de- 
mand without  any  speculation  in  it  at  all  ? 

A.  Take  the  average  for  four  years  ? 

Q.  Yes. 

A.  I don’t  think  it  w’ould  average  seventy-five  cents. 

Q.  Do  you  know  what  the  western  farmers  in  the  corn-producing 
regions  consider  a fair  price  for  corn  ? 

A.  I believe  they  get  from  twenty-five  to  thirty  cents  a bushel 
usually ; sometimes  in  places  distant  from  the  railroad  they  do  not  get 
as  much. 

. Q.  Now  wheat  in  the  same  regions  about  what  do  they  get  for  that? 

A.  It  depends  upon  what  the  character  of  the  wheat  is,  the  kind  of 
wheat ; No.  2 red,  which  is  most  largely  dealt  in,  about  ninety  cents 
to  one  dollar. 

Q.  Now  do  these  speculations  and  the  rise  in  price  of  wheat  and 
corn  make  any  difference  in  price  which  the  farmer  ordinarily  receives? 

A.  I think  the  farmer  sometimes  shares  the  benefits  resulting  from 
the  advance  in  consequence  of  speculation. 

Q.  Take  such  a case  as  this  that  has  occurred  within  the  last  month 
where  corn  went  up  to  $1.10,  and  then  within  three  weeks  w^ent  back 
to  sixty-eight  ? 

A.  It  has  been  out  of  the  farmer’s  hands  too  long  to  have  him  share 
in  the  benefit. 

Q.  The  farmer  did  not  share  in  that,  did  he  ? 

A.  No,  sir  ; I think  not. 

Q.  An  arbitration  has  recently  taken  place  between  Husted  & Hazel- 
tine  and  Lane  & Son  ; were  you  present  at  that  arbitration  ? 

A.  I was  not.  \ 

Q.  Do  you  know  any  thing  about  the  facts  ? 

A.  I know  nothing  about  the  facts  or  circumstances  connected  with 
it. 

Q.  Please  state  the  average  cash  prices  of  corn  in  New  York  from 
and  including  1877  to  the  present  time  ? 

A.  1877,  the  average  range  was  59  1-3  to  60  1-3  cents  ; 1878,  49  1-6 
to  49  7-10  cents ; 1879,  49  3-10  to  50  3-8  cents  ; 1880,  48  9-16  to  61  1-8  ; 
1881,  62  1-2  to  63  5-8  ; that  is  the  yearly  average. 

Q.  Now,  if  you  can  find  No.  2 red  wheat,  I would  like  the  same  as 
to  that? 

N A.  The  average  range  of  price  of  No.  2 red  winter,  for  the  year  1881, 
was  from  one  hundred  and  thirty-one  and  one-fourth  to  one  hundred 


922 


and  thirty-two  and  five-sixteenths,  and  for  tlie  year  1880,  the  average 
range  was  from  one  hundred  and  twenty  six  and  one-fourth  to  one 
hundred  and  twenty-seven  and  three-fourths  ; these  are  all  cash. 

Q.  Can  you  give  me  the  price  of  corn  for  export  on  the  29th  of  No- 
vember last  ? 

A.  I don’t  think  I can  here,  sir. 

Q.  It  has  been  stated  by  one  or  two  witnesses  that  the  price  for  ex- 
port on  that  day  was  from  eighty-two  to  eighty-three  cents ; does  that 
agree  with  your  recollection  ? 

A.  I can’t  remember  now ; it  is  somewhere  in  that  neighborhood, 
but  I cannot  remember  exactly  the  figures. 

Q.  It  is  also  stated  that  the  price  for  delivery  was  $1.10  ? 

A.  There  were  some  days  during  about  that  time  that  the  delivery 
here,  what  was  delivered,  was  $1.10. 

Q.  That  would  make  a difference  of  twenty-eight  cents  a bushel  — 
that  is,  that  corn  cost  more  to  be  delivered  for  consumption  here  than 
it  did  for  export  and  shipment  to  the  extent  of  twenty-eight  cents  a 
bushel  ; do  you  think  that  is  possible  ? 

A.  It  is  barely  possible  ; I don’t  remember  now.  I know  the  trade 
in  cash  corn  during  these  high  prices  was  scarcely  any  thing  at  all. 

John  D.  Rockafeller,  being  duly  sworn,  was  then  interrogated  and 
testified  as  follows  : 

By  Mr.  Chitte^tden'  : 

Q.  Where  do  you  reside  ? 

A.  Cleveland,  Ohio. 

Q.  How  long  have  you  resided  there  ? 

A.  x\bout  twenty-eight  years. 

Q.  Have  you  ever  resided  in  New  York  within  that  time  ? 

A.  I have  often  been  in  New  York  ; I am  here  winters  a portion  of 
the  time. 

Q.  Do  you  keep  house  here  ? 

A.  No,  sir. 

Q.  You  have  no  household  here  then  ? 

A.  No,  sir. 

Q.  And  have  not  had  at  any  time  ? 

A.  No,  sir. 

Q.  Have  you  any  official  connection  with  the  Standard  Oil  Com- 
pany ? 

A.  Yes,  sir. 

(2.  What  is  it? 

A.  Pj-osident. 

(,).  How  long  have  you  been  president? 


923 


A.  Since  its  organization. 

Q.  Are  you  also  one  of  its  directors  or  trustees  ? 

A.  Yes,  sir. 

Q.  How  many  trustees  or  directors  has  it  ? 

The  Witness  — (To  Senator  Boyd.)  Is  this  a necessary  question,, 
senator  ? 

Senator  Boyd  — I think  so;  simply  stating  the  condition  and 
status  of  the  company. 

The  Witness  — I am  ready  and  willing  to  answer  all  necessary 
questions  in  reference  to  the  case. 

Q.  Will  you  please  answer  the  question  ? 

A.  I decline  to  answer  it. 

Q.  Why? 

A.  Because  I think  it  is  impertinent. 

Q.  What  are  the  names  of  your  associate  trustees  or  directors  of  the 
Standard  Oil  Company  ? 

Mr.  S.  0.  Dodd  states  that  he  is  counsel  for  the  witness. 

Mr.  Chittenden  — What  is  your  official  connection  with  the 
Standard  Oil  Company,  Mr.  Dodd  ? 

Mr.  Dodd  — Solicitor. 

Mr.  Chittenden  — Where  is  your  office  ? 

Mr.  Dodd — 44  Broadway. 

Mr.  Chittenden  — At  the  office  of  the  Standard  Oil  Company  ? 

Mr.  Dodd — The  same  building,  yes,  sir. 

Mr.  Chittenden  — Are  you  employed  by  the  company  at  a salary  ? 

Mr.  Dodd  — By  the  Standard  and  other  companies,  yes,  sir. 

Mr.  Chittenden  — And  you  are  in  their  permanent  employ,  are 
you  ? 

Mr.  Dodd  — Yes,  sir. 

Mr.  Chittenden  — You  do  no  other  professional  business  ? 

Mr.  Dodd  — No,  sir. 

Mr.  Chittenden  — How  long  have  you  been  their  counsel  ? 

Mr.  Dodd  — I believe  I am  not  a witness;  if  the  chairman  will  per- 
mit me,  as  counsel,  I think  these  questions  in  relation  to  the  Standard 
Oil  Company,  its  organization,  its,  offices,  etc.,  while  they  are  matters 
of  record  and  easily  obtainable,  are  not  pertinent  to  the  subject  of  in- 
vestigation here,  and,  as  the  witness  has  been  instructed  not  to  answer 
such  questions,  it  may  as  well  appear  on  the  record  now  that  he  will 
decline  to  answer  questions,  unless  in  his  best  judgment  they  may  relate 
to  the  questions  concerning  corners  and  futures. 

Senator  Boyd  — The  object  of  the  committee  in  making  this  inves- 
tigation is  to  ascertain,  if  possible,  as  the  resolution  reads,  the  effect  of 
making  corners  and  dealing  in  futures  upon  the  public  welfare  and 


924 


upon  our  commerce,  and  it  might  be  well  when  witnesses  come  before 
the  committee  to  know  their  exact  status  in  the  community,  whether 
they  appear  as  private  individuals  or  as  members  of  corporations, 
and,  if  they  appear  as  members  of  corporations,  it  is  our  duty  to  as- 
certain the  standing  of  the  corporations.  Now  we  take  it  as  a com- 
mittee, and  I believe  it  individually,  that  the  Standard  Oil  Company 
is  a highly  influential,  important  and  respectable  company,  and  I do 
not  see  that  there  should  be  any  objection  to  giving  the  names  of  the 
gentlemen  who  are  engaged  in  the  carrying  on  of  that  business  so  that 
we  may  avail  ourselves  of  their  extended  information  in  instructing 
the  public,  so  far  as  we  can,  as  to  the  evil  effects  of  dealing  in  futures 
and  making  corners.  Therefore,  I think  the  question  is  a proper  one, 

Mr.  Dodd — So  far  as  the  object  of  the*  committee  is  con- 
cerned I have  no  doubt  that  you  state  it  correctly,  but  a 
statement  was  made  by  counsel  representing  the  committee  that 
he  had  an  entirely  different  object  in  this  investigation,  and  therefore 
we  avail  ourselves  of  what  we  deem  our  privilege  more  strictly  than 
we  otherwise  would. 

Mr.  Chittenden — I desire  to  say  that  the  counsel  for  the  committee 
has  made  no  such  statement ; I stated  exactly  the  bearings  which  in 
my  judgment  these  questions  had  upon  the  question  of  the  control 
by  this  company  of  the  oil  trade,  and  I shall  go  into  no  discussion 
any  farther  than  to  set  myself  right  when  such  statements  are  made. 
We  are  here  to  get  testimony  and  if  the  witnesses  do  not  wish  to  an- 
swer they  can  decline. 

Senator  Boyd — I desire  to  state  to  the  witness  that  this  investiga- 
tion is  in  the  interest  of  the  people  of  the  State  and  is  being  con- 
ducted by  their  authority,  and  I hope  that  witnesses  will  respect  the 
people  of  this  State  to  such  an  extent  as  to  answer  as  promptly  as  pos- 
sible all  questions  which  tend  to  effect  the  purposes  which  the  people 
have  in  this  investigation. 

The  Witness — In  answer  to  these  remarks  I want  to  repeat  again 
that  it  is  my  desire  to  answer  all  questions  in  all  fairness  and  with 
promptness  that  are  pertinent  to  the  inquiry  before  us.  Of  course,  I 
could  desire  that  such  questions  would  be  put.  I am  a man  of  busi- 
ness, with  a great  deal  to  attend  to,  and  I,  of  course,  would  much  pre- 
fer not  to  have  time  unduly  wasted  with  questions  that  do  not  neces- 
sarily belong  in  this  class. 

Senator  Boyd — The  very  fact  that  you  are  a man  engaged  in  so 
much  business  renders  your  testimony  to  the  people  so  much  the  more 
valuable  and  the  i)eople  expect  you,  both  through  their  committee  and 
through  the  Press,  to  aid  them  in  this  investigation  as  much  as  possi- 
ble. 


925 


Mr.  Chittenden’ — Now,  if  the  committee  please,  I think  the  rela- 
tive positions  of  these  gentlemen  are  pretty  well  understood,  and  I 
hope  we  shall  not  incumber  the  record  by  any  further  discussion. 

Senator  Boyd — The  further  examination  of  the  witness  will  be  by 
direct  questions  and  categorical  answers. 

Q.  What  are  the  names  of  your  associates,  trustees  or  directors  of  the 
Standard  Oil  Company  ? 

A.  1 decline  to  answer. 

Q.  Where  do  such  trustees  or  directors  respectively  reside  ? 

A.  I decline  to  apswer. 

Q.  Have  you  any  connection  with  the  company  spoken  of  by  Mr. 
Brewster  in  his  testimony  as  the  National  Transit  Company,  or  a sim- 
ilar name  ? 

A.  I have  not. 

Q.  What  is  the  corporate  name  of  that  company  of  which  Mr. 
Brewster  is  vice-president  ? 

A.  National  Transit  Company. 

Q.  Where  is  that  company  organized? 

A.  It  is  a Pennsylvania  company. 

Q.  Who  is  the  president  of  that  company  ? 

A.  Mr.  Clement  A.  Griscpm. 

Q.  Where  does  he  live  ? 

A.  Philadelphia. 

Q.  How  many  directors  are  there  of  that  company  ? 

A.  I don’t  know. 

Q.  Do  you  know  their  names  ? 

A.  I do  not. 

Q.  Give  the  names  of  any  of  the  directors  Known  to  you  ? 

A.  I decline  to  answer  that  ? 

Q.  Are  any  of  those  directors  connected  officially  or  pecuniarily 
with  the  Standard  Oil  Company  ? 

A.  I decline  to  answer. 

Q.  Do  you  know  a concern  called  the  Standard  Trust  ? 

A.  I do. 

Q.  Is  that  a corporation  ? 

A.  It  is  a trusteeship,  I suppose  it  would  be  called. 

Q.  Is  it  or  not  a corporation  ? 

A.  I should  say  not. 

Q.  Who  are  the  trustees? 

A.  I decline  to  answer. 

Q.  Are  you  one  of  them  ? 

A.  I decline  to  answer. 

Q.  Is  Mr.  Bostwick  one  of  them  ? 

A.  I decline  to  answer. 


Q.  Is  Mr.  FJagler  one  of  them  ? 

A.  I decline  to  answer. 

Q.  By  what  official  or  corporate  name  is  that  trust  known  among 
those  interested  ? 

A.  I decline  to  answer. 

Q.  Has  thta  trust,  by  whatever  name  it  is  known,  issued  certificates 
of  stock,  shares  or  interests  ? 

A.  I decline  to  answer. 

Q.  Has  it  issued  such  certificates  representing  a capital  amounting 
to  seventy  millions  of  dollars  ? 

A.  I decline  to  answer. 

Q.  Has  it  paid  dividends  upon  a capital  of  about  seventy  millions  of 
dollars  ? 

A.  I decline  to  answer. 

Q.  Has  it  not  paid  dividends  at  the  rate  of  six  per  cent  per  annum 
upon  about  seventy  millions  of  dollars  since  its  organization  ? 

A.  I decline  to  answer. 

Q.  Do  you  hold  stock  in  that  trust  ? 

A.  I decline  to  answer. 

Q.  Do  you  hold  stock  in  that  trust  to  amount  exceeding  two  and 
one-half  millions  of  dollars? 

A.  I decline  to  answer. 

Q.  What  is  the  present  market  value  of  stock  in  that  trust  ? 

A.  I decline  to  answer, 

Q.  What  is  the  business  of  that  trust  ? 

A.  I decline  to  answer. 

Q.  Has  not  substantially  the  property  of  the  Standard  Oil  Company 
of  Ohio,  including  shares  of  stock  owned  by  it  in  other  companies^ 
been  conveyed  to,  and  is  not  such  property  now  held  by  that  trust  ? 

A.  I decline  to  answer, 

Q.  Was  not  the  property  so  conveyed  to  that  trust  inventoried  at 
about  the  sam  of  seventy  millions  of  dollars. 

A.  I decline  to  answer. 

Q.  Where  is  that  trust  located  ? 

A.  Its  office  is  44  Broadway,  New  York  city. 

Q.  Is  that  its  principal  place  of  business  ? 

A.  Yes,  sir. 

Q.  Does  not  that  trust  hold  stock  in  the  National  Transit  Company? 
A.  1 decline  to  answer. 

Q.  lias  tliat  trust  ever  made,  to  your  knowledge,  any  returns  to  the 
Comptroller  of  this  State? 

A.  1 decline  to  answer. 

Q.  lias  tliat  trust  to  your  knowledge  paid  any  taxes  in  this  State? 
A.  1 decline  to  answer. 


927 


Q.  Did  not  that  trust  in  the  year  1881  divide  about  ten  millions  of 
dollars  among  its  owners  ? 

A.  1 decline  to  answer. 

Q.  Does,  or  does  not  that  trust  substantially  control  the  property  of 
the  Standard  Oil  Company  ? 

A.  I decline  to  answer. 

Q.  Does  that  trust  own  many  oil  wells  or  interests  in  such  wells  ? 

A.  I decline  to  answer. 

Q.  Does  that  trust  deal  in  crude  oil,  buy  and  sell  it  ? 

A.  I decline  to  answer. 

Q.  What  was  the  original  capital  of  the  Standard  Oil  Company  of 
Ohio  ? 

A.  I decline  to  answer. 

Q.  Was  not  the  stock  of  that-  company  or  its  proceeds  substantially 
issued  and  paid  for  property  in  which  you  were  interested  ? 

A.  I decline  to  answer. 

Q.  What  is  the  capital  of  the  Standard  Oil  Company  of  Ohio  now  ? 

A.  I decline  to  answer. 

Q.  Except  the  property  that  was  purchased  about  the  time  of  its 
organization  do  you  know  that  any  money  or  other  property  has  been 
contributed  by  its  stockholders  in  payment  or  exchange  for  its  stock  ? 

A.  I decline  to  answer. 

Q.  Do  you  know  what  dividends  that  company  has  actually  made  to 
its  shareholders  ? 

A.  1 decline  to  answer. 

Q.  Has  not  that  company  made  annually,  in  each  year,  about  the 
1st  of  January,  an  inventory  of  its  property,  showing  its  value  ? 

A.  I decline  to  answer.  ' 

Q.  Are  you  not  able  to  show  to  the  committee  the  property  owned 
and  held  by  that  company  on  or  about  the  1st  day  of  January  since 
its  organization  ? 

A.  I decline  to  answer. 

Q.  Is  it  true  that  there  are  now  existing  corporations  by  the  name 
of  the  Standard  Oil  Company  in  Ohio,  New  York,  New  Jersey,  and 
Pennsylvania  ? 

A.  I decline  to  answer. 

Q.  Is  not  the  principal  place  of  business  of  all  these  corporations  at 
No.  44  Broadway,  New  York  city  ? 

A.  I decline  to  answer. 

Q.  Was  not  the  purpose  of  organizing  these  four  companies  under 
the  same  name  to  avoid  taxation  ? 

A.  I decline  to  answer. 


928 


Q.  Has  the  Standard  Oil  Company  to  your  knowledge  ever  paid  any 
taxes  in  the  State  of  New  York  ? 

A.  I decline  to  answer. 

Q.  Does  the  Standard  Oil  Company  or  the  Standard  Trust  Company 
pay  taxes  anywhere  except  in  the  State  of  Pennsylvania  ? 

A.  I decline  to  answer. 

Q,  At  the  time  the  Standard.  Oil  Company  of  Ohio  was  organized 
were  you  engaged  in  the  business  of  refining  petroleum  oil  ? 

A.  I decline  to  answer. 

Q.  Were  you  not  at  that  time,  and  are  you  not  now,  familiar  with 
the  business  of  refining  petroleum,  the  number  of  refineries  in  exist- 
ence and  their  respective  products  ? 

A.  Generally  speaking,  yes,  sir. 

Q.  How  many  of  such  refineries  were  there  at  that  time  in  the  State 
of  Ohio  ? 

A.  I decline  to  answer. 

Q.  How  many  such  refineries  in  the  State  of  Ohio  have  since  come 
under  the  control  of  the  Standard  Oil  Company  ? 

A.  I decline  to  answer. 

Q.  How  many  such  refineries  were  in  existence  at  the  organization 
of  the  Standard  Oil  Company  in  New  York,  Pennsylvania,  and  New 
Jersey  ? 

A.  I am  unable  to  answer  the  number. 

Q.  How  many  refineries  at  the  organization  of  this  company  were 
you  interested  in  ? 

A.  I decline  to  answer. 

Q.  Were  not  yourself  and  your  associates,  Mr.  Flagler  and  Mr.  Bost- 
wick,  at  the  organization  of  the  Standard  Oil  Company,  carrying  on 
two  refineries  in  or  near  the  city  of  Cleveland  ? 

A.  I decline  to  answer. 

Q.  What  was  the  capacity,  the  annual  product,  of  those  two 
refineries  in  refined  oil  at  that  time  ? 

A.  I decline  to  answer  ; I do  not  know. 

Q.  At  that  time,  did  you  and  your  associates  collectively  refine  one- 
eighth  of  the  annual  product  of  petroleum  in  this  country  ? 

A.  I decline  to  answer. 

Q.  How  many  refineries  of  petroleum  have  been  absorbed  by,  and 
brought  under  the  control  of  the  Standard  Oil  Company  since  its 
organization  ? 

A.  I decline  to  answer. 

Q.  How  many  refineries  do  you  know  of  in  this  country,  running 
at  tlie  present  time,  that  are  not  owned  or  substantially  controlled  by 
the  Standard  Oil  Com[)any  or  the  Standard  Trust? 

A.  1 could  not  state  exactly  the  number. 

Q.  you  know  of  any  ? 


929 


* 


A.  I do. 

Q.  Name  them  ? 

A.  It  would  be  quite  impossible  for  me  to  give  the  names  of  them 
all  ; I know  that  there  are  thirty  or  forty  of  such  refineries. 

Q.  Give  the  names  of  such  as  you  remember? 

A.  I decline  to. 

Q.  Do  you  remember  of  one  ? 

A.  1 decline  to  answer. 

Q.  Is  there  one  such  refinery  in  the  State  of  New  York  ? 

A.  Yes,  sir. 

Q.  Where  is  it  located  ? 

A.  I decline  to  answer. 

Q.  What  is  its  name  ? 

A.  I decline  to  answer. 

Q.  What  is  its  capacity  for  refining  oil  annually  ? 

A.  I decline  to  answer. 

Q.  Is  it  not  true,  in  your  judgment,  that  the  Standard  Oil  Company, 
the  Standard  Trust  and  the  persons  connected  with  those  two  institu- 
tions, purchase,  refine  a'nd  sell  ninety  per  cent  of  the  petroleum  pro- 
duced in  this  country  at  the  present  time  ? 

A.  I decline  to  answer. 

Q.  Is  the  Standard  Oil  Company  of  Ohio  engaged  in  refining  at  the 
present  time  ? 

A.  Yes,  sir. 

Q.  AVhere  are  those  refineries  situated  ? 

A.  At  Cleveland,  Ohio. 

Q.  Anywhere  else? 

A.  No,  sir;  I think  not. 

Q.  Are  there  refineries  at  Hunter’s  Point. 

A.  Yes,  sir. 

Q.  Who  owns  them? 

A.  I decline  to  answer. 

Mr.  Dodd  — I would  say  that  the  refusal  of  the  witness  to  answer 
is  under  the  advice  of  counsel. 

Q.  Are  they  owned  by  the  Standard  Oil  Company  of  Ohio  ? 

■ A.  No,  sir  ; they  are  not  owned  by  the  Standard  Oil  Company  of 
Ohio. 

Q.  Are  they  owned  by  the  Standard  Trust? 

A.  I decline  to  answer.  ^ 

Q.  Where  is  the  principal  part  of  the  oil  purchased  by  the  concern 
with  which  you  are  connected,  and  which  is  shipped  to  the  eastward, 
refined  ? 

A.  In  the  neighborhood  of  New  York  and  Philadelphia,  I should 
say  in  and  about  those  places. 


930 


Q.  Is  much  the  largest  part  of  it  refined  in  the  neighborhood  of 
New  York  ? 

A.  Yes,  sir. 

Q,  Is  that  oil  which  is  so  refined  in  the  neighborhood  of  New  York 
purchased  in  the  oil  fields  or  is  it  the  product  of  wells  owned  by  con- 
cerns with  which  you  are  connected  ? 

A.  Purchased  in  the  oil  fields. 

Q.  Who  is  the  purchaser  of  that  oil  ? 

A.  I decline  to  answer. 

Q.  Who  makes  the  contracts  for  its  shipments  ? 

A.  I decline  to  answer. 

Q.  How  is  it  shipped  to  New  York,  by  pipe  lines  or  by  rail  ? 

A.  By  pipe  lines  and  by  railroads. 

Q.  Both  ? 

A.  Yes,  sir. 

Q.  From  what  point  to  what  point  by  pipe  lines  ? 

A.  I am  unable  to  give  the  names  of  the  stations.  lam  not  so 

familiar  with  the  pipe  line  business. 

Q.  Well,  is  it  shipped  by  the  pipe  lines  from  the  oil  fields  to  some 
place  in  Eastern  Pennsylvania  ? 

A.  Yes,  sir. 

Q.  And  is  it  shipped  from  to  New  York  by  rail  ? 

A.  By  rail  in  part,  sir. 

Q.  Are  there  any  pipe  lines  that  extend  from  the  oil  fields  to  New 
York  ? 

A.  Yes,  sir. 

Q.  Are  those  pipe  lines  substantially  owned  and  Icontrolled  by  the 
National  Transit  Company  ? 

A,  Yes,  sir. 

Q.  About  what  proportion  of  the  oil  is  shipped  by  railway  coming 
East  ? 

A.  I am  unable  to  state. 

Q.  Who  makes  the  contracts  with  the  railroads  for  the  freight  upon 
that  oil  ? . • 

A.  I decline  to  answer. 

Q.  Do  you  not  know  personally  the  terms  of  those  contracts  ? 

A.  I decline  to  answer. 

Q.  Have  you  not  access  to  those  contracts  so  that  you  could  if  you 
chose  give  the  committee  copies  of  them  ? 

A.  1 decline  to  answer. 

Q.  Will  you  give  the  committee  copies  of  those  contracts  ? 

A.  J decline  to  answer.  ’ 

Q.  Have  you  not  had  for  the  last  eight  years  contracts  with  the 
principal  railroad  com])anies,  special  contracts  for  the  transportation 
of  the  oil  owned  by  the  concerns  with  which  you  are  connected  ? 


931 


A.  I decline  to  answer. 

Q.  Under  those  contracts  have  not  such  concerns  annually  received 
payments  by  way  of  rebate  ? 

A.  I decline  to  answer. 

Q.  Have  not  those  payments  amounted  in  some  years  to  ao  large  a 
sum  as  one  hundred  thousand  dollars  annually  ? 

A.  I decline  to  answer. 

Q.  Have  they  not  amounted  to  as  much  as  two  hundred  and  fifty 
thousand  dollars  annually  ? 

A.  I decline  to  answer. 

Q.  Have  they  not  amounted  to  half  a million  dollars  annually  ? 

A.  I decline  to  answer, 

Q.  What  sum  of  money  net  per  barrel  do  the  concern  with  which 
you  are  associated  now  pay  for  the  transportation  of  crude  oil  from  che 
oil  fields  to  New  York  ? 

A.  I decline  to  answer. 

Q.  Is  not  that  sum  less  by  twenty-five  per  cent  than  shippers  not 
connected  with  your  concern  can  obtain  ? 

A.  I decline  to  answer. 

Q.  Have  you  peersonally  received  dividends  on  the  stock  of  the 
Standard  Trust? 

A.  I decline  to  answer. 

Q.  Have  you  not  personally  received  dividends  equivalent  to  six  per 
centum  upon  a capital  of  seventy  millions  of  dollars  in  the  Standard 
Trust  ever  since  its  organization  ? 

A.  I decline  to  answer. 

Q.  When  was  the  last  dividend  declared  by  the  Standard  Oil  Com- 
pany, of  Ohio  ? 

A.  I decline  to  answer. 

Q.  Has  that  company  declared  any  dividends  since  the  organization 
of  the  Standard  Trust  ? 

A.  I decline  to  answer. 

Q.  Have  any  of  the  corporations,  the  stock  of  which  is  held  by  the 
Standard  Trust,  paid  dividends  to  you  since  the  organization  of  the 
Standard  Trust  i 

A.  I decline  to  answer. 

Q.  Do  you  know  what  quantity  of  oil  was  exported  by  tj|e  different 
concerns  with  which  you  were  connected  from  the  port  of  New  York, 
in  the  year  1881  ? 

A.  I do  not. 

Q.  How  many  millions  of  barrels  of  oil  were  refined  by  such  con- 
cerns in  the  vicinity  of  New  York  in  the  year  1881  ? 


932 


A.  I don’t  know  how  much  was  refined. 

Q.  Did  not  the  concern  with  which  you  were  so  connected  in  the 
year  1881  purchase  over  eiglit  million  barrels  of  crude  petroleum  ? 

A.  I am  unable  to  state. 

Q.  Do  not  the  purchases  of  the  concerns  with  which  you  are  so 
connected  exceed  one-half  the  annual  product  of  petroleum  ? 

A.  I think  they  do,  sir. 

Q.  Has  the  Standard  Oil  Company  recently  had  a litigation  in 
Pennsylvjinia  concerning  its  taxes  ? 

A.  Yes,  sir. 

Q.  Have  you  in  your  possession  a printed  copy  of  the  casein  which 
such  litigation  was  involved  ? 

A.  I have  not. 

Q.  Are  you  interested  in  the  Equitable  Gas  Company  just  organized 
in  this  city  ? 

A.  I decline  to  answer. 

Q.  Do  not  you  and  your  immediate  associates  in  the  Standard  Oil 
Company  substantially  control  the  Equitable  Gas  Company  ? 

A.  1 decline  to  answer. 

Q.  Do  not  you  and  your  immediate  associates  in  the  Standard  Oil 
Company  own  three-quarters  of  the  stock  of  the  Equitable  Gas  Com- 
pany  ? 

A.  I decline  to  answer. 

Q.  What  is  the  capital  of  the  company  ? 

A.  I do  not  know. 

Q.  Do  you  not  know  that  it  is  about  twenty  millions  of  dollars  ? 

A.  I do  not. 

Q.  How  much  of  its  stock  have  you  got  ? 

A.  I decline  to  answer. 

Q.  Have  you  paid  any  thing  for  the  stock  which  you  own  of  that 
company  ? 

A.  I decline  to  answer. 

Q.  That  company  is  organized  for  the  purpose  of  manufacturing 
and  furnishing  gas,  is  it  not  ? 

A.  I decline  to  answer. 

Q.  It  has  recently  obtained  a contract  with  the  city  to  furnish  gas 
due  the  cii^^  for  $1.50  a thousand  feet,  has  it  not  ? 

A.  I don’t  know. 

Q.  Is  it  not  so  reported  to  you  ? 

A.  It  has  not  been  reported  to  me. 

Q.  Have  you  not  so  heard  ? 

A.  I have  beard  nothing  about  it,  except  what  I may  have  read  in 
the  newspapers;  I read  in  the  newspapers  that  somegas  company  had 
a contract  of  late  ; I am  unable  to  say  what  company  it  was. 


933 


Q.  You  do  not  know  whether  it  was  the  Equitable  or  not  ? 

A.  I do  not. 

Q.  Do  you  think  it  was  the  Equitable  ? 

A.  I decline  to  answer. 

0.  Have  you  investigated  the  cost  of  making  that  gas  ? 

A.  I have  not. 

Q.  Has  not  its  cost  been  represented  to  you  ? 

A.  It  has  not. 

Q.  Has  it  not  been  made  the  subject  of  discussion  in  your  presence? 
A.  No,  sir. 

Q.  Don’t  you  know  any  thing  about  it  ? 

A.  I do  not. 

Q Do  you  know  Mr.  Stern,  the  president  of  that  company  ? 

A.  I do  not. 

Q Never  saw  him  ? 

A.  I never  did. 

Q.  Do  you  not  know  that  that  contract  has  been  entered  into  with 
knowledge  on  the  part  of  yourself  and  your  associates  that  the  gas 
they  propose  to  furnish  can  be  manufactured  for  thirty  cents  a thousand 
feet? 

A.  I do  not. 

Q.  Do  you  mean  to  have  the  committee  understand  that  you  do  not 
know  any  thing  about  the  Equitably  G-as  Company  ? 

A.  I decline  to  answer. 

Q.  Did  you  not  know  that  that  company  has  been  organized  by  your 
associates  in  the  Standard  Oil  Company  ? 

A.  I decline  to  answer. 

Q.  Do  you  know  the  cost  of  making  the  kind  of 'gas  they  propose  to 
furnish  ? 

A.  I do  not. 

Q.  Did  you  sign  the  articles  of  incorporation  of 'that  company  ? 

A.  I decline  to  answer. 

Q.  Will  you  say  that  you  did  not  sign  such  articles? 

A,  I decline  to  answer. 

Q.  Do  you  not  know  that  these  articles  represent  a capital  of  twenty 
millions  of  dollars  to  be  issued  for  certain  gas  patents  ? 

A.  I do  not. 

Q.  Has  the  Standard  Oil  Company  recently  gone  into  the  business 
of  raising  cattle  ? 

A.  I decline  to  answer. 

Q.  Has  it  not  entered  into  leases  for  a large  tract  of  grazing  land  in 
the  Indian  Territory  ? 

A,  I decline  to  answer. 


934 


Q.  Do  you  know  whether  it  has  or  not  ? 

A.  I decline  to  answer. 

Q.  Do  you  not  know  that  the  Secretary  of  the  Interior  has  recently 
refused  to  approve  those  leases  ? 

Mr.  Dodd  — I desire  to  have  it  appear  that  only  one  member  of  the 
committee  is  present. 

Mr.  Chittendejs'  — If  you  raise  that  objection  I will  have  Senator 
Browning  sent  for  and  have  the  questions  repeated  to  the  witness. 

Mr.  Dodd — I will  waive  any  objection  to  this  examination  having 
been  taken  during  the  temporary  absence  of  Senator  Browning,  a 
member  of  this  committee. 


f 


STATE  OF  NEW  YORK. 


No.  46. 


IN  SENATE. 

Apkil  25^  1883. 


THIKTY-EIGHTH  ANNUAL  REPORT 

OF  THE  PRISON  ASSOCIATION  OF  NEW  YORK,  FOR 

THE  YEAR  1882. 


Prison  Association  of  New  York, 
No.  65  Bible  House. 

To  the  Lieutenant-Governor  and  President  of  the  Senate : 


Sir  — In  accordance  with  chapter  163  of  the  Laws  of  1864,  we 
have  the  honor  to  present  herewith  the  Thirty-eighth  Annual  Report 
of  the  Prison  Association  of  New  York,  and  respectfully  to  request 
that  you  will  lay  the  same  before  the  Legislature. 


Respectfully  Yours, 

THEO.  W,  DWIGHT,  I^resident, 
CHARLTON  T.  LEWIS,  Chairman^ 

Executive  Committee, 


Ohas.  H.  Kitchel, 

Chairman  of  Committee  on  Annual  Revort. 


New  York,  Aprils  1883. 
[Sen.  Doc.  No.  46.] 


1 


OFFICERS  FOR  1883. 


President. 

Theodore  W.  Dwight,  LL.D. 

Yice-Presiden  ts. 

Grover  Cleveland.  Abraham  Lansing. 

Rt.  Rev.  F.  D.  Huntington.  Sinclair  Tousey. 

Edwin  Hutchinson.  Andrew  D.  White,  LL.D. 


Corresponding  Secretary. 

W.  M.  F.  Round,  65  Bible  House. 

Recording  Secretary. 

Eugene  Smith. 

Treastirer, 

Cornelius  B.  Gold,  10  Pine  St.,  N.  Y. 


Executive  Committee. 


Charlton  T.  Lewis,  Chairman, 
Thomas  C.  Acton, 

Levi  M.  Bates, 

Noah  Brooks, 

Stephen  Cutter, 

John  D.  Crimmins, 

Henry  W.  DeForest, 

Richard  L.  Dugdale, 

Z.  Styles  Ely, 

George  S.  Fraser, 

Elisha  Harris,  M.D., 

Charles  H.  Kitchel, 

William 


Woodbury  G.  Langdon, 
AFilliarn  P.  Letch  worth, 
Henry  K.  McHarg, 
Thomas  M.  Peters,  D.D., 
Henry  C.  Potter,  D.D., 
William  P.  Prentice, 
Wendell  Prime,  D.D., 

J.  Bishop  Putnam, 
Stephen  Smith,  M.D., 
James  R.  Steers, 
Lispenard  Stewart, 
Charles  B.  Waite, 
Whitlock. 


General  Agent. 

Stephen  Cutter,  65  Bible  House. 


LOCAL  COMMITTEES  FOR  CO-OPERATION  AND  CORRESPONDEiN  CE. 


Albany  County  : Residence,  Albany  — Manrice  E.  Yiele,  William 
Law  Learned,  Rev.  Refns  W.  Clark,  Edward  Savage,  Rev.  Charles 
Reynolds,  Secretary. 

Allegany  County  : Residence,  Friendship — Hon.  Abijah  J.  Well- 
man. 

Broome  County  : Residence,  Binghamton  — Marcus  W.  Scott,  Di-. 
John  G.  Orton,  Sabin  McKinney,  B.  N.  Loomis,  E.  M.  Koyes, 
Rev.  Robert  NT.  Parke,  E.  K.  Clark,  Susan  J.  Taber. 

Cattaraugus  County  : Residence,  Little  Yalley — Arthur  H.  Howe, 
Dr.  L.  Twombly. 

Cayuga  County  : Residence,  Auburn  — Miss,  Perry,  Dr.  S.  Willard, 
Byron  C.  Smith,  D.  M.  Osborne,  Dennis  R.  Alward,  Mrs.  Miles 
Perry,  Mrs.  D.  R.  Alward,  Rev.  Willis  J.  Beecher,  D.L).,  William 
G.  Wise  ; residence.  Fair  Haven  — Hon.  George  I.  Post. 
Chautauqua  County:  Residence,  Mayville — Rev.  J.  H.  Miller, 
William  Chase  ; residence,  PTedonia  — M.  S.  Moore;  residence, 
Westlield  — Alfred  Patterson  ; residence,  Jamestown  — flon. 
Jerome  C.  Preston. 

Chemung  County;  Residence,  Elmira  — Dr.  W.  C.  Wey,  Z.  R. 
Brockway,  J.  D.  F.  Slee,  Rev.  Dr.  Knox,  Rev,  G.  H.  McKnight, 
Dr.  T.  H.  Squire,  Dr.  Ira  T.  Hart,  D.  Atwater,  Frederick  Hall, 
Rev.  F.  C.  tioskins,  S.  Convei’se. 

Chenango  County : Residence,  Norwich — Dr.  H.  H.  Beecher,  B. 

Gage  Berry,  Daniel  M.  Holmes,  Cyrus  B.  Martin. 

Clinton  County:  Residence,  Plattsburgh  — Hon.  William  P. 
Mooers,  Henry  Orvis,  Rev.  F.  B.  Hail  ; residence,  Keeseville  — 
Hon.  Henry  Kingsland,  2d. 

Columbia  County  : Residence,  Hudson — A.  S.  Peet,  A.  B.  Scott, 
C.  W.  Gebhard. 

Cortland  County : Residence,  Cortlandville  — Lewis  Bouton, 
Frank  Place,  Dr.  Frederick  Hyde  ; residence,  Homer  — Dr.  Caleb 
Green,  Thomas  S.  Ranney. 

Delaware  County  : Residence,  Delhi  — Dr.  Ferris  Jacobs,  T.  W. 
Brown,  Gen.  Ferris  Jacobs,  Jr.,  O.  S.  Penfield,  Mrs.  W.  H. 
Griswold,  Mrs.  F.  Jacobs,  Jr.,  Mrs.  W.  Youmans,  Dr.  H . A. 
Gates,  Mrs.  H.  A.  Gates,  Mrs.  C.  A.  Frost. 

Dutchess  County  : Residence,  Poughkeepsie  — H.  Loomis,  Jr.,  Dr. 
Edward  H.  Parker,  Edmund  Platt,  Robert  F.  Wilkinson,  Warren 
G.  Cowle,  Mrs.  Mary  G.  Underhill. 


6 


[Senate 

Erie  County  : Residence,  Buffalo  — Hugh  Webster,  dames  Lyons, 
P.  J.  Ferris,  Dr.  John  D.  I Jill,  David  P.  Page,  Mrs.  A.  Mclffier- 
son. 

Essex  County:  Residence,  Elizabethtown — Dr.  8.  E.  Hale,  hVancis 
A.  Smith,  Richard  L.  Hand,  Abijah  Perry,  Jtol)ert  W.  lu’vingston. 
Franklin  County:  Residence,  Malone — Dr.  8.  I^.  Bates,  Hon.  W. 

A.  Wheeler,  F.  T.  Heath,  Hon.  John  I.  Gilbert,  J.  P.  Badger. 
Fulton  County:  Residence,  Johnstown — Jacob  Benton  : residence, 
Gloversville—  John  Ferguson,  Dr.  I^higene  Beach. 

Genesee  County:  Residence,  Batavia — Prof.  G.  I^hdler,  C.  T^Fix- 
ton  ; residence,  Wlieatville  — Hon.  J.  R.  Holmes. 

Greene  Country  : Residence,  Catskill  — George  H.  I;*enfield,  Samuel 
Harris,  Mrs.  M.  B.  Sellick. 

Hamilton  County  : Residence,  Wells  — G.  B.  Morrison  ; residence, 
Sageville  — William  H.  I^h’y. 

Herkimer  County  : Tiesidence,  Herkimer  — David  M.  Davendorf; 
residence,  Ilion — E.  Remington. 

Jefferson  County:  Residence,  Watertown — Richard  G.  Keyes, 
Jesse  M.  Adams. 

Kings  County:  Residence,  Brooklyn — Rev.  Job  G.  Bass,  Eugene 
D.  Bern,  Rev.  Michael  J.  Ilickie,  W.  B.  Wadsworth,  Jatnes  M. 
Shanahan,  Thomas  E.  J^earsall,  N.  T.  Beers,  Jr. , William  Hadden, 
Robert  Mayhem,  Andrew  A.  Smith,  J.  B.  Clayton,  G.  H.  Tobias, 
Moses  G.  Wanzor,  W.  J.  Schaufele.  A.  D.  Mathews. 

Lewis  County  : Residence,  Lowville  — Rev.  Joseph  H.  France,  Amos 
Rice,  Carroll  House,  Royall  P.  Wilbur;  residence,  Croghan  — 
Hon.  William  W.  Rice. 

Livingston  County:  Residence,  Geneseo  — Dr.  W.  E.  Lauderdale, 
Rev.  T.  D.  W.  Ward,  Prof.  W.  J.  Milne. 

Madison  County : Residence,  Morrisville  — D.  D.  Chase,  H.  P. 

Meade,  Lucius  P.  Clark  ; residence,  Oneida  — W.  R.  Williams. 
Montgomery  County:  Residence,  Fonda  — William  K.  Johnson, 
Rev.  W.  Frothingham. 

onroe  County:  Residence,  Rochester  — Hon.  Henry  R.  Selden, 
Dr.  E.  Y.  Stoddard,  James  J.  Stewart,  L.  S.  Fulton,  Quincy  Yan 
Yoorhis,  Theodore  Bacon,  Mrs.  Yick. 

Kew  York  County  : The  Association’s  Committees  on  Detentions 
and  Discharged  Prisoners. 

Niagara  County  : Residence,  Lockport  — Gaylord  B.  Hubbell,  M. 
II.  Webber,  Dr.  J.  B.  Hartwell,  Dr.  A.  W.  Tryon,  Mrs.  Robert 
Norton. 

Oneida  County  : Residence,  Utica  — Col.  Theo.  P.  Cook,  John  F. 
Seymour,  Dr.  Edwin  Hutchenson,  Charles!]. Warren, Edwin  Hunt; 
resiflence,  Jlome — Simon  G.  Yisscher,  Mr.  Converse. 

Onondaga  County  : Jiesidence,  Syracuse  — lion.  P.  Jhirns,  A.' C. 
Williams,  Dr.  11.  B.  Wilbur,  Rev.  M.  Baird,  Mrs.  Dr.  Dunlap, 
Dr.  R.  W.  Pease,  Hon.  W.  11.  11.  Gere,  Timothy  Hough,  M. 


No.  46.] 


Y 


W.  flanchett,  Timothy  R.  Porter,  J.  C.  Williams,  Dr.  E.  E. 
Yan  De  Warker,  James  A.  Skinner,  G.  L.  Ponta. 

Ontario  County  : Residence,  Canandaigua  — Darwin  Cheeney,  Dr. 
Harvey  Jewett,  Cyrus  W.  Dixson,  Mrs.  Collins  Hart,  Prof.^ 
Edward  Tyler,  Hon.  James  C.  Smith,  Levi  B.  Gaylord;  residence, 
Geneva  — T.  C.  Maxwell,  Arthur  P.  Rose. 

Orange  County : Residence,  Goshen — Dr.  J.  H.  Thompson,  Rev. 
Floyd  A.  Crane  ; residence,  Newburgh  — Dr.  R.  Y.  K.  Montfort, 
Grant  Edgar,  William  McCrea,  John  Caldwell,  Uriah  Tra])hagen, 
Lewis  F.  Corwin;  residence,  Middletown — Hon.  J.  D.  Friend, 
Hon.  J.  G.  Wilkin. 

Orleans  County:  Residence,  Albion  — Edwin  R.  Reynolds,  Daniel 
W.  Frye,  U'.  C.  Rogers. 

Oswego  county:  Residence,  Oswego — Hon.  O.  J.  Harmon,  G.  C. 
McWhorter,  Hon.  J.  A.  Place,  Dr.  A.  S.  Coe.  G.  Mollison,  Rev. 
Geo.  Graffley,  Mrs.  George  Goodier,  Miss  Florence  Pettibone, 
Mrs.  C.  B.  Randell. 

Otsego  County  : Residence,  Cooperstown  — Elihu  Phinney,Dr.  H. 
Lathrop,  S.  M.  Shaw,  G.  P.  Keese,  Miss  Susan  Cooper,  Dr.  W 
T.  Bassett. 

Putnam  County  : Residence,  Carmel  — Hon.  W.  S.  Clapp,  J.  D. 

Little,  James  R.  Weeks,  Addison  Ely,  M.  D.  i 

Queens  County:  Residence,  Manhasset  — John  Keese,  W.  H. 
Onderdonk  ; Residence,  Hempstead — Rev.  Win.  H.  Moore,  D. 
D.,  Ebenezer  Kellum,  Yalentine  Clowes;  residence,  Westbury  — 
Benj.  D.  Hicks,  Mrs.  Jas.  R.  Willets;  residence,  Glen  Cove  — 
Edwin  A.  Hopkins;  residence,  Astoria  — Rev.  Washington  Rod^ 
man,  Miss  E.  H.  Rodman,  Dr.  J.  D.  Trask.  , 

Rensselaer  County:  Residence,  Troy  — Rev.  C.  W.  Wood,  Chair- 
man^ Amasa  R.  Moore,  H.  W.  Houghton,  Rev.  William  Irvin, 
Samuel  Foster. 

Richmond  County  : Residence,  West  Brighton — Rev.  J.  S.  Bush, 
Chairman^  Mrs.  J.  S.  Lowell;  residence,  Richmond  C.  H. — Dr. 
Ephraim  Clark,  Dr.  I.  L.  Milspaugh,  Stephen  Stephens,  Miss  H. 
Moore,  Miss  Mundy. 

Rockland  County:  Residence,  Stony  Point  — Dr.  Win.  Govan  ; 
residence,  Haverstraw  — Alonzo  Wheeler  ; residence,  Nyack  — 
Seth  B.  Cole;  residence,  Tomkins  Cove — Walter  T.  Searing, 
Mrs.  Laura  Wood. 

Saratoga  County  : Residence,  Ballston  Spa  — J.  W.  Horton,  Dr. 
Morgan  Lewis  ; residence,  Saratoga  Springs  — Prof.  Hiram  A. 
Wilson,  Dr.  L.  E.  Whiting,  Oscar  F.  Stiles. 

Seneca  County  : Residence,  Yaterloo  — Hon.  S.  G.  Hadley,  Dr.  S. 
R.  Wells,  Rev.  S.  H.  Gridley,  Solomon  Carman ; residence, 
Ovid  — Hon.  George  Franklin,  Dr.  John  B.  Chapin;  residence, 
Seneca  Falls  — Charles  A.  Hawley. 

Schoharie  County  : Residence,  Schoharie  — Rev.  Jacob  Heck,  Thos. 
W.  Zeh,  Jr. 


s 


[SENATE,  No.  40, 1 

Schenectady  County  : Residence,  Sclienectady — ])r.  B.  A.  Mynderse, 
lion.  W.  T.  L.  Sanders,  S.  B.  Howe. 

Schuyler  County  : Residence,  Watkins — Frederick  Davis,  Dr.  J. 

W.  Thoin])son,  Rev.  (leor^e  Kna])]),  Ik  W.  Woodward. 

St.  Lawrence  County  : Residence,  ('antofi — (leo.  Robinson,  Rev. 
James  Gardner,  11.  H.  Judd,  Dr.  J.  C.  Preston;  residence, 
Oi;densbnrg — l)r.  B.  F.  Slierrnan,  Jb’of.  R.  (L  Pettil)one. 
Steuben  County : Residence,  Bath  — Guy  H.  McMaster,  Z.  L. 
Parker,  Rev.  O.  K.  Howard,  Rev.  James  Aj[.  Platt,  Dr.  A.  II. 
Cruttenden  ; residence,  Corning — Dr.  C.  May,  F.  A.  Williams. 
SuJolk  County:  residence,  Riverhead  — N.  W.  Foster,  Dr.  R.  H. 

Benjamin,  Thos.  (k)ok,  G.  ().  Wells. 

Sullivan  County:  Residence,  Monticello  — (Jiarles  F.  Canedy, 
Dr.  Edward  Quinlan,  James  Strong;  residence,  Grahamville  — 
Dr.  J.  M.  La  Moree. 

Tioga  County  : Residence,  Owego  — Hon.  Win.  Smyth,  Rev.  J.  A. 
Ostrander,  A.  Abel,  Y.  N.  Russell,  Hon.  T.  I.  Chatheld,  G.  B. 
Goodrich,  A Coburn,  11.  1).  Piuney. 

Tompkins  County  : Residence,  Ithaca — Prof.  Ziba  11.  Potter,  Prof, 
dames  Law,  Prof.  William  D.  Wilson,  Marcus  Lyon,  Orange  P. 
Hyde. 

Ulster  County  : Residence,  Kingston — Hon.  dames  G.  Lindsley, 
Mrs.  Mary  W.  Reynolds,  Rev.  Geo.  Waters,  D.  D.,  Augustus  W. 
Reynolds,  Rev.  C.  W.  Camp;  residence,  New  Paltz  — Dr.  C.  W. 
Deyo  ; residence,  Whiteport  — Edward  Dorernus. 

Warren  County:  Residence,  Lake  George  — Samuel  R.  Archibald, 
Francis  G.  Crosby,  Elias  S.  Harris,  Dr.  W.  R.  Adamson. 
Washington  County : Residence,  Salem  — R.  G.  Atwood,  James 
Blashtield,  E.  P.  Sprague,  C.  R.  Hawley. 

Wayne  County:  Residence,  Lyons  John  L.  Cole,  Win.  Yaii 
Master,  Charles  Ennis  ; residence,  Palmyra  — Isaac  C.  Bronson, 
Dr.  Samuel  Ingraham.  A.  S.  Niles,  Airs.  Horace  Eaton,  George 
G.  Jessup;  residence,  Arcadia — Rev.  Park  Burgess;  residence, 
Walworth  — Hon.  Lucien  T.  ATunnans. 

Westchester  County  : Residence,  W bite  Plains  — Dr.  H.  E.  Schmid, 
Mrs.  J.  O.  Dyckman,  M.  Prudhornme,  Rev.  F.  Y.  Yan  Kleeck ; 
residence,  Sing  Sing  — Dr.  G.  J.  Fisliee,  Mrs.  Catherine  E.  Yan 
Cortlandt,  L.  G.  Bostwick,  S.  G.  Howe,  Miss  E.  Roe. 

Wyoming  County  : Residence,  Warsaw  — Hon.  Augustus  Frank, 
Rev.  L.  E.  Nassau. 

Yates  County:  Residence,  Penn  Yan  — Myron  Hamlin,  Joseph  F. 
Crosby,  Win.  F.  Yan  Tuyl,  D.  A.  Ogden. 


CHARTER  OF  THE  PRISON  ASSOCIATION  OF 

NEW  YORK. 


An  Act  to,  Incoepobatb  the  Prison  Association  op  New  York. 

Passed  May  9,  1846,  by  a two-thirds  vote. 

r 

The  People  of  the  State  of  New  York^  represented  in  Senate  and 
Assenibly,  do  enact  as  follows : 

Section  1.  All  such  persons  as  are  now  or  hereafter  shall  become 
members  to  the  said  association,  pursuant  to  the  constitution  thereof, 
shall  and  are  hereby  constituted  a body  corporate,  by  the  name  of 
“The  Prison  Association  of  New  York,”  and  by  that  name  have 
the  powers  that,  by  the  third/title  of  the  eighteenth  chapter  of  the 
tirst  part  of  the  Revised  Statutes,  are  declared  to  belong  to  every 
corporation  ; and  shall  be  capable  of  purchasing,  holding  and  con- 
veying any  estate,  real  or  personal,  for  the  use  of  said  corporation ; 
provided,  that  such  real  estate  shall  never  exceed  the  yearly  value  of 
ten  thousand  dollars,  nor  be  applied, to  any  other  purpose  than  those 
for  which  the  corporation  is  formed. 

§ 2.  The  estate  and  concerns  of  said  corporation  shall  be  managed 
and  conducted  by  its  executive  committee,  in  conformity  to  the  con- 
stitution of  the  said  corporation  ; and  the  following  articles  that  now 
form  the  constitution  of  the  association  shall  continue  to  be  the 
fundamental  laws  and  constitution  thereof,  subject  to  alteration  in 
the  mode  therein  prescribed. 

Aetiole  I. 

The  objects  of  the  association  shall  be  : 

1.  The  amelioration  of  the  condition  of  prisoners,  whether  de- 
tained for  trial,  or  finally  convicted,  or  as  witnesses. 

2.  The  improvement  of  prison  discipline,  and  the  government  of 
prisons,  whether  for  cities,  counties  or  states. 

3.  The  support  and  encouragement  of  reformed  convicts  after 
their  discharge,  by  affording  them  the  means  of  obtaining  an  honest 
livelihood,  and  sustaining  them  in  the  efforts  at  reform. 

[Sen.  Doc.  No.  46.]  2 


10 


[Senate 


^ Article  II. 

The  officers  of  the  society  shall  be  a president,  vice-presidents,  a 
corresponding  secretary,  a recording  secretary,  a treasurer  and  an 
executive  committee.  There  shall  be  the  following  standing  com- 
mittees, viz.:  A finance  committee,  a committee  on  detention,  a 
committee  on  prison  discipline,  and  a committee  on  discharged  con- 
victs. The  number  of  the  executive  committee  shall  consist  of  not 
more  than  thirty-five,  of  whom  not  more  than  ten  shall  be  officers  of 
the  society,  and  not  more  than  twenty-five  shall  be  persons  other 
than  officers. 

Article  III. 

The  officers  named  in  the  preceding  article  shall  be  ex-officio 
members  of  the  executive  committee,  who  shall  choose  one  of  their 
number  chairman  thereof. 

Article  IV. 

The  executive  committee  shall  meet  once  in  each  month,  and  keep 
regular  minutes  of  their  proceedings.  They  shall  have  a general 
superintendence  and  direction  of  the  affairs  of  the  societ}^  and  shall 
annually  report  to  the  society  all  their  proceedings,  and  such  other 
matters  as  shall  be  likely  to  advance  the  ends  of  the  association. 

Article  V. 

The  society  shall  meet  annually  in  the  city  of  New  York,  at  such 
time  and  place  as  the  executive  committee  shall  appoint,  and  at  such 
other  times  as  the  president,  or,  in  his  absence,  one  of  the  vice-presi- 
dents shall  designate.  i. 

Article  VI. 

Any  person  contributing  annually  to  the  funds  of  the  association 
not  less  than  five  dollars  shall,  owing  to  such  contribution,  be  a 
member  thereof.  A contribution  of  five  hundred  dollars  shall  con- 
stitute a life  patron ; a contribution  of  one  hundred  dollars  shall 
constitute  an  honorary  member  of  the  association  for  life;  and  a 
contribution  of  fifty  dollars  shall  constitute  a member  of  the  associa- 
tion for  life.  Honorary  and  corresponding  members  may,  from  time 
to  time,  be  appointed  by  the  executive  committee. 

Article  VII. 

A female  department  shall  be  formed,  consisting  of  such  females 
as  shall  be  selected  by  the  executive  committee,  who  shall  have 
charge  of  the  interest  and  welfare  of  prisoners  of  their  sex,  under 
such  regulations  as  the  executive  committee  shall  adopt. 

Article  VIII. 

Tlie  officers  of  the  association  shall  be  chosen  annually,  at  the  an- 
nual rneetiiig,  at  which  time  such  persons  may  be  elected  honorary 
members  as  shall  have  rendered  essential  service  to  the  cause  of 
prison  discipline. 


No.  46.] 


1 


11 


Article  IX. 

Any  society  having  the  same  object  in  view  may  become  atixillary 
to  tills  association  by  contributing  to  its  funds  and  co-operating 
with  it. 

Article  X. 

The  executive  committee  shall  have  power  to  add  to  any  of  the 
standing  committees  such  persons  as,  in  their  opinion,  may  be  likely 
to  promote  the  objects  of  the  society,  and  shall  have  power  to  fill 
any  vacancy  which  may  occur  in  any  of  the  offices  of  the  association, 
intermediate  the  annual  meetings. 

Article  XI. 

This  constitution  may  be  amended  by  a vote  of  the  majority  of 
the  societ}’,  at  any  meeting  thereof,  provided  notice  of  the  amend- 
ment has  been  given  at  the  next  preceding  meeting. 

The  officers  selected  for  the  current  year,  under  the  constitution, 
shall  continue  to  be  the  officers  thereof  until  others  shall  be  duly 
chosen  in  their  places. 

And  it  is  hereby  further  enacted,  that  no  manager  of  said  society 
shall  receive  compensation  for  his  services. 

§ 3.  The  said  executive  committee  shall  have  power  to  establish  a 
work-house  in  the  county  of  New  York,  and,  in  their  discretion,  to 
receive  and  take  into  the  said  work-house  all  such  persons  as  shall 
be  taken  up  and  committed  as  vagrants  or  disorderly  persons  in  said 
city,  as  the  court  of  general  sessions  of  the  peace,  or  the  court  of 
special  sessions,  or  the  court  of  oyer  and  terminer,  in  said  county,  or 
any  police  magistrate,  or  the  commissioner  of  the  alm's-house,  may 
deem  proper  objects ; and  the  said  executive  committee  shall  have 
the  same  powers  to  keep,  detain,  employ  and  govern  the  said  per- 
sons as  are  now  by  law  conferred  on  the  keepers  of  the  bridewell  or 
penitentiary  in  said  city. 

- § 4.  The  said  executive  committee  may,  from  time  to  time,  make 
by-laws,  ordinances  and  regulations  relative  to  the  management  and 
disposition  of  the  estate  and  concerns  of  said  association,  and  the 
management,  government,  instruction,  discipline  and  employment 
of  the  persons  so  as  aforesaid  committed  to  the  said  work-house,  not 
contrary  to  law,  as  they  may  deem  proper;  and  may  appoint  such 
officers,  agents  and  servants  as  they  rqay  deem  necessary  to  transact 
the  business  of  the  said  association,  and  may  designate  their  duties. 
And  the  said  executive  committee  shall  make  an  annual  report  to 
the  Legislature  and  to  the  corporation  of  the  city  of  New  York  of 
the  number  of  persons  received  by  them  into  the  said  work-house, 
the  disposition  which  shall  be  made  of  them  by  instructing  or  em- 
ploying them  therein,  the  receipts  and  expenditures  of  said  execu- 
tive committee,  and  generally  all  such  facts  and  particulars  as  may 
exhibit  the  operations  of  the  said  association. 


12 


[Senate,  No.  4^.] 

§ 5.  The  said  executive  committee  shall  have  power,  during  the 
minority  of  any  of  the  persons  so  committed  to  the  said  work-liouse, 
to  bind  out  the  said  persons  so  being  minors,  as  aforesaid,  as  ap- 
prentices or  servants,  with  their  consent,  during  their  minority,  to 
such  persons  and  at  such  places,  to  learn  such  pro])er  trades  and  em- 
ployments as,  in  their  judgment,  will  be  most  conducive  to  the  ref- 
ormation and  amendment  and  future  benefit  and  advantage  of  such 
persons. 

§ 6.  The  said  executive  committee,  by  such  committees  as  they 
shall  from  time  to  time  appoint,  shall  have  power,  and  it  shall  be 
their  duty,  to  visit,  inspect  and  examine  all  the  prisons  in  the  State, 
and  annually  report  to  the  Legislature  their  state  and  condition,  and 
all  such  other  things  in  regard  to  them  as  may  enable  the  Legisla- 
ture to  perfect  their  government  and  discipline.  And  to  enable 
them  to  execute  the  powers  and  perform  the  duties  hereby  granted 
and  imposed,  they  shall  possess  all  the  powers  and  authority  that, 
by  the  twenty-fourth  section  of  title  rirst,  chapter  third,  part  fourth 
of  the  Revised  Statutes,  are  invested  in  inspectors  of  county  pris- 
ons ;*  and  the  duties  of  the  keepers  of  each  prison  that  they  may  ex- 
amine shall  be  the  same  in  relation  to  them  as  in  the  section  afore- 
said are  imposed  on  the  keepers  of  such  prisons  in  relation  to  the 
inspectors  thereof.  Provided^  that  no  such  examination  or  inspec- 
tion of  any  prison  shall  be  made  until  an  order  for  that  purpose,  to 
be  granted  by  the  chancellor  of  this  State,  or  one  of  the  judges  of 
the  supreme  court,  or  by  a vice-chancellor  or  circuit  judge,  or  by 
the  first  judge  of  the  county  in  which  the  prison  to  be'  examined 
shall  be  situate,  shall  first  have  been  had  and  obtained,  which  order 
shall  specify  the  name  of  the  prison  to  be  examined,  the  names  of 
the  persons,  members  of  the  said  association,  by  whom  the  examina- 
tion is  to  be  made,  and  the  time  within  which  the  same  must  be 
concluded. 

State  of  New  York,  ) 

In  Senate,  May  8,  1846.  f 

The  bill  having  been  read  the  third  time,  two-thirds  of  all  the 
members  elected  to  the  Senate  voting  in  favor  thereof, 

Eesolved,  That  the  bill  do  pass. 

By  order  of  the  Senate. 

A.  GARDINER,  President 

State  of  New  York,  ) 

In  Assembly,  April  24,  1846.  ) 

This  bill  having  been  read  the  third  time,  and  two-thirds  of  all 
the  members  elected  to  the  Assembly  voting  in  favor  thereof, 

Resotced^  That  the  bill  do  pass. 

By  order  of  the  Assembly, 

WM.  C.  CRAIN,  Speaker. 

Approved  this  9th  day  of  May,  1846. 

Silas  Wright. 


* See  S 24,  on  next  page. 


Kd.46.] 


13 


State  of  New  York,  ) 

Secretary's  Ojftce.  ) 

I have  compared  the  preceding  with  an  original  law  on  file  in 
this  office,  and  do  certify  that  the  same  is  a correct  transcript  there- 
from and  the  whole  of  said  original. 

In  testimony  whereof,  I have  hereunto  affixed  the  seal  of  this 
office,  at  the  city  of  Albany,  the  fifteenth  day  of  May,  in  the  year 
of  oiir  Lord  one  thousand  eight  hundred  and  forty-six. 

ARCH’D  CAMPBELL, 

Depiity  Secretary  of  State. 


(Revised  Statutes,  Part  IV,  Chap.  3,  Title  I.) 

§ 24.  * It  shall  be  tlie  duty  of  tlie  keepers  of  each  of  the  said 
prisons  to  admit  the  said  inspectors,  or  any  one  of  them,  into  every 
part  of  such  prison  ; to  exliibit  to  them,  on  demand,  all  the  books, 
papers,  documents  and  accounts  pertaiiiiiig  to  the  prison  or  to  the 
detention  of  the  persons  confined  therein,  and  to  render  them  every 
facility  in  their  power  to  enable  them  to  discharge  the  duties  above 
described.  And  for  the  purpose  of  obtaining  the  necessary  infor- 
mation to  enable  them  to  make  such  report  as  is  above  required,  the 
said  inspectors  shall  have  power  to  examine,  on  oath,  to  be  adminis- 
tered by  either  of  the  said  inspectors,  any  of  the  officers  of  the  said 
prisons,  and  to  converse  with  any  of  the  prisoners  confined  therein, 
without  the  presence  of  the  keepers  thereof,  or  any  of  them. 


BY-LAWS  OE  THE  PRISON  ASSOCIATION  OF  NEW 

YORK. 

I.  There  shall  be  a stated  meeting  of  the  executive  committee  on 
the  fourth  Thursday  of  each  month,  and  special  meetings  shall  be 
held  on  the  requisition  of  the  chairman  or  any  three  members  of  the 
executive  committee.  The  call  for  a special  meeting  shall,  in  all 
cases,  state  the  business  to  be  transacted  at  said  meeting. 

il.  At  every  meeting  of  the  executive  committee,  five  members 
shall  be  necessary  to  constitute  a quorum. 

III.  The  order  of  business  at  every  stated  meeting  shall  be  as 
follows : 

1.  The  reading  and  approval  of  the  minutes  of  the  last  preceding 
meeting. 

2.  Report  of  the  treasurer. 

3.  Reports  from  standing  committees. 


* Section  20  iu  last  revision. 


14 


[Sknat® 


4.  Report  from  tlie  corresponding  secretary. 

5.  Reports  from  special  committees. 

6.  Report  from  the  general  agent. 

1.  Miscellaneous  business. 

At  a special  meeting,  no  other  business  shall  be  transacted  than 
that  for  which  the  said  meeting  was  called. 

IV.  The  chairman  shall  appoint  all  special  committees  ; and  no 
person  nominated  by  him  shall  be  excused,  unless  upon  reasons  sat- 
isfactory to  the  meeting. 

Y.  The  chairman  shall  decide  all  questions  of  order,  subject  to  an 
appeal ; and  the  rules  of  order  shall  be  those  embodied  in  Cushing’s 
Manual,  so  far  as  they  are  applicable. 

VI.  There  shall  be  four  standing  committees,  namely  : A com- 
mittee on  finance,  a committee  on  detention,  a committee  on  dis- 
charged convicts,  and  a committee  on  prison  discipline. 

. YII.  It  shall  be  the  duty  of  the  finance  committee  : 

1.  To  devise  ways  and  means  for  obtaining  the  funds  necessary 
to  carry  on  the  work  of  the  association  ; and  they  may,  at  their  dis- 
cretion, employ  an  agent  to  collect  the  requisite  funds. 

2.  To  audit  all  bills  against  the  association  ; and  no  bills  shall  be 
paid  by  the  treasurer  unless  approved  by  the  committee  and  counter- 
signed by  the  chairman. 

3.  To  audit  and  report  upon  the  treasurer’s  accounts  annually. 

4.  To  invest  and  control  the  surplus  moneys  of  the  association, 
under  the  authority  of  the  executive  committee. 

YIII.  It  shall  be  the  duty  of  the  committee  on  detentions  : 

1.  To  inquire,  as  far  as  may  be  practicable  or  necessary,  into  the 
causes  of  commitment  of  persons  in  the  prisons  or  houses  of  deten- 
tion in  the  cities  of  New  York  and  Brooklyn,  tand  to  adopt  proper 
measures  for  procuring  the  discharge  or  providing  for  the  defense 
of  such  as  shall  appear  to  be  entitled  thereto. 

2.  To  visit  frequently  the  prisons  under  their  charge,  and  to  en- 
deavor to  improve  both  the  physical  and  moral  condition  of  the 
prisoners  in  all  suitable  and  practicable  ways. 

IX.  It  shall  be  the  duty  of  the  committee  on  discharged  convicts  : 

1.  To  correspond  with  prison  agents  or  superintendents  relative 
to  the  character  and  trades  of  prisoners,  and  to  ascertain,  ])revious  to 
the  discharge  of  each  prisoners,  his  feelings,  views  and  capabilities, 
witli  a view  to  making  the  best  arrangements  for  his  future  employ- 
ment. 

2.  k(}ep  a record  of  all  ])ersons  who  will  employ  discharged 
prisoners,  and  of  their  several  occupations  ; to  procure  such  employ- 


16 


No.  46.] 

ment  for  prisoners  applying  therefor  as  seems  best  adapted  to  the 
capacity  of  each  ; to  hold  correspondence  with  employers;  to  keep  a 
record  of  the  conduct  and  prospects  of  those  for  whom  places  have 
been  obtained,  that  they  may  be  sustained  and  encouraged  with  the 
idea  that  a continued  friendly  interest  is  felt  for  him. 

3.  To  procure  suitable  boarding  places  for  discharged  prisoners, 
where  they  will  not  be  exposed  to  corrupting  influences,  taking  care 
not  to  have  more  than  one  in  a place,  where  it  can  be  avoided. 

4.  To  see  that  the  prisoners  are  provided  with  suitable  clothing, 
of  a kind  that  will  not  attract  particular  attention. 

X.  It  shall  be  the  duty  of  the  committee  on  prison  discipline  : 

To  give  attention  to  the  internal  organization  and  management  of 
prisons,  embracing  the  physical  and  moral  influences  to  be  exerted  on 
the  prisoners  during  their  confinement.  This  duty  shall  be  com- 
prised under  the  following  heads : health,  reformation,  convict  labor, 
administration  and  internal  police,  comparison  of  different  prison 
systems,  visitation  of  prisons  aud  houses  of  reformation,  and  the 
whole  subject  of  criminal  law#nd  penal  justice. 

XI.  One  or  more  agents  may  be  appointed  by  the  executive  com- 
mittee to  assist  the  standing  committees  in  the  performance  of  their 
duty. 

XII.  The  recording  secretary  of  the  association  shall  be  the  secre- 
tary of  the  executive  committee  ; and  it  shall  be  his  duty  to  keep  the 
minutes  of  the  proceedings  of  said  committee,  to  record  them  in  a 
book  provided  for  that  purpose,  and  to  give  due  notice  of  all 
meetings  of  the  committee. 

XIII.  The  corresponding  secretary  shall  conduct  the  correspond- 
ence of  the  executive  committee  and  of  each  of  the  standing  com- 
mittees when  required ; shall  act  as  the  general  financial  agent  of 
the  association,  and  shall  report  at  each  stated  meeting  of  the  com- 
mittee. 

XIY.  The  treasurer  shall  receive  and  safely  keep  all  moneys  be- 
longing to  the  association  ; shall  pay  over  the  same  as  directed  by 
the  finance  committee ; shall  report  at  each  stated  meeting  of  the 
executive  committee,  and  shall  give  such  security  for  the  faithful  dis- 
charge of  his  duty  as  that  committee  shall  require. 

XY.  The  president,  chairman  of  the  executive  committee,  and 
corresponding  secretarj^  shall  be  members,  ex-officio^  of  all  the  stand- 
ing committees. 

XYI.  No  alteration  shall  be  made  in  these  by-laws,  except  upon 
notice  of  the  proposed  amendment,  given  at  a previous  meeting  of 
the  executive  committee.  ! 


THIETY-EIGHTH  ANNUAL  REPORT 

OF  THE 

EXECUTIVE  COMMITTEE  OF  THE  PRISON  ASSOCIATION  OF  NEW  YORK 

FOR  THE  YEAR  1882. 


In  accordance  with  the  requirements  of  the  act  of  the  Legislature 
by  which  it  was  incorporated,  the  Executive  Committee  submit  the 
following  report : 

County  Jails. 

Time  and  again  the  condition  and  needs  of  our  county  jails  have  been 
pointed  out  in  reports  emanating  from  this  association.  The  reports 
of  our  local  committees  show  in  one  or  two  instances  some  im- 
provement, but  the  evils  that  exist  are  beyond  a radical  cure  while 
the  present  system  remains  in  vogue.  Much  of  the  evil  communi- 
cation in  our  jails  arises  in  no  small  degree  from  the  fact  that  the 
prisoners  are  allov^ed  to  associate  together  in  the  corridors,  without 
surveillance,  and  with  no  regular  employment.  Thousands  of  able- 
bodied  prisoners  are  now  being  supported  in  our  county  jails,  at 
an  expense oaput  of  from  $2.25  to  $3.75  a week.  It  is  not  too 
much  to  sa\^  that  this  State  expends  annually  no  less  than  $1,000,- 
000  — speaking  in  round  numbers  — to  feed  and  clothe  and  warm 
— its  army  of  tramps,  petty  thieves,  drunkards,  etc.,  etc.,  all  of 
whom  are  quite  as  well  able  to  earn  their  own  living  as  are  the 
majority  of  tax  payers.  The  following  report  made  by  the  corre- 
sponding secretary  of  the  association  shows  plainly  how  it  is  pos- 
sible to  make  our  county  jails  self-supporting,  or  at  least  very 
nearly  so.  The  Chester  county  (Penn.)  prison  showed  in  the  year 
1881  a balance  sheet  with  all  the  expenses  of  the  prison  paid  by  it- 
self and  an  item  of  $247.70  in  cash  in  favor  of  the  prison.  In  order 
to  ascertain  how  this  was  brought  about  our  corresponding  secre- 
tary visited  Westchester  and  made  the  following  report. 

Minutes  or  Special  Eepoet  on  the  Prison  at  Westchester 

(Penn.). 

On  the  9th  of  April  I visited  the  Westchester  (Penn.)  prison 
and  found  it  an  old-fashioned  building  of  stone,  with  a yard,  and 
high  walls  of  stone  all  about  it  except  across  the  front  which  was 
opeUgto  the  street.  The  cells  open  upon  a central  corridor,  each 
having  a window  that  looks  directly  out  into  the  jail-yard.  There 
are  three  tiers  of  cells. 

[Sen.poc.  No.^46]  3 

% 


18 


[Sena^te 


The  kitcliens  and  offices  are  on  tlie  lower  floor  of  tlie  main  hnild- 
ing,  and  tlie  odors  frojn  cooking  can  be  detected  in  every  part  of 
the  prison.  There  is  no  distinctively  prison  od(jr.  Passage^s,  cells 
and  stairs  were  scrnpulonsly  clean,  and  no  part  of  the  prison  was 
dark  or  gloomy. 

“The  building  is  heated  by  steam.  There  wei'e  in  the  prison  forty- 
nine  prisoners,  some  waiting  trial,  but  a large  part  of  them  sentenced 
to  terms  of  from  thirty  days  to  five  years.  The  avei-age  length  of 
sentence  is  two  and  one-half  years.  The  men,  all  of  whom  were 
confined  in  their  cells,  had  a healthy  look,  their  muscles  firm  and 
with  notliing  of  that  hang-dog  expression  that  is  populai’ly  8uj)])08ed 
to  go  with  the  cellular  solitary  system.  The  Tuen  were  clothed  in 
checked  blue  and  white  cotton  stuff,  every  thread  of  which  is  woven 
in  the  prison.  This  is  light  material,  but  the  prison  is  kept  suffic- 
iently warm  to  make  heavier  clothing  unnecessary.  Each  man  is 
recpiired  to  take  a full  bath  once  a montlp  and  is  encouraged  to  bathe 
his  feet  and  upper  part  of  his  body  frequently.  The  food  is  abundant 
and  well  cooked,  the  labor  of  the  kitchen  being  largely  performed 
by  the  prisoners  under  the  supervision  of  a keeper. 

“Mr.  Washington  Haggerty,  the  principal  keeper,  informed  me 
that  there  was  a diet  list,  but  that  he  varied  it  so  much,  to  suit  the 
needs  of  the  prisoners  and  the  season,  that  it  was  useless  except  as  a 
guide  as  to  quantity.  Even  here,  he  practically  gave  every  man  as 
much  as  he  could  eat.  The  men  made  no  complaints  of  their  food 
as  to  quantity  or  quality,  and  their  looks  showed  plainly  that  they 
were  well  kept. 

“ There  are  four  kinds  of  labor  performed  in  the  prison  — Carpet- 
weaving, weaving  of  cotton  cloth  for  prison  garments  and  bed 
clothes,  chair  bottoming  and  broom-making.  Carpet-weaving  is  the 
principal  industry.  I'he  looms  are  placed  in  cells  eight  to  twelve 
feet  in  size  and  seven  and  a half  feet  high.  These  are  lighted  by 
windows — perpendicular  in  the  lower  tiers  three  feet  six  inches  in 
height  and  five  inches  in  width.  The  frames  of  the  windows  are 
of  wrougiit  iron,  set  deeply  into  the  masonry  ; the  light  is  ob- 
structed only  by  strong  wire  netting  — placed  at  four  or  five  inches 
outside  the  windows  — not  to  prevent  escape,  but  to  prevent  the 
passage  of  notes  and  other  articles  by  the  prisoners. 

“ The  looms  are  of  the  most  primitive  character.  Eag  carpets 
principally  are  woven.  To  a great  extent  they  are  woven  to  order 
— the  rags  being  sent  in  from  the  town  and  country  round  about, 
and  tlie  w’arp  furnisbed  by  the  prison  authorities.  For  carpets 
woven  to  oi'der,  the  prison  receives  thirty  cents  a yard  ; the  carpets 
woven  of  ])i  ison  material  are  sold  for  fifty-eight  cents  ; they  are 
of  excellent  (piality,  and  a considerable  degree  of  taste  is  shown  in 
the  arrangements  of  color.  Each  weaver  has  a task  of  ten  yards  a 
day,  hut  tliis  is  an  easy  tiisk  for  an  expert.  The  men  often  weave 
nearly  twice  that  amount.  After  having  done  the  regulation  ten 
yards,  the  weavers  receive  for  over-work  two  cents  for  each  yard. 
This  is  paid  to  them  when  they  go  out  — and  some  of  the  long  term 


No.  46.] 


19 


prisoners  already  have  very  respectable  bank  accounts.  A man  went 
out  I’ecently,  after  a term  of  tliree  years,  which  he  had  shortened 
by  the  usual  commutation,  and  carried  with  him  $90  with  which  to 
begin  an  honest  life.  Better  tlian  that  he  carried  a trade  ; he  was 
an  excellent  carpet  weaver,  understanding  the  business  in  all  its 
branches.  The  men  never  go  out  of  their  cells  for  exercise,  and 
seem  to  suffer  little  inconvenience  from  the  confinement.  Their 
windows  open  directly  out  of  doors,  and  the  exercise  of  weaving, 
which  requires  the  movement  of  the  hands,  arms  and  legs,  keeps 
them  in  good  condition.  Their  beds  are  beside  their  looms,  and 
their  rations  are  handed  in  through  the  opening  in  the  grated  cell 
door.  The  urinal  and  closets  are  in  the  corner  of  each  cell,  connect- 
ing directly  witli  a vault,  from  which  foul  odors  are  excluded  by 
rather  primitive,  but  at  the  same  time  effective  water  traps.  The 
growing  hoys  are  taken  out  of  their  cells  into  lighter  and  larger 
cells,  where  they  work  in  gangs  of  two  or  three  togetlier  at  warping 
and  spooling  for  the  looms.  They  are  allowed  to  talk  together 
freely,  and  the  men  at  the  looms  talk  across  the  corridors  and  from 
window  to  window.  But  a small  number  were  employed  at  cane- 
bottoming  chairs  or  broom  making  when  I visited  tlie  place. 

There  are  religious  services  in  the  jail  every  Sunday;  the  outer 
cell  doors  being  thrown  opci],  and  th(3  exercises  conducted  in  the 
corridor.  There  were  but  two  women  in  the  prison,  and  they 
had  quarters  quite  by  themselves. 

“The  men  seemed  full  of  hope,  and  many  of  them  had  decorated 
their  cells  with  colored  pictures  and  festoons  of  paper. 

“ There  seemed  to  be  an  excellent  understanding  between  prisoner 
and  keeper,  and  I could  not  learn  that  it  had  been  necessary  to  re- 
sort to  corporal  punishiiient  in  the  prison.  It  has  been  found  to  be 
a sufficiently  effective  punishment  to  stop  a man’s  work  or  deprive 
him  of  some  article  on  the  diet  list.  The  dark  cell  wou^l  have  been 
looked  upon  with  a smile  of  contempt  by  the  advocates  of  dark  cells. 
It  was  a large  high-vaulted  cell  with  an  elbow  ventilating-shaft  con- 
necting with  the  outside  and  admitting  enough  light  to  make  a dark 
grey  dawn  in  every  part  of  the  room.  It  wasn’t  cheerful  but  it  was 
not  dark.” 

This  prison  proves  most  conclusively  that  it  is  possible  to  have  a 
system  of  labor  in  our  county  jails  that  shall  pay  its  own  way  and 
have  a disciplinary  value  besides. 

Before  leaving  this  subject  of  county  jails,  the  committee  wishes 
to  express  its  satisfaction  at  the  readiness  of  the  sheriff  and  other 
county  officers  to  afford  every  facility  of  inspection  to  the  agents  of 
the  association,  and  in  several  instances  to  make  needed  changes 
without  waiting  for  the  tardy  action  of  supervisory  boards. 

Most  of  our  county  jails,  however,  are  still  a disgrace  to  the  State, 
and  to  humanity.  The  corresponding  secretary,  having  inspected 
the  Rensselaer  county  jail,  reported  on  it  as  follows: 


20  [Sknate 

REPORT  ON  RENSSELAER  COUNTY  JA  FL,  SITUATED 

AT  TROY. 

RKroRT  OF  Jail  Visit ation. 

To  the  Executive  Committee  of  the  Prison  association  (f  New 
Yorh — Gcntletnen  — : On  the  14fh  of  FebriuiryT  visited  the  jail  in 
Troy,  Rensselaer  county,  in  company  with  the  Rev.  C.  W.  Wood 
of  Ti'oy,  the  chaii’inan  of  our  local  committee  for  the  county.  We 
were  courteously  shown  every  part  of  the  jail,  the  keeper,  John  D. 
Miles,  seeming  desirous  that  we  should  see  what  he  well  understood 
to  be  the  faults  of  its  construction  and  arrangement.  The  jail  is  a 
glooniy-looking  structure  of  brick,  about  45xY0  feet  in  size,  and 
situated  in  a thickly  populated  part  of  the  city  of  Troy.  Its  win- 
dows are  small  and  almost  covered  with  thick  bands  of  iron,  which 
reduce  the  passage  of  light  and  air  to  an  actual  space  of  about  one- 
fifth  the  size  of  the  window. 

A Eire-Trap. 

The  interior  of  the  jail,  if  it  had  been  planned  with  that  idea, 
could  hardly  be  a more  effective  fire-trap.  The  cells  are  on  the 
sides  and  ends  of  the  building  in  the  second  story.  Ac- 
cess is  obtained  to  them  by  a wooden  staircase  in  the  middle  of 
one  side  of  the  building.  It  is  the  only  means  of  reaching  the  up- 
per story.  It  goes  from  the  ground  to  the  garret,  which  garret  is 
full  of  combustible  rubbish.  At  the  foot  of  this  staircase,  in  the 
cellar,  is  the  heater,  its  hot  pipes  radiating  to  different  parts  of  the 
building.  Every  thing  that  these  come  in  contact  with  is  as  dry  as 
tinder.  Charred  timbers  could  he  seen  where  fires  had  taken  place. 
The  keeper  has  wisely  put  iron  lathing  in  some  places  that  are  ex- 
posed to  heat,  having  been  several  times  admonished  by  fire  that  he 
had  better  do  so.  Twice  within  a year  fire  has  made  considerable 
headway  in  the  jail.  During  the  eleven  years  that  the  present 
keeper  has  lieen  in  office,  the  building  has  been  on  fire  again  and 
again.  A lire  extinguisher  is  kept  at  hand,  but  the  time  may  come 
any  moment  when  a fire  will  get  beyond  the  usefulness  of  such  an 
instrument.  Rensselaer  county  lieeps  sixty-five  poor  wretches 
locked  up  in  peril  f rom  fire  every  moment  of  their  prison  lives.  If 
the  jail  burns  there  is  little  hope  of  escape  for  the  prisoners.  The 
firemen  could  not  get  in,  nor  could  the  prisoners  get  through  the 
absurdly  barred  windows.  The  staircase  would  be  the  flue  of  the 
fire,  and  therefore  impassable.  Under  such  circumstances  I have 
no  doubt  that  an  indictment  for  manslaughter  would  hold  against 
the  supervisors  individually  if  a fire  should  take  place  and  lives 
should  be  lost. 

A Eiltiiy  Place. 

The  ventilation  of  the  jail  can  be  represented  by  a cypher.  The 
stemdi  is  sickening,  and  wujuld  be  worse  but  for  the  constancy  with 
which  the  keej)e*i’  has  fought  uncleanliness  with  whitewash.  This 
st(inch  is  not  altogether  due  to  the  condition  of  the  cells  or  the  pris- 
oners. We  were  taken  into  the  cellar,  a board  was  taken  up  from 


21 


No.  46.] 

tlie  floor,  and  close  beside  the  heater  under  the  floor,  we  saw  eight- 
een inches  of  foul  and  stagnant  water.  It  had  been  tliere  long 
enough  to  accumulate  a green,  greasy  slime  on  its  surface.  A dog 
fell  into  it  while  we  were  there,  and  stirring  it  up,  the  whole  place 
became  sickening.  As  the  staircase  is  a flue,  as  the  heater  is  at  the 
bottom  of  the  staircase,  and  as  the  pool  of  stagnant  water  is  by  the 
heater,  it  is  quite  in  harmony  with  the  laws  of  ])hysics  that  the  dis- 
ease germs  should  be  carried  to  every  part  of  the  building.  Nothing 
could  be  better  arranged  for  carrying  and  spreading  the  malarial  in- 
fluences that  must  arise  from  such  a condition  of  things.  This  sink 
of  corruption,  the  keeper  informed  us,  had  existed  as  long  as  he  had 
known  any  thing  about  the  jail. 

Mensselaer  county  keeps  sixty-jive  poor  wretches  locked  up^  ex- 
posed to  death  from  poison  every  moment  of  their  prison  lives.  It 
has  been  said  that  our  county  jails  are  schools  ot  crime.  This  is 
sadly  true,  and  emphatically  true  of  Hensselaer  county.  I looked 
into  one  cell  and  saw  a boy  of  fifteen  years,  arrested,  I think,  for 
petty  larceny.  Four  men  were  in  the  same  cell  with  him  — two  of 
them  were  burglars  and  two  of  them  were  common  drunkards. 
They  had  nothing  to  do  the  whole  day  through  but  to  teach  that 
boy  traditions  of  shame.  The  most  shameless  and  unspeakable 
crimes  are  committed  in  such  prison  cells.  There  is  practical  sepa- 
ration of  the  sexes  in  Eensselaer  county  jail.  The  women  young 
and  old,  sane  and  insane,  criminals  by  profession  and  criminals  by 
circumstances  are  all  huddled  into  two  badly  ventilated  rooms  to- 
gether, and  lett  to  their  own  evil  devices.  Rensselaer  county  keeps 
its  young  offenders  locked  up  exposed  to  contaminating  moral  influ- 
ences every  moment  of  their  prison  lives.  In  addition  to  these  con- 
taminating influences  of  association,  the  walls  are  decorated  with 
such  pictures  as  cover  the  pages  of  our  flash  newspapers,  ballet 
dancers,  noted  sporting  and  criminal  characters,  etc.  There  are  no 
proper  or  adequate  facilities  for  bathing.  The  prisoners  live  in 
complete  idleness.  They  spend  their  days  in  the  consumption  of 
tobacco,  in  repeating  the  petty  gossip  of  crime,  in  sleeping  and  eat- 
ing, and  in  telling  obscene  stories.  Mr.  Miles  certainly  feeds  the 
prisoners  well,  and  preserves  as  good  discipline  as  he  can  well  do 
considering  the  classes  with  which  he  has  to  deal,  and  the  incon- 
venient surroundings  of  the  prisoners. 

Discharged  Convicts. 

The  committee  wish  particularly  to  call  the  attention  of  your  hon- 
orable body  to  the  needs  that  exist  for  a better  organized  system  of 
help  to  discharged  convicts  who  wish  to  return  to  society  as  honest 
men.  They  leave  the  prison  gates  or  the  jail  doors  with  nothing 
more  than  an  unsavory  reputation,  stigmatized  as  outcasts,  and  so- 
ciety refuses  to  have  them  again  in  the  ranks  of  law  abiding  and 
honest  industry.  Many  of  the  men  say  that  they  wish  to  reform ; 
but  society  demands  something  more  than  a mere  word  as  an  earnest 
of  their  good  intention . 


[Senate 


n 

They  have  no  reputation  upon  which  they  can  re-establisli  tlietn- 
selves,  and  society  refuses  to  receive  them  wliile  tliey  are  making 
one.  You  must  he  proved,  says  honest  industry  — and  then  cuts 
off  all  means  of  jiroliatior).  Not  only  should  tliese  men  he  aided  by 
something  more  than  the  ])ittance  now  doled  out  by  the  State,  hut 
facilities  should  he  afforded  to  assist  those  who  wish  to  reform  until 
they  are  sufficiently  ])urified  from  the  prison  taint  to  he  received 
hack  into  the  ranks  of  honest  labor. 

Men  who  come  out  of  prison,  where  they  liave  been  kept  at  work 
under  the  contract  s^^stem,  have  generally  only  the  merest  fragment 
of  a trade,  and  as  they  will  not  he  allowed  by  the  ‘‘  Trade’s  Union  ” 
to  work  at  that,  there  remains  hut  two  things  for  them  to  do.  The 
alternative  is  to  remain  honest  and  starve,  or  to  be  dishonest  and 
feed  themselves. 

The  general  agent  of  this  association,  with  great  care,  portions  out 
the  small  sums  that  come  from  the  excise  fund,  and  from  sundry 
contributions  from  individuals,  and  he  seeks  to  help  the  most  de- 
serving and  the  most  ])roniising,  but  every  day  turns  men  away  from 
this  office  with  such  inadecpiate  help  that  before  they  can  possibly 
find  employment,  they  must  feel  the  pangs  of  want.^ 

Many  a man  goes  back  to  vicious  courses  who  could  be  saved, 
if  the  means  at  the  disposal  of  the  general  agent  were  increased. 

The  following  reports  of  officers  need  no  comment. 

Extracts  from  report  on  Kings  county  penitentiary  made  by  Mr. 
Cbas.  B.  Waite  of  the  executive  committee. 

I was  particularly  struck  with  the  cleanliness  of  the  prisons,  like- 
wise the  number  of  windows  which  are  lofty  and  permit  the  sun- 
light to  reach  even  to  the  inner  part  of  the  cells,  the  absence  of 
darkness  was  equally  noticeable  in  the  cells. 

The  ventilation  of  the  prisons  and  cells  seems  to  be  perfect,  in 
short  they  are  sweet  and  clean. 

The  blankets  are  warm  and  of  good  quality. 

The  buckets  are  emptied  at  the  mouth  of  a large  sewer  out  of  doors. 
The  buckets  are  thoroughly  washed  by  short-time  rn^n  and  disin- 
fected and  returned  to  the  prison. 

The  hospital  is  small  and  low  and  would  seem  to  be  illsuited  to 
its  purpose,  it  compared  very  unfavorably  with  the  rest  of  the  prison 
in  the  matter  of  light  and  ventilation. 

Some  of  the  cells  are  occupied  by  two  prisoners  each.  The  com- 
fort of  the  cells  in  the  long-term  prison  was  particularly  noticeable, 
likewise  in  the  female  prison.  There  seemed  to  be  no  restriction 
in  the  matter  of  furnishing,  many  cells  having  carpets  and  curtains, 
beds  with  two  or  three  mattresses,  etc.  This  seems  hardly  con- 
sistent wdth  a thorough  inspection  as  the  concealment  of  false  keys, 
dangerous  weapons  or  even  s])irituous  liquor  is  more  than  possible. 

The  food  is  good  and  ])lentiful,  compared  with  care  and  in  a 
cleanly  and  inviting  manner. 

The  amount  ol' food  closely  approximates  the  navy  ration;  the 
(juantity  of  bread  is  not  limited. 


^^"0.  46.] 


23 


• The  shops  in  which  the  convicts  are  employed  are  too  small  and 
not  safe  in  case  of  fire,  for  the  pnr])Ose  of  making  escape  almost  im- 
possible. The  stair-ways  are  few  and  not  easy  of  access. 

The  introduction  into  the  prison  of  free  laborers  by  the  contractor 
and  their  intermingling  with  the  prisoners  is  condemned.  They 
could  perfectly  well  be  separated  and  should  be.  The  possibility 
of  communication  with  the  outside  seems  to  be  most  simple. 

The  appearance  of  the  prisoners  is  healthy  and  contented. 

The  grounds  of  the  prison  ai‘e  not  well  kept. 

All  of  which  is  respectfully  submitted. 

Dated  New  York,  Aprils  1883.  , 

President. 

Chas.  H.  Kitchel,  Chairmo/n  Committee  on  Annnal  Report. 


TEEASURERVS  STATEMENT 

FOR  THE  YEAR  ENDING  DECEMBER  31,  1882. 


Receipts. 

Cash  on  hand  December  31,  1881 $416  23 

From  individual  donations 1,  289  00 

From  city  excise  fund 650  00 


$2,355  23 

Payments. 

Old  indebtedness $90  00 

Rent 278  00 

Sundries 118  09 

* In  aid  of  prisoners  discharged  from  Black- 
well’s Island  and  city  prisons 649  85 

General  agent,  balance  salary  for  1881  500  00 

General  at^ent,  account  salary  for  1882 600  00 

2,  235  94 


Balance  in  Mechanics’  National  Bank  to  credit  of 
Association $119  29 


* In  addition  to  this  item,  Mr.  Stephen  Cutter,  the  general  agent,  reports  that 
he  has  personally  received  from  the  State  agent  and  expended  in  direct  relief  of 
prisoners  discharged  from  the  State  prisons  |1, 000.00. 

CORNELIUS  B.  GOLD, 

Treasurer. 


REPORT  OF  THE  GENERAL  AGENT. 

\ 


All  the  statistics  of  all  the  penal  institutions  and  alms-houses  in 
this  country,  and  in  all  civilized  countries,  go  to  prove  the  most  pro- 
lific cause  of  crime  is  connected  with  the  sale  and  use  of  alcoholic 
liquors. 

Our  city  is  a miniature  world,  we  have  wards  in  which  tenement- 
houses  prevail  and  the  population  more  dense  than  any  part  of 
London. 

There  are  brought  into  our  six  police  magistrate  courts  everj^day 
in  the  year  (Sundays  and  holidays  included),  an  average  of  at  least 
two  hundred  men  and  women,  ninety  per  cent  of  whom  are  brought 
there  through  the  use  of  intoxicating  drinks. 

A total  of  65,000  annually  — more  than  20,000  of  of  them  being 
intoxicated  at  the  time  and  5,000  vagrants,  nearly  all  drunkards. 

What  is  to  become  of  these  corrupt  and  debased  multitudes  ? 
Some  of  them  will  soon  fill  drunkards’  graves,  but  they  must  be 
cared  for  with  a view  to  saving  them  from  a life  of  crime. 

A steady  stream  of  them  are  coming  from  our  State  prisons  and 
penitentiaries,  a large  number  of  whom  come  to  the  office  of  the 
prison  association  for  assistance.  Some  of  them  are  young  men,  es- 
pecially from  our  penitentiaries.  Their  circumstances  are  peculiar. 
Their  parents  are  dead  or  extremely  poor ; they  have  no  home  or 
friends,  many  of  them  sent  to  our  penitentiary  in  the  summer-time 
with  thin  and  ragged  clothes,  for  short  terms,  four,  five  and  six 
months,  they  come  out  in  the  winter  and  the  summer  clothes  they 
went  up  with  are  put  on  them  when  they  are  released.  They  come 
to  our  office  shivering  with  the  cold.  They  are  not  fit  to  go  into 
the  streets,  they  could  not  get  employment  if  work  was  plenty. 
The  authorities  at  the  penitentiary  do  not  give  them  a cent ; if  the 
prison  association  does  not  care  for  them,  what  will  they  do?  Our 
finances  are  such  we  can  do  but  little,  they  are  in  great  danger  of 
drifting  into  crime  and  going  back  again  to  prison. 

But  this  is  a difficult  problem  to  solve,  these  men  cannot  be  trusted 
with  money  in  their  present  condition,  addicted  as  many  of  them 
are  to  drink  and  the  company  of  those  who  drink. 

The  experience  and  observation  gained  in  the  prosecution  of  this 
work  by  your  agent  leads  him  to  suggest  the  necessity  of  an  indus- 
trial home  where  these  men  can  go  and  work,  learn  trades  and 
otherwise  fit  themselves  to  make  a living  until  they  are  strong 

[Sen.  Doc.  No.  46.]  4 


26  [Sknate 

enough  to  resist  temptation,  and  tlion  provided  with  eTn])loyment 
suitable  for  them,  they  may  be(;ome  honest  and  industrious. 

Besides  attending  to  liis  duties  at  tlie  Toml)S  prison  and  tlie  courts 
the  agent  has  assisted  eight  hundred  and  five  discharged  convicts 
wlio  have  called  upon  him  at  the  rooms  of  the  prison  association. 

The  following  tabular  statement  shows  the  number  of  discharged 
convicts  who  have,  during  the  past  year,  been  assisted  by  the  gen- 
eral agent,  and  of  the  prisons  and  reformatories  from  which  they 
have  been  released  : 


No.  46.] 


2Y 


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28 


The  general  agent  would  call  attention  to  the  few  cases  here 
selected  to  illustrate  the  character  and  methods  of  his  work  for  the 
association  ajid  the  frequency  in  vvdiich  intemperance  brings  f>erson8 
into  crime. 

No.  1.  Came  to  this  ofhee  from  the  penitentiary  where  he  had 
been  six  times  for  petty  thieving,  and  had  spent  three  years  of  his 
life  in  prisons. 

He  was  persuaded  to  believe  there  was  a better  way  to  live,  that 
if  he  became  honest  he  would  he  ha])py  and  enjoy  the  proceeds  of 
his  labor.  • 

AVe  recommended  him  to  the  Home  of  Industry  at  40  Plast 
Houston  street.  There  he  attended  the  meetings  and  in  a short 
time  professed  to  be  a convert  to  Christianity. 

We  were  not  long  in  obtaining  a situation  for  him  at  good  wages. 

No.  2.  Came  from  the  penitentiary  where  he  had  been  serving  a 
sentence  for  assault  and  battery. 

This  was  his  sixth  term,  the  direct  conse(pience  of  drink  ; he  has 
a good  trade  and  now  seems  desirous  to  reform,  and  was  persuaded 
to  go  to  a good  place  to  board  and  lodge  for  a few  days.  We  then 
obtained  a situation  for  him  at  steady  employment  at  his  trade.  AVe 
have  heard  from  him  several  weeks  since  that  he  was  doing  well. 

No.  4.  Is  young  not  out  of  his  teens,  parents  dead,  has  been  to 
sea  as  a sailor,  seems  well  disposed,  never  committed  crime,  gave 
himself  up  to  the  warden  at  the  Tombs  rather  than  steal.  He  re- 
quired friendly  advice,  a little  help  and  in  a short  time  was  shipped 
to  sea  at  $19  per  month. 

No.  5.  A married  man,  age  twenty -eight ; parents  dead,  has  no 
trade,  twice  in  prison,  once  in  Sing  Sing.  For  this  last  offense  (at- 
tempt to  rescue  a prisoner)  he  was  sent  to  the  penitentiary  one  year. 
Upon  his  discharge  he  protested  he  did  not  want  to  lead  a life  of 
crime  and  was  anxious  and  willing  to  do  honest  work.  In  a few 
days  by  being  comfortably  clad  he  obtained  employment  as  a truck 
driver. 

No.  6.  A youth  of  sixteen  years,  in  the  boys’  prison,  had  been 
employed  in  a book  store  for  three  years,  had  by  faithfully  discharg- 
in<r  liis  duties  completely  won  the  confidence  of  employer,  but  un- 
fortunately made  the  acquaintance  of  some  boys  who  were  fond  of 
playing  pool  for  drinks,”  and  in  order  to  keep  up  with  his  com- 
rades he  yielded  to  their  repeated  urgings  and  committed  the  crime 
that  brought  him  to  prison. 

He  seemed  penitent  and  much  concerned  about  the  disgrace  he  had 
brought  upon  his  pai'ents.  We  felt  that  this  was  a case  we  ought  to 
save  from  further  imprisonment.  We  found  Ids  employer  was  will- 
ing to  second  our  efforts  and  the  court  also.  We  attribute  this  boy’s 
downfall  to  pool  playing,  which  is  growing  feai-fully  among  boys. 

We  have  visited  this  boy  at  his  homo  and  have  good  reason  to  be- 
li(jve  he  is  saved  from  further  crime. 

No.  7.  Is  a Hollander,  passed  middle  life,  a single  man,  has  been 
in  this  country  a half  a score  of  years,  got  into  dilliculty  by  indulg- 


ISTo.  46.] 


29 


ing  in  drink  and  was  sent  to  the  penitentiary  for  one  month  for 
petty  larceny.  He  came  to  this  office  poorly  clad,  he  needed  assist- 
ance which  was  rendered  him,  and  a place  soon  obtained  for  him  as 
hospital  nurse,  and  is  now  doing  well. 

No.  9.  Has  served  a sentence  of  eighteen  months  in  Albany  Peni- 
tentiary for  counterfeiting  ; his  first  offense;  he  appears  penitent, 
is  a mechanic  and  wishes  employment.  We  ])rovided  for  him  a 
few  days  when  he  obtained  work  at  his  trade  and  was,  when  last 
heard  from,  doing  well. 

No.  10.  Has  a good  trade  and  is  a good  mechanic  ; was  living  com- 
fortably, supporting  his  wife  and  two  children  ; he  never  was  ad- 
dicted to  drink  as  so  many  are  tliat  get  into  trouble;  he  felt  safe 
in  his  position.  One  evening  after  taking  supper  with  his  family, 
he  went  out  to  take  a walk,  he  met  a man  with  whom  he  was  some- 
what acquainted,  but  knew  but  little  of  him.  This  man  invited 
him  to  go  into  a saloon  and  take  a driiik  which  he  refused,  but  did 
consent  to  go  in  and  take  a segar.  In  this  saloon  was  a man  hav- 
ing a piece  of  cloth  for  sale,  which  he  pressed  upon  our  man  as  a 
good  chance  to  buy,  as  it  was  cheap,  and  finally  he  did  buy  at  $15. 
Before  he  left  the  place  he  was  an-ested  and  held  to  answer  for  hav- 
ing stolen  goods  in  his  possession  and  was  sentenced  to  Sing  Sing 
prison  two  and  a half  years.  He  comes  out  this  9th  of  October, 
finds  his  wife  has  been  able  to  pull  through  and  keep  her  family 
together.  But  they  are  poor  and  he  needs  clothes  and  tools  which 
were  furnished  him.  He  soon  obtained  work  and  is  doing  well. 

No.  11.  Is  a young  man  nineteen  years  of  age,  belonging  to  one  of 
the  small  cities  of  Connecticut,  and  in  his  experience  here  has  been 
taught  how  easy  it  is  to  get  into  prison.  M.  says  at  home  he 
worked  at  making  curry-combs,  but  work  became  dull  in  December 
and  he  was  laid  off.  With  $5  in  his  pocket  he  started  for  New 
Brunswick,  N.  J.,  for  work,  but  there  he  found  matters  quite  as  bad 
as  where  he  came  from,  and  when  he  had  spent  all  his  money  look- 
ing for  employment  and  could  get  none,  he  resolved  to  get  home  if 
he  had  to  walk.  He  walked  back  to  this  city  and  started  on  for 
home ; he  got  as  far  as  Harlem  and  found  niglit  coming  on  ; he  was 
tired,  hungry  and  sleepy;  he  went  to  a freight  car  standing  on  the 
side  track,  the  door  was  not  locked,  he  crawled  in  and  laid  down 
and  went  to  sleep.  About  8 o’clock  the  watchman  with  a police- 
man came  and  wbke  him  up  and  took  him  to  the  station  chaiging 
him  with  burglary.  He  was  not  guilty ; he  did  not  know  what  was 
in  the  car  ; his  object  was  to  get  rest  and  get  warm  ; he  was  not  intoxi- 
cated. Tiie  officer  and  watchman  both  acknowledged  he  was  asleep 
when  they  went  to  the  car.  We  thought  a man  intending  to  steal 
wmuld  not  lay  down  and  go  to  sleep.  The  court  thought  so  too  and 
the  judge  discharged  him.  We  provided  him  with  the  means  to 
get  to  his  home. 

No.  12.  Is  a young  man,  has  lost  his  left  hand.  He  was  making 
a good  living,  selling  papers  and  dilving  a horse  hoisting  coal.  In 
September,  1880,  a man  with  whom  he  was  acquainted  gave  him  a 


30 


[Rknate 


til" 

watch  to  care  for;  he,  not  knowing  it  was  stolen,  took  it  and  tlie 
|>ro])erty  was  found  on  liiin.  He  was  convicted  and  sent  to  tlie 
penitentiary  two  years  for  receiving  stolen  ^oods.  lie  came  out  in 
May,  1882.  The  man  for  whom  he  drove  the  horse  refused  to  lake 
him  on  again  because  he  had  been  in  ])rison.  Ilecallsat  tlu;  <jflice  for 
advice  and  hel]),  he  has  not  a friend  or  a cent  (►f  money  and  one  hand 
only  to  Avoi'k  with.  Tie  thinks  he  can  make  a living  at  selling  lUiws- 
])a])ers.  As  he  is  acquainted  with  the  i)usiness  we  arlvise  him  to  go 
at  selling  newsj)a])er8,  and  we  furnish  him  with  the  amount  he 
thinks  will  set  him  up,  aiid  he  goes  away  with  a grateful  heart ; as 
he  has  no  had  habits  we  believe  he  will  succeed. 

INo.  14.  Is  a lahorei*  living  in  Bi-ooklyn,  arrested  for  forgery;  he 
admitted  his  guilt.  He  works  along  shore,  but  for  five  or  six  weeks 
has  l)een  cm])loyed  only  a part  of  the  time,  till  his  wife  and  three 
childi’en  were  in  a starving  condition.  He  says  he  does  not  drink 
(and  we  believe  him);  this  determined  us  to  do  what  we,  could,  for 
we  were  qiiite  sure  it  was  his  first  offense. 

We  ascertained  the  forged  order  was  for  throe  dollars  on  a grocer 
to  get  food  for  his  children.  It  was  so  poorly  done  it  was  discovered 
as  soon  as  pi;esented  and  he  was  arrested.  When  the  grocer  saw 
the  wife  and  childien  and  their  extreme  ])overty,  he  put  his  hand  in 
his  pocket  and  assisted  them  and  was  also  willing  to  withdraw  the 
complaint.  WHth  the  help  of  the  prosecuting  othcer  we  obtained 
his  release. 

Xo.  15.  Came  from  prison  where  he  had  just  served  six  and  one- 
half  years  for  an  attempt  at  bui’glary  and  had  previously  served  ten 
years  at  Sing  .Sing,  although  but  thirty  years  of  age.  He  gave  evi- 
dence of  his  determination  to  lead  an  honest  life  in  the  luture,  and 
we  determined  to  aid  him  in  his  efforts. 

He  is  a plumber  by  trade  and  secured  employment ; we  then  fur- 
nished him  with  such  tools  as  he  needed.  He  seemed  to  get  along 
nicely,  managing  to  make  a modest  living.  But  the  detectives 
hounded  him  from  place  to  place,  at  his  boarding-house,  and  his 
place  of  employment,  until  he  was  greatly  discouraged  and  called 
here  again,  asking  protection  from  the  guardians  of  our  homes. 
This  is  a frequent  occurrence.  We  have  on  hand  now  a young  man 
who  was  working  and  doing  well,  when  the  detective  gave  informa- 
tion that  he  had  been  in  prison  and  he  was  discharged. 

No.  16.  A young  man  came  in  from  BlackwelPs'lsland  Peniten- 
tiary where  he  had  served  out  a sentence  of  two  years  for  arson  ; 
he  was  a book-keeper  for  a mercantile  house  ; had  allowed  himself 
to  get  into  habits  that  required  more  money  than  he  could  command; 
he  took  money,  altered  his  bo(>ks  to  cover  his  crime,  and  when  he 
found  he  would  be  discharged  he  burned  the  books,  for  which  offense 
he  has  just  served  his  time.  He  was  very  determined  to  retrieve  his 
])ast  life  and  start  anew. 

lie  determined  to  be  honest  and  in  looking  for  a situation  not  to 
hide  the  fact  that  he  had  been  in  prison,  and  hoped  to  find  some 
(jhristian  man  who  would  trust  him,  employ  him  and  help  him  to 


31 


ISTo.  46.] 

lead  a better  life.  He  called  at  over  three  hundred  offices  and  places  of 
business,  was  well  received  in  inaii}^  places  until  he  got  to  that  part 
of  his  history  where  he  fell,  and  then  he  was  informed  they  did  not 
want  him.  We  had  faith  in  him  and  assisted  him  from  time  to  time, 
until  he  finally  got  employment;  he  is  now^  doing  well  and  has  a 
good  home  where  he  enjoys  the  society  of  Ids  wife  and  children. 

No.  lY.  Is  a young  woman  of  fair  intelligence  ; when  our  atten- 
tion was  called  to  her  by  the  matron  in  the  Tombs  she  bad  been 
tried,  found  guilty  and  remanded  for  sentence.  In  examining  this 
case  we  found  she  had  recently  left  her  relative  in  Broome  county 
on  her  way  back  to  Ireland  ; on  arriving  in  this  city  she  went  to  a 
store  and  purchased  silk  goods  for  a dress,  also  some  triinndng  for 
her  dress;  the  trimmings  she  is  charged  with  stealing,  which  she 
stoutly  denied ; an  offer  was  made  if  she  would  pay  for  them  she 
would  be  allowed  to  go,  but  she  spurned  the  compromise,  saying  she 
had  paid  for  them  once  and  that  was  sufficient.  She  had  beeh 
fleeced  by  lawyers  who  had  got  all  her  money  with  the  promise  to 
get  her  acquitted. 

We  interceded  for  her  and  the  court  gave  her  only  five  days  cit}^ 
prison.  She  was  then  looked  after  and  a place  obtained  for  her  to 
go  to  service. 

In  closing  this  report  we  feel  it  our  duty  to  acknowledge  the 
courtesy  of  all  concerned  in  the  administration  of  law  in  our  criminal 
courts,  by  whom  we  have  been  treated  with  uniform  respect. 

To  the  members  of  the  profession  of  the  law  we  are  much  in- 
debted for  the  aid  rendered  us,  and  for  the  willingness  shown  to 
defend  or  help  anj^  cases  in  which  we  may  desire  such  service  at 
their  hands. 

Yery  respectfully  submitted, 

STEPHEN  CUTTEE, 

General  Agent. 


\ 


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STATE  OF  NEW  YORK. 


No.  47. 


IN  SENATE, 

April  27,  1883. 


REPORT 

OF  THE  BOARD  OF  RAILROAD  COMMISSIONERS. 

Board  of  Railroad  Commissioners  ) 

OF  THE  St^e  of  New  York,  v 
Albany,  April  26,  1883.  ) 

Present  - Commissioners  John  D.  Kernan,  Wm.  E.  Rogers, 
John  O’Donnell. 

To  the  Honorable  the  Senate  of  the  State  of  New  York  : 

The  Board  is  in  receipt  of  the  following  resolution  passed  by  your 
honorable  body  : 

STATE  OF  NEW  YORK  : 

In  Senate,  ) 

Albany,  April  25,  1883.  j 

Resolve f That  the  Railroad  Commissioners  be  invited  to  report  to 
this  Senate,  at  the  earliest  practicable  moment,  what  hearing,  if  any, 
was  had  before  that  Board  upon  Senate  bills,  entitled  An  act  in 
relation  to  the  rate  of  fare  upon  the  elevated  railroads  of  the  city  of 
New  York,”  and  ‘‘  An  act  to  ascertain  the  capital  actually  expended 
in  the  construction  of  railroads.” 

By  order, 

JOHN  W.  YROOMAN, 

Clerk. 


[Sen.  Doc.  No.  47-1 


1 


2 


[Senate,  No.  47.) 


The  bills  tlierein  inquired  about  are  as  follows  : 

AN  ACT  in  relation  to  the  rate  of  fare  upon  the  elevated  rail- 
roads of  the  city  of  New  York. 

The  People  of  the  State  of  New  York,  represented  in  Senate  and 
Assembly,  do  enact  as  follows  : 

Section  1.  From  and  after  the  ])asRa^e  of  this  act  the  rate  of  fare 
for  each  passenger  over  and  upon  each  of  the  elevated  railroads  in 
the  city  of  New  York  during  the  commission  hours,  which  are 
hereby  fixed  from  four  until  ten  o’clock,  a.  m.,  and  from  three  until 
nine  o’clock,  p.  m.,  shall  be  five  cents. 

§ 2.  This  act  shall  take  effect  immediately. 


AN  ACT  to  ascertain  the  capital  actually  expended  in  the  construe 

tion  of  railroads. 

'The  People  of  the  State  of  New  York,  represented  in  Senate  and 
Assembly,  do  enact  as  follows: 

Section  1.  It  shall  be  the  duty  of  the  Railroad  Commissioners,  as 
soon  as  practicable,  consistent  with  the  duties  heretofore  devolved 
upon  them,  to  examine  and  ascertain  the  cash  ca])ital  actually  ex- 
pended in  the  constructing  and  equipping  of  each  of  the  surface  rail- 
roads in  the  State,  including  street  railroads,  and  report  the  same  to 
the  succeeding  Legislature. 

§ 2.  This  act  shall  take  effect  immediately. 

The  Board  respectfully  reports  that  no  hearing  has  ever  been  had 
before  the  Board  upon  either  of  said  proposed  acts,  nor  has  any  evi- 
dence ever  been  taken  in  relation  thereto. 

The  said  acts  were  recommended  by  Commissioner  O’Donnell  in 
his  minority  report  upon  the  elevated  railroads  of  New  York  city, 
and  were  not  before  the  Board  for  its  consideration  at  any  time  while 
the  said  elevated  railroad  matter  was  pending  before  it. 

• By  order  of  the  Board, 

WILLIAM  C.  HUDSON, 

Secretary. 


STATE  OF  NEW  YORK. 


No.  48. 


IN  SENATE. 

April  27,  1883. 


REPORT 

OF  OOMMTTTEE  ON  CANALS  UPON  A RESOLUTION 
RELATIVE  TO  ENCROACHMENTS  UPON  CANAL 
PROPERTV  BY  THE  NEW  YORK,  WEST  SHORE  AND 
BUFFALO  RAILROAD  COMPANY. 

To  the  Senate : 

The  following  preamble  and  resolution  were  heretofore  submit- 
ted to  the  Senate  : 

“ Whereas,  The  fact  is  self-evident  that  the  main  line  of  the  rail- 
road of  the  New  York,  West  Shore  and  Buffalo  Railroad  Company 
is  for  a distance  of  one  and  a quarter  miles,  at  a point  about  two 
miles  west  from  Fort  Plain,  between  locks  Nos.  32  and  33,  built 
into  the  Erie  canal  upon  land  the  property  of  the  State,  and  for  a 
distance  of  ten  miles  east  and  west  froiii  that  point  the  work  of 
constructing  said  railroad  upon  and  along  the  canal  banks  is  pro- 
gressing. 

“ Resolved^  That  the  committee  on  canals  be  and  is  hereby  in- 
structed to  inquire  and  ascertain  forthwith  the  extent  to  which  the 
line  of  the  said  railroad  has  been,  or  is  being,  constructed  upon  and 
along  the  canal  property  of  the  State,  which  is  specially  reserved  and 
protected  to  the  State  by  its  Constitution  ; by  whom  the  permission 
was  given  for  such  construction,  the  authority  for  the  same,  and  the 
consideration,  pecuniary  or  otherwise,  given,  granted  or  promised 
for  such  permission,  with  power  to  the  <;ommittee  to  send  for  papers, 
books  and  persons,  and  to  report  at  as  earl  v a date  as  practicable.” 

This  preamble  and  resolution  were  not  di recti}"  acted  upon  hy  the 
Senate,  but  were  referred  to  the  canal  committee  under  a resolution 
in  the  following  words  : 

“ Resolved.  That  the  resolution  be  referred  to  the  canal  com- 
mittee to  report  in  the  first  instance  upon  the  advisability  of  its 

[Sen.  Doc.  No.  48.J  1.  ' 


2 


[Senatk 


adoption  with  or  witliout  amendirient,  and  upon  tlic  necessity  of 
any  investi^i:ation,  or  report  other  tlian  can  be  made  by  the  State  o(li- 
cers  charged  witli  tlie  care  of  the  canals,  or  the  Railroad  Corji mis- 
sion.” 

Yonr  committee  respectfully  report  that  they  have  considered 
tlie  I’esolntions  at  several  sessions,  of  which  notice  has  been  given, 
and  that  all  |)ersons  desiring  to  appear  before  the  committee  have 
had  the  opportunity  of  doing  so. 

Yonr  committee  have  been  attended  ])y  the  Attorney-(jeneral, 
the  Superintendent  of  Public  Works,  and  Ids  predecessor. 

Subsequent  to  the  introduction  of  the  original  preamble  and  reso- 
lution in  the  Senate,  a similar  inquiry  was  directed  by  tlie  Assem- 
bly, and  the  speaker  of  that  body  received  in  response  to  their  call 
written  reports  carefully  ])re[)ared  by  the  Siq)erintendent  of  l^ublic 
A¥prks  and  the  State  Engineer  and  Surveyor. 

In  order  to  avoid  additional  ex])en8e  and  annoyance  to  public  offi- 
cers, the  Superintendent  of  Public  Works  and  State  Engineer  and 
Surveyor  were  not  called  upon  to  make  separate  reports  to  your 
committee;  but  the  reports  of  these  officers  to  the  Assembly  were 
considered  by  your  coimnittee,  and  are  made  a part  of  this  report. 

{See  Asserttbly  Doeiiments^  Nos.  101  and  106.) 

Your  committee  do  not  find  that  any  of  the  canal  lands  have  been 
sold  or  disposed  of  ; but  that  the  same  remain  under  the  control  of 
the  State  authorities  in  cliarge  of  the  canals;  that  certain  lands 
within  the  blue  lines  and  within  ten  rods  of  the  Erie  canal,  not  nec- 
essary for  canal  purposes,  have  been  occupied  by  the  railroad  com- 
pany ; that  this  occupation  is  held  by  permits  specially  limited  and 
guarded,  so  as  to  maintain  tlie  free  and  perfect  use  of  the  canals, 
and  that  these  permits  are  according  to  the  precedents  which  have 
been  established  in  numerous  other  cases  where  like  permission  has 
been  given  for  many  years  past  to  other  railroads,  a portion  of  which 
permits  are  referred  to  in  the  exhibit  attached  to  the  report  of  the 
Superintendent  of  Public  Works  made  to  the  Assembly. 

Your  committee  annex  hereto  the  blank,  form  which  has  been 
used  for  the  permits  granted  to  the  railroad  company,  whereby,  in 
addition  to  other  things,  itjappears  that  all  the  work  authorized  by 
the  permits  is  to  be  done  under  the  supervision  of  the  Assistant 
Superintendent  of  Public  Works  and  of  the  Division  Engineer  of 
the  canal,  upon  plans  and  specifications  approved  by  the  State  En- 
gineer and  the  Superintendent  of  Public  Works,  and  under  inspect- 
ors to  be  selected  by  the  Superintendent  of  Public  Works  ; that  the 
work  should  be  done  at  such  times  as  the  Superintendent  of  Public 
Woi‘ks  directs,  and  so  as  not  to  interfere  with  the  free  and  perfect 
use  of  the  canals,  or  endanger  the  lives  or  property  of  those  en- 
gaged in  nqiairing,  navigating  or  operating  the  same. 

It  also  appears  that  by  the  terms  of  the  permits  the  railroad  com- 
pany is  held  liable  for  all  damages  to  the  State,  or  to  individuals,  in 
consequence  of  the  construction  of  the  railroad,  and  the  Superin- 


No.  48.J 


3 


tendent  of  Public  Works  is  given  supervisory  power  over  so  much 
of  the  railroad  as  may  be  constructed  within  the  limits  of  ten  rods 
of  the  canal. 

In  these  permits  the  Superintendent;^  of  Public  Works  reserves 
the  right  at  any  time  to  revoke  and  annul  the  permits,  and  to  cause 
the  railroad  company  to  remove  their  road  from  tlie  limits  of  ten 
rods  of  the  canal,  with  the  right  of  re-entry  on  such  lands,  as  the 
free  and  perfect  use  of  the  canal  at  any  future  time  may  require,  or 
as  may  be  necessary  for  making  any  repairs,  improvements,  or  alter- 
ations in  the  same. 

In  addition  to  the  foregoing,  an  acceptance  by  the  railroad  com- 
pany of  the  permits  is  made  a covenant  for  the  faithful  perform- 
ance of  all  the  conditions  and  requirements  made  by  the  Superin- 
tendent of  Public  Works. 

Your  committee  find  that  in  the  initiatory  proceedings  the 
Attorn ey-General  appeared  on  behalf  of  the  State  ; tliat  plans  and 
specifications  in  every  case  where  application  was  made  by  the  rail- 
road company  to  occupy  lands  within  ten  rods  of  the  canal  are  in 
the  office  of  the  Superintendent  of  Public  Works  ; that  the  same, 
with  the  maps  accompanying  them,  were  submitted  to  the  State 
Engineer  and  Surveyor,  and  that  the  action  of  these  officers  in 
regard  to  the  occupation  of  canal  lands  was  afterward  submitted  to 
and  a})proved  by  the  Canal  Board. 

Your  committee,  therefore,  find  that  all  the  facts  and  papers  con- 
nected with  this  occupation  are  to  be  found  in  the  offices  of  the 
Attorney-General,  the  Canal  Board,  the  State  Engineer  and  Sur- 
veyor, and  the  Superintendent  of  Public  Works,  and  that  all  the 
permits  and  accompanying  papers  are  on  file  and  accessible  to  the 
Legislature,  or  to  any  private  citizen,  on  proper  application. 

Your  committee,  therefore,  report  that  no  further  inquiry  is  deemed 
necessary  on^tlie  part  of  the  committee,  and  it  is  their  opinion  that 
no  other  or  further  action  is  required. 

0.  L.  MACARTHUR, 

A.  M.  HOLMES, 

D.  H.  EYANS, 

JOHN  W.  BROWNING, 

R.  H.  ROBERTS, 

ROBT.  C.  TITUS, 

THOS.  F.  GRADY. 

April  26,  1883. 

Office  of  Superintendent  of  Public  Works,  ) 
Albany,  188  . i 

Whereas,  the  Company,  a corporation  duly  formed  and 

organized  under  and  by  virtue  of  the  laws  of  this  State,  has  made 
ap})licatloa  for  permission  to  construct  a railroad  , and  have, 

filed  in  this  office  maps,  plans  and  profile  of  the  route  designated 


4 jj  [Senate  No.  48.] 

for  their  railroad  and  of  tlie  as  required  by  section  17  of  act 

chapter  276  of  the  Laws  of  1834, 

Therefore^  permission  is  hereby  granted  to  said  Company 

to  construct  and  maintain  at  its  own  cost  and  exj^ense  a railroad 
as  shown  on  the  ma])s  acc-om])anying  said  application,  and 
now  on  tile  in  tliis  office,  upon  the  following  conditions  and  re- 
strictions : 

1st.  Said  Company  shall  he  subject  to  and  shall  ])ay  as  the 

value  of  such  ])ermis6ion  to  the  State  of  New  York  before  com- 
mencing work  under  said  permit,  such  sum  as  shall  be  fixed  by 
a))praisers  to  be  duly  a])pointed  by  the  Su])reme  Court,  in  pursu- 
ance of  the  statutes  for  the  appraisal  of  lands  taken  by  railroad 
companies  for  the  construction  of  their  railroads. 

2d.  All  work  authorized  by  this  permit  shall  be  done  under  the 
supervision  of  the  Assistant  Su])erintendent  of  Public  Works  and 
the  Division  Engineer  of  the  Division,  upon  plans  and  s})ecifica- 
tions  approved  by  the  State  P]ngineei’  and  the  Superintendent  of 
Public  Works,  and  the  salaiy  of  inspectors  for  said  work,  to  be 
selected  by  the  Superintendent  of  Public  Works,  shall  be  paid  by 
said  Comj)any,  and  the  work  shall  be  done  at  such  times  as 

the  Superintendent  of  Public  Works  shall  direct,  and  so  as  not  to 
interfere  wdth  the  free  and  ])erfect  use  of  the  canals,  or  endanger 
the  lives  or  property  of  those  engaged  in  repairing,  operating  or 
navigating  the  same. 

3d.  Said  ' Company  shall  be  held  liable  for  and  shall  pay  all 
damages  that  may  occui-  or  arise,  either  to  the  State  or  to  individuals, 
in  consequence  of  the  construction  of  said  railroad. 

4th.  The  Superintendent  of  Public  Works  shall  have  supervisory 
})Owei‘  over  so  much  of  said  railroad  as  is  or  may  be  constructed 
within  the  limits  of  ten  rods  of  said  or  upon  any  lands  be- 

longiug  to  this  State  for  canal  purposes,  as  provided  by  section  17 
of  act  cha])ter  276  of  the  Laws  of  1834. 

5th.  The  Superintendent  of  Public  Works  reserves  the  right  at 
any  time  to  revoke  and  annul  this  permit  and  cause  said  Com- 

])any  to  remove  said  i*ailroad  at  its  own  cost  and  expense  from  the 
limits  of  ten  rods  of  said  ; als  > the  right  on  the  part  of  the 

State  of  re-eniry  and  re-occupancy  of  such  lands  covered  by  this 
[lermit,  as  the  free  and  ])erfect  use  of  said  canal  at  any  future  time 
may  require,  or  as  may  be  necessary  for  making  any  repairs,  im- 
])r()vements  or  alterations  in  the  same. 

6th.  An  acce])tance  by  said  Company  of  this  permit  shall 

be  deemed  a covenant  for  the  faithful  performance  of  all  the  condi- 
tions and  requirements  herein  contained. 

In  testimony  whereof,  1 have  hereunto  set  my  hand  and  affixed 
the  oflicial  seal  of  said  office. 


Superintendent  of  Public  Works. 


STATE  OF  NEW  YORK. 


No.  49. 


IN  SENATE. 


April  28,  1883. 


REPORT 

OF  COMMITTEE  ON  CITIES  RELATIVE  TO  THE  DE- 
PARTMENT OF  PUBLIC  WORKS  OF  THE  CITY  OF 
NEW  YORK. 

The  committee  on  cities  of  the  Senate  of  the  State  of  New  York, 
to  whom  was  referred  the  resolution  adopted  by  the  Senate  on  March 
15,  1882,  directing  yonr  committee,  among  other  things  to  examine 
into  the  management  of  the  department  of  public  works  of  the  city 
of  New  York  under  Hubert  O.  Thompson,  the  then  and  now  com- 
missioner of  said  department,  respectfully  report : 

That  as  soon  after  the  adoption  of  the  resolution  in  question  as  the 
official  duties  of  yonr  committee  would  permit,  and  upon  as  short 
notice  to  the  commissioner  of  public  works  of  the  action  of  the 
Senate  and  of  the  duties  of  your  committee,  as  seemed  consistent  with 
official  courtesy  and  the  magnitude  of  the  charges  preferred  against 
said  commissioner,  and  on  the  31st  day  of  March,  1882,  your  com- 
mittee met  at  the  department  of  public  works,  in  the  city  of  New 
York,  and  at  various  times  during  the  session  of  tlie  Legislature  there 
and  elsewhere  in  the  city  "of  New  York,  and  at  the  city  of  Albany, 
held  and  continued  its  sittings  and  hearings.  That  in  order  to  advance 
the  investigation  -as  rapidly  as  possible  and  to  facilitate  an  under- 
standing 01  the  various  accounts  and  methods  of  the  department, 
your  committee  at  its  later  sessions  retained  Mr.  Richard  S.  New- 
combe  as  its  counsel  to  conduct  tlie  investigation,  and  to  his  indus- 
try and  legal  acumen  your  committee  are  indebted  for  the  orderly 
arrangement  and  clear  presentation  of  results.  The  commissioner 
was  represented  by  Mr.  George  Bliss,  Mr.  Francis  Lynde  Stetson 
and  Mr.  Robert  Payne,  as  his  counsel.  Y our  committee, at  the  request 


2 


[Senate 

of  counsel  for  Mr.  Thompson,  before  presenting  their  views  upon  the 
merits  of  the  investigation,  call  attention  of  the  Senate  to  tlie  fact 
that  upon  tire  first  notice  to  Commissioner  Thompson  of  the  investi- 
gation the  access  to  the  records  of  the  department,  and  an  unre- 
strained opportunity  to  examine  into  all  things  therein,  or  connected 
therewith,  was  accorded.  Coming  to  the  matters  which  your  com- 
mittee was  instructed  to  consider,  the  Senate  is  reminded  that  the 
resolution  directing  the  investigation  proceeded  first  upon  the  fact, 
recited  in  the  preamble,  that  the  expenditures  of  the  department  of 
public  works  for  1881  exceeded  those  of  1880  by  $620,065.21, 
and  those  of  18Y9  by  $1,312,759.28;  and  secondly  upon  the  charge, 
also  recited  in  the  preamble,  that  such  increase  of  expenditures  was 
due  to  gross  neglect  of  duty  and  violation  of  law  on  the  part  of  the 
commissioner.  At  the  outset  of  the  investigation  Mr.  Thompson 
stated  and  explained,  in  response  to  questions  by  your  committee, 
that  he  became  commissioner  of  the  department  of  public  works 
on  December  10th,  1880 ; that  the  estimates  for  1881  were  made 
in  September,  1880,  by  his  predecessor,  Mr.  Allan  Campbell;  that  the 
expenses  of  the  department  vary  from  year  to  year,  increasing  and 
decreasing  with  the  amount  of  money  appropriated  to  its  use,  and  that 
in  1881  the  expenditures  of  the  department  did  not  exceed  the 
amount  which  had  been  appropriated  to  be  expended  by  it. 

Mr.  Thompson  also  stated  that  there  were  four  classes  of  accounts 
in  his  department  which  were  affected  by  this  increase,  namely  : 


1.  Appropriation  or  tax  accounts  in  which  there 

was  an  increase  of $452,136  00 

2.  Assessment  of  reimbpirsement'account  in  which 

there  w’as  an  increase  of 164,633  00 

3.  Revenue  or  temporary  tax  loan  in  which  there 

was  an  increase  of 4,718  00 

4.  Bonded  account  for  permanent  water  supply  in 

which  there  was  an  advance  of 3,  411  00 


Making  as  already  stated  a total  increase  of $620,076  00 


In  reference -to  the  increased  expenditure  in  the  appropriation 
account  it  was  found  that  $132,835  was  incurred  for  new  works,  in 
rebuilding  a public  market  and  a public  bath,  the  alterations  of  armo- 
ries, and  changes  in  the  reservoir  system. 

The  balance,  $319,301,  was  for  increased  work  covering  a reinforce- 
ment of  the  aqueduct  which  had  become  necessary  from  extreme 
])ressure  and  striiin,  and  on  account  of  its  age ; for  the  repairing 
and  repaving  streets,  and  repairs  to  tlie  boulevards  and  unpaved  roads ; 
fertile  rebuilding  of  sewers  ; for  suppressing  waste  of  water  and 
rojiairing  the  pipes;  for  the  increased  cost  of  lighting  the  city,  and 
lor  improvements  to  public  buildings. 

The  nec.essiticis  of  these  works  woi’c  made  evident,  and  had  been 
anticipatt;d  by  the  predecessor  of  the  present  commissioner  in  his 
request  to  the  boanl  of  estimate  and  apportionment,  which  is  required 


No  49.] 


3 


to  pass  upon  and  determine  the  appropriations  of  each  departmeni 
of  the  city.  The  Comptroller  is  a member  of  this  board,  and  it  ap- 
pears that  in  the  course  of  the  political  changes  in  the  city,  it  became 
his  duty  to  pass  as  comptroller  upon  his  own  estimates,  made  shortly 
before  by  him  in  his  official  capacity  as  commissioner  of  public 
works.  The  present  commissioner  expended  the  allowances  made 
by  the  board  of  estimate  and  apportionment,  and  consequently  the 
committee  deemed  it  necessary  only  to  investigate  the  manner  in 
which  the  expenditures  had  been  made.  The  increased  expenditure 
in  the  assessment  and  revenue  accounts,  aggregating  $171, 351, 
it  appears  was  occasioned  by  the  increase  of  work  on  regulating, 
grading,  paving,  sewering  and  other  improvements  to  the  streets. 
In  the  bonded  account  there  is  to  beinoted  a small  decrease  in  the  com- 
parative expenditure  with  the  preceding  year,  the  money  expended 
was  for  increasing  the  water  supply  by  conducting  the  waters  of  the 
Bronx  river  to  the  city,  and  making  them  available  ; the  commence- 
ment of  this  essential  improvement  necessitated  the  purchase  of 
land  and  water  rights,  including  surveys  for  a new  aqueduct. 

These  statements  and  explanations  of  Mr.  Thompson  have  been 
carefully  examined  by  your  committee’s  counsel,  and  it  is  but  fair  to 
the  commissioner  of  public  works  to  say  that  they  have  been  fully 
verified. 

The  attention  of  the  Senate  is  also  recalled  to  the  recital  contained 
in  the  preamble,  upon  which  the  resolution  of  investigation  was  in 
part  based.  .This  recital  is  to  the  effect  that  the  published  quarterly 
reports  of  the  Comptroller  of  the  city  of  New  York  for  1881,  show 
apparent  evasions  and  violations  of  law,  and  charter  provisions  on 
the  part  of  said  commissioner.”  It  will  be  seen  from  the  testimony, 
as  well  as  from  the  investigation  of  accounts  made  by  your  commit- 
tee,' that  the  fact  in  this  regard,  is  that  such  payments  of  over  $1,000 
were,  in  many  cases,  the  aggregation  of  numerous  orders,  running 
from  $10  upwards,  and  that  these  items  were  and  are  allowed  to  ac- 
cumulate in  order  to  save  much  clerical  labor,  and  prevent  petty 
transactions  in  the  departments . In  the  reports  of  the  Comptroller, 
the  dates  of  the  payments  are  recorded,  and  not  the  dates  on  which 
the  orders  were  issued  by  the  department  of  public  works,  or  the 
dates  on  which  the  labor  or  material  were  furnished  to  the 
department. 

The  sucessive  appearance  of  the  names  of  an  individual  or  firm  will 
occur  in  the  Comptroller’s  report,  who,  although  receiving  a number 
for  the  same  class  of  work  or  materials  at  different  times,  covering  a 
long  period,  may  not  render  his  bills  against  the  city  until  they  have 
accumulated,  and  he  then  receives  at  one  time,  several  warrants  or 
checks,  which  aggregate  more  than  $1,000.  From  the  evidence,  as 
well  as  the  examination  made  by  us,  it  does  not  appear  that  any  one 
order,  amounting  to  $1,000,  was  drawn  on  any  single  day,  for  any 
one  article  or  kind  of  work. 

In  regard  to  the  disposition  of  other  funds  embraced  in  the  repairs 


4 


[Senate 


to  sewers,  restoring  and  replacing  pavements  or  flagging  over  open- 
ings made  in  the  streets  by  plumbers  and  otliers,  we  lind  that  while 
the  reports  of  the  comptroller  show  that  sums  varying  from  $800  to 
$1,000  were  paid  at  dates  so  near  each  other  as  to  indicate  an  ap- 
parent violation  of  law,  an  examination  of  the  accounts  and  a tracing 
of  the  separate  bills  to  the  original  order  from  the  department  of  public 
works,  show  however,  that  in  many  cases,  these  amounts  were  made 
up  by  aggregating  numerous  orders,  varying  in  amount  from  $10 
upward  as  heretofore  explained.  Touching  the  matter  of  supplies, 
it  seems  to  have  been  the  custom  of  the  department,  in  the  purchase 
of  hydrants,  stop-cocks,  etc.,  that  the  lowest  bidder,  at  a letting  of 
work,  should  receive  the  subsequent  orders  for  like  articles,  until 
a change  in  the  condition  of  the  market  warranted  the  invitation  of 
new  proposals  either  by  public  or  private  letting  ; the  prices  for 
certain  classes  of  goods,  as  established  by  the  public  letting  of 
October  15th,  1881,  prevailed  until  the  public  letting  of  May  4th, 
1882,  and  at  the  latter  letting,  the  prices  were  a trifle  higher 
than  had  been  paid  in  the  interim. 

From  an  examination  of  reports  and  inquiry  at  other  departments, 
we  are  informed  that  all  exercise  the  discretion  of  purchasing  sup- 
plies without  public  letting,  in  quantities  amounting  to  less  than 
$1,000,  and  it  is  claimed  by  the  departments  that  the  use  of  this 
discretion  is  generally  conducive  to  the  best  interests  of  the  city. 
In  the  charter  of  1857,  the  limit  as  to  the  amounts  which  heads  of 
departments  might  expend  without  advertisement  was  fixed  at  $250, 
but  by  the  charter  of  1873,  now  in  force,  the  amount  was  increased 
to  $1,000.  We  are  however  of  opinion,  notwithstanding  the  course 
hitherto  pursued  by  the  department  of  public  works  and  other  city 
departments,  that  when  it  is  apparent  supplies  will  be  required  within 
a reasonable  time  to  a value  in  excess  of *$1,000,  that  such  supplies 
should  be  obtained  by  contract  through  public  letting  under  the 
charter. 

In  conclusion,  your  committee  commends  the  testimoney  taken 
upon  the  investigation  to  the  consideration  of  the  senate.  Its 
perusal  will  show  that  the  committee  did  not  confine  its  researches 
within  the  technical  limits  ot  the  resolution,  but  believing  that  abuses, 
if  they  existed  in  the  department,  should  be  abated  whether  they  fell 
within  or  without  the  strict  line  of  authorized  inquiry,  your  commit- 
tee sought  generally  for  information  touching  the  right  and  proper 
conduct  of  the  public  trust  reposed  in  the  commissioner  of  public 
works.  With  this  field  for  investigation,  thoroughly  traversed  as 
your  committee  believe,  no  material  irregularity  or  mismanagement 
in  the  business  of  said  de])artment  has  been  found,  and  it  remains 
therefore  only  for  your  committee  to  submit  the  result  of  their 
investigation  to  the  Senate  and  their  conclusion  that  the  evidence 
does  not  sustain  the  allegations  coiitained  in  the  preamble  to  the 
resolution  of  March  15th,  1882,  and  that  the  commissioner  of  public 
work^  should  be  exonerated  therefrom,  and  recommend  to  the 


Ko  49.] 


5 


Senate  the  adoption  of  this  report  and  the  discharge  of  the  commit- 
tee from  the  further  consideration  of  the  matter. 

THOS.  R GEADY, 

D.  McCAETHY, 

JAMES  DALY, 

FEANK  P.  TEEANOE, 
JAMES  W.  COYEET. 


We  attended  but  two  meetings  of  the  committee  and  nothing  was 
developed  at  such  meetings,  to  indicate  any  want  of  official  care 
or  corruption  in  the  department  of  public  works. 

F.  LANSING, 

CHAS.  H.  EUSSELL. 


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i'W':; 


STATE  OF  NEW  YORK. 


No.  50. 


IN  SENATE. 


May  4,  1883. 


REPORT 

OF  COMMITTEE  APPOINTED  TO  INVESTIGATE  THE 
LAYING  OF  MAINS  AND  OTHER  STRUCTURES  BENEATH 
THE  SURFACE  OF  STREETS  IN  NEW  YORK  CITY. 

To  the  Senate: 

March  2d,  the  Senate  adopted  the  following  : 

Whereas,  It  is  matter  of  serious  complaint  that  certain  corporations 
in  the  city  of  New  York,  having  franchise  rights  to  use  the  streets  and 
avenues  of  the  said  city  for  the  laying  of  mains  and  other  structures 
beneath  the  surface  thereof,  having  so  exercised  their  rights  in  refer- 
ence thereto  as  to  endanger  the  lives  and  seriously  affect  the  health  of 
the  residents  in  said  city  ; and 

Whereas,  Many  complaints  have  been  made  as  to  the  condition  of 
the  pavements  of  many  of  the  streets  and  avenues  in  said  city,  result- 
ing, in  a large  measure,  from  the  manner  in  which  the  corporations 
referred  to  have  conducted  their  operations  in  tearing  up  and  restoring 
the  same  ; and 

Whereas,  Pavements  of  the  said  city  are,  in  many  districts,  in  a con- 
dition which  renders  passage  over  them  difficult  and  dangerous  ; there- 
fore, 

Resolved,  That  it  be  and  hereby  is  referred  to  the  Senators  from 
the  city  of  New  York  to  inquire  into  the  matters  above  specified,  and 
report  what  legislation,  if  any,  is  in  their  judgment  necessary  to  con- 
trol and  secure  the  proper  exercise  of  the  rights  and  franchises  of  the 
corporation  referred  to,  in  opening  the  streets  and  avenues  of  said 
city  and  in  constructing  their  works  beneath  the  same  and  restoring 
the  pavements ; and  what  legislation,  if  any,  is  necessary  to  secure  a 
more  adequate  and  efficient  system  of  paving  the  streets  and  avenues 
in  said  city . 

[Sen.  Doc.  No.  50.] 


1 


2 


[Senate,  No.  50.] 


Pursuant  to  said  resolution  a inceting  of  the  Senators  represent- 
ing the  city  of  New  York  was  held  at  the  City  TTall  in  the  city  of  New 
York,  March  31st,  for  the  purpose  of  hearing  argument  upon  the 
subject  referred  to  in  the  resolution. 

A nund^er  of  citizens  appeared  and  addressed  the  committee  and 
their  statements  are  su])mitted  herewith.  The  argument  was  in  favor 
of  legislation  authorizing  the  repavement  of  Fiftli  avenue  in  tlie  city 
of  New  York  witii  a granite  block  on  a concrete  foundation.  d'hat 
there  should  be  a durable  and  substantial  pavement  provided  for  Fifth 
avenue,  which  is  one  of  the  great  thoroughfares  of  the  city,  there 
does  not  appear  to  be  any  doubt ; and  as  the  local  authorities  do 
not  possess  the  power  to  make  such  an  improvement,  we  recommend 
that  some  legislation  upoif  the  subject  be  passed. 


JOHN  W.  BROWNING 
JOSEPH  KOCH, 
FRANK  P.  TREANOR. 


REPORT'. 


Tlie  Senate  committee,  to  whom  was  reterred  the  matter  of  the 
street  pavements  in  New  York  city,  met  on  Saturday,  Marcli  31,  1883, 
pnrsiuant  to, resolution,  etc. 

On  motion  of  Senator  Koch,  Senator  Browning  took  tlie  chair. 

The  following  views  were  given  by  citizens  in  relation  to  street 
paving,  etc. : 

John  J.  Bradley  gave  the  following  as  his  views  on  the  matter  : 

It  is  only  about  an  hour  ago,  Mr.  Chairman,  that  I was  informed 
that  a committee,  consisting  of  the  Senators  representing  the  county 
of  New  York,  were  to  meet  here,  for  the  purpose  of  hearing  what  any 
citizen  might  have  to  say  in  regard  to  the  paving  iind  repairing  and 
the  condition  of  the  streets  of  this  city.  I at  first  thought  it  Was  the 
intention  of  the  committee  to  hear  suggestions  only  in  relation  to  the 
repaving  of  certain  prominent  thoroughfares.  So  far  as  the  uprooting 
of  the  streets  is  concerned,  not  being  an  engineer  I am  unable  to  say 
how  that  can  be  remedied.  I suppose  the  present  commissioner  of 
public  works  has  or  will  have  some  advice  on  that  subject.  The  way 
streets  are  torn  up  and  the  pavement  afterward  relaid  is  a matter  that 
requires  very  serious  attention,  and  something  should  be  done  to 
remedy  it.  So  far  as  pavements  are  concerned,  1 very  justly  can  say 
that  the  streets  are  in  a horrible  condition — that  is,  many  of  the  streets 
are  and  the  principal  ones  too.  Many  of  the  side  streets  are  dangerous 
on  account  of  the  bad  pavement,  and  I consider  that  they  in  a great 
many  instances  should  be  regraded  and  repaved. 

So  far  as  the  streets  where  a great  traffic  is  done,  such  as  Broadway, 
and  West  Broadway,  where  an  enormous  amount  of  traffic  goes  over 
them,  those  who  have  a great  many  vehicles  have  come  to  the  conclu- 
sion that  the  only  decent  pavemient  is  the  pavement  now  on  Broadway 
laid  even  if  laid  level.  It  is  a pavement  that  I suppose  nobody  has  a 
patent  on  and  any  one  is  allowed  to  come  in  and  make  their  bids  on  it, 
and  I think  the  people  of  the  city  of  New  York  would  be  best  sub- 
served by  establishing  a uniform  pavement  for  all  the  streets  and 
^venues  similar  to  that  now  on  Broadway.  Eestrictions  should  be 
made  in  regard  to  tearing  up  the  streets  which  after  they  are  properly 
paved  and  not  meddled  with  will  be  in  good  condition.  These  are  my 
views,  gentlemen,  without  any  notice  that  J was  to  appeO'^  her^  ^ 
thank  you  for  your  kind  attention  ! 


4 


[Senate 


Views  of  Mr.  Win.  T.  Ryerson. 

I am  one  of  tlic  firm  of  Ryerson  & Brown  and  am  largely  interested 
in  the  livery  business  in  this  city.  The  streets  have  given  us  a great 
deal  of  trouble  and  annoyance.  It  has  been  a very  serious  matter 
with  us,  whei'C  they  take  and  tear  u])  the  street,  it  subjects  us  to  a 
great  many  delays,  and  our  customers  have,  very  ])ro|)crly,  made  a 
great  many  com])hiints  and  found  a great  deal  of  fault  with  them. 

I think  that  the  Fifth  jivenue  ])avement  is  of  very  great  importance, 
as  it  is  one  of  the  main  thoroughfares,  and  we  have  had  a great  deal 
of  troulde  about  it.  Tlie  patent  pavement  in  front  of  the  Ihiekingharn 
Hotel”  is  very  bad.  At  one  time  1 have  seen- as  many  as  three  single 
horses  down,  on  account  of  the  sli])pei-y  i)avement  there.  The  pave- 
ment in  front  of  the  Windsor  Hotel,”  which  we  do  the  work  for, 
troubles  us  a great  deal.  It  is  very  sli])pcry,  ])articularly  after  a rain, 
and  it  is  a risk  to  drive  horses  there.  The  right  kind  of  ])avemcnt 
to  be  placed  there  is  a rough  stone  i)avement  or  a coarse  granite 
pavement. 

By  Senator  Browning  : 

Q.  Mr.  Ryerson,  in  your  judgment,  the  commissioner  of  public 
works  has  full  charge  of  this  matter,  has  he  not  ? A.  I don’t  know. 

(2.  He  is  superintendent  of  all  the  streets  ? A.  I have  understood 
that  the  Fifth  avenue  pavement  was  a separate  matter,  that  it  was 
under  control  of  the  Legislature,  and  it  has  been  so  in  the  past  and 
would  be  in  the  future.  It  is  very  important  that  this  avenue  should 
be  re])aved  with  a pavement  similar  to  that  on  Broadway,  and  means 
should  be  taken  to  prevent  the  avenue  from  being  torn  up. 

Q.  AVhen  was  it  paved  last  ? A.  Several  years  ago.  Since  then  . 
they  have  tried  experiments  on  it,  two  or  three  times,  with  patent 
pavements,  and  every  one  of  them  have  been  a failure  and  a nuisance. 

Q.  Is  there  a good  pavement  there  now  ? A.  No,  sir ; it  is  very 
slippery,  and  if  it  had  not  been  for  the  action  of  the  stage  company 
in  sanding  the  street,  many  days  we  would  have  been  unable  to  use  it 
at  all.  When  it  is  very  slipj^ery  sand  is  put  there,  thrown  over  it  by 
the  stage  company.  The  stone  with  which  it  is  paved  is  the  wrong 
shape  and  wears  very  slippery. 

Q.  What  in  the  way  of  improvement  have  you  to  suggest  ? A.  A 
coarse-grained  granite  stone  pavement,  laid  oval,  with  a good  solid  bed 
of  sand  underneath. 

if  Has  the  commissioner  of  public  works  now  the  right  to  go  ahead 
with  these  improvements  ? A.  I have  not  kept  up  with  the  spirit  of 
the  times  in  regard  to  the  rights  of  the  commissioner  of  public  works. 

I i ll  ink  it  rests  with  the  common  council  to  be  done,  under  the  direc- 
tion of  the  commissioner  of  public  works. 

Samuel  W.  Andrews  gave  the  following  as  his  views  on  the  subject 
of  street  paving  and  rcjiairing: 

1 ani  jiaj-t  owner  of  the  Fiftli  avenue  line  of  stages,  and  have  been 
for  tlie  last  thirty-one  years;  on  the  12th  of  April  next,  it  will  be 
thirty-one  years.  1 ran  stages  before  the  present  jiavement  was  laid. 

J tiiink  the  present  pavement  was  laid  about  twenty-live  years  ago  — 


5 


No.  60.] 

somewhere  about  tliat  time.  It  is  old  and  has  worn  very  smooth  and 
very  slippery  and  it  is  dangerous  to  horses  to  travel  on  it,  so  much  so 
that  every  winter  we  have  to  sand  it  over,  otlierwise  it  would  he  im- 
passable. This  winter  we  have  distributed  over  two  cargoes  of  sand — 
since  November  last,  tliat  is.  AVc  have  had  to  do  that  for  twenty-five 
years.  It  is  impossible  to  get  over  these  smooth  blocks,  and  we  have 
often  been  obliged  to  run  around  them  to  avoid  them.  We  give  our 
drivers  instructions  to  go  around  them.  It  is  a pavement  that  in  my 
judgment  that  won’t  do  Fiftli  avenue.  From  my  long  experience  of 
thirty  years,  no  other  pavement  would  do  that  avenue,  except  a solid 
stone  pavement  similar  to  the  Broadway  pavement,  no  other  pave- 
ment would  stand  there  except  it,  to  be  laid  oval  and  roughed  so  that 
a horse  could  catch  with  his  feet  and  wouldn’t  slij);  such  a pavement 
and  such  only  will  meet  the  requirements  of  traffic.  Our  company  has 
spent  on  an  average  five  hundred  dollars  (1500)  a year  for  the  last  few 
years  — I mean  for  the  last  twenty-five  years,  and  that  foots  up  quite 
a large  sum  of  money  to  be  spent  by  our  company  repairing  a street, 
besides  the  amount  of  money  the  city  has  spent  on  it,  also  for  repairs. 
The  city  has  done  all  they  could  for  it  in  the  way  of  repairs,  and  the 
rest  we  have  done  ourselves.  It  is  an  avenue  over  which  there  is  a 
very  large  traffic,  and  has  caused  a great  deal  of  trouble.  It  is  really 
the  only  opening  to  the  Central  park  and  the  principal  thoroughfare 
from  and  to  the  Grand  Central  de})ot,  and  over  which  more  omni- 
buses pass  and  the  best  horses  travel  in  the  world.  The  most  valuable 
horses  in  the  world  are  driven  over  it.  I have  heard  gentlemen  say 
that  they  would  do  any  thing  to  get  a good  pavement  on  Fifth  avenue 
and  the  cost  would  not  be  considered  at  all,  what  they  wanted  was  a 
good  pavement,  no  matter  about  the  cost,  and  that  is  what  Fifth  avenue 
should  have.  It  wants  a safe  pavement  laid  where  horses  are  not  con- 
tinually slipping  and  falling  down.  I have  been  requested  frequently 
to  call  on  Mr.  Campbell  during  his  administration  as  commissioner  of 
public  works  and  have  done  so,  and  Mr.  Campbell  told  me  probably 
it  would  be  repaved.  To-day,  positively,  it  is  not  safe  to  drive  over 
it.  In  my  opinion,  nothing  but  a granite  pavement  should  be  laid  on 
Fifth  avenue,  a pavement  similar  to  the  Broadway  pavement  and  like 
the  Seventh  avenue  ])avement.  If  you  drive  up  Seventh  avenue  you 
would  be  pleased  with  the  pavement.  I have  frequently  went  through 
Canal  street,  and  up  that  way  to  get  to  Seventh  avenue,  and  then 
back  in  order  to  avoid  going  up  Fifth  avenue.  I am  very  sure  the 
people  of  this  city  would  be  pleased  with  such  a pavement  as  that. 
There  is  no  other  pavement  that  will  stand  because  of  the  great 
amount  of  traffic  over  Fifth  avenue.  Another  great  injury  done  our 
streets  is  allowing  them  to  be  torn  up  at  all  times.  This  is  wrong  ; 
the  streets  should  be  properly  paved  and  after  that  should  be  left 
alone.  People  driving  to  the  park  by  way  of  Fifth  avenue  are  dis- 
gusted with  the  pavement  of  it.  It  is  simply  disgraceful.  A new  pavement 
should  be  laid  under  the  direction  of  commissioner  of  public  works  — 
Mr.  Thompson.  I think  if  it  were  paved  under  his  direction  the 
people  would  be  satisfied  that  it  would  be  properly  done.  A number 
of  people  have  asked  me  to  call  and  see  the  commissioner  of  public 
works  about  it. 


6 


[Senate 


By  Senator  Browning  : 

Q.  You  say  a iiuni])er  of  people  have  suggested  to  you  the  propriety 
of  calling  upon  the  connnissioner  of  ])ul)lic  works  to  ask  him  to  put 
down  sucli  a pavement  on  Fifth  avenue  as  you  say  is  needed  there  — 
what  reply  did  lie  make  ? A.  He  said  he  would  do  that  as  soon  as  he 
could. 

Q.  Do  you  think  the  pavement  now  on  Fifth  avenue  is  worn  out  ? 
A.  Yes  ; the  stones  have  ])een  turned  over,  they  are  loose ; 1 have 
turned  them  over  myself,  and  have  taken  them  up  myself  by  the  hun- 
dred ; we  have  had  to  do  it  in  order  to  get  along. 

Q.  When  did  you  last  call  on  the  commissioner  of  public  works  ? 
A.  I think  it  is  two  years  ago  or  more.  It  was  when  Mr.  Campbell 
was  commissioner  of  public  works.  I never  spoke  to  him  but  once 
about  it.  Some  gentlemen  on  the  ‘^road’’  refjuested  me  to  call  on 
him  in  relation  to  repaving  Fifth  avenue  and  I did  so,  as  I promised 
them  I would.  When  I called  on  him  I told  him  1 was  directed  to 
do  so  in  relation  to  it,  and  he  told  me  that  as  soon  as  he  could  attend 
to  it  he  would.  He  said  when  he  got  the  money  he  would  attend 
to  it. 

Q.  Have  you  any  thing  to  say  about  tearing  the  streets  up  and  put- 
ting down  steam  pii)es  ? A.  Yes  ; we  have  suffered  greatly  by  that. 
During  the  last  winter  jiarticularly,  it  lias  hurt  us  very  much  ; they 
have  torn  up  portions  of  Broadway  and  Fulton  streets.  It  has  hurt 
my  business  very  much  ; it  has  not  only  hurt  our  business,  but  it  has 
rendered  travel  very  dangerous  ; I had  one  stage  broken  all  to  pieces. 
One  of  our  horses  fell  into  a hole  caused  by  this  laying  of  steam  pipes 
and  hurt  himself.  Another  time  a large  piece  of  rock  came  crashing 
through  the  roof  of  a stage,  it  must  have  weighed  fifteen  pounds,  for- 
tunately no  one  was  killed  ; it  was  caused  by  the  explosion  of  a steam 
heating  pipe.  This  thing  of  tearing  the  streets  up  should  be  stopped. 

Q.  How  did  you  say  the  rock  came  through  the  stage  ? A.  It  was 
caused  by  a steam  heating  pipe  bursting,  and  it  sent  this  large  stone 
up  in  the  air  and  came  crashing  through  the  roof  of  the  stage,  nobody 
was  hurt,  it  broke  through  the  top  and  went 'right  across. 

By  Senator  Boyd  : 

Q.  Do  you  say  this  stone  was  thrown  in  the  air  by  a burst  in  one  of 
tlie  steam  heating  pipes  ? A.  I presume  it  was,  the  driver  reported 
that  a steam  pipe  had  bursted  in  the  street,  and  had  thrown  this  stone 
through  the  stage,  but  nobody  was  hurt.  I have  had  several  horses 
hurt  by  stepping  into  holes  in  the  street. 

Q.  Can’t  the  holes  be  avoided  ? A.  No,  sir  ; I considered,  it  very 
injurious  to  the  streets  to  allow  this  laying  of  steam  heating  pipes,  one 
can’t  imagine  the  moment  a burst  might  occur. 

lly  Senator  Fitzgerald  : 

(2.  When  you  asked  the  commissioner  of  public  works  about  the  re- 
paving of  Kiflh  jiveniie  was  it  to  be  done  out  of  the  a])propriation  for 
r(!i)aii-ing  stro(!ts.  A.  J le  replied  that  there  was  no  money  appropriated 
for  that  ))urpose  now,  but  that  as  soon  as  they  had  the  money  they 
intended  to  rcjiavo  it.  In  driving  through  the  streets  it  is  like  driving 


No.  50.] 


7 


oyer  a mine,  you  don’t  know  the  moment  tiiey  are  going  to  burst  and 
send  you  up  in  the  air.  Not  long  ago  my  brother  was  ])assing  down 
Nassau  street,  when  something  resembling  an  earthquake  occ.urred 
and  blocks  and  asphalt  filled  the  air. 

Senator  Browning  — ‘‘If  there  is  anybody  here  that  desires  to  be 
heard  now  upon  the  subject  we  are  ready  to  listen  to  them.” 

Mr.  Marshall  : — “Mr.  John  B.  Sherwood  said  he  would  be  here, 
he  is  very  anxious  to  have  a granite  pavement  on  Fifth  avenue.” 

By  Senator  Browning  : 

Q.  Mr.  Eyerson,  have  the  men  in  your  business  ever  had  any  con- 
sultation upon  this  subject,  and  have  they  come  to  any  conclusion  as 
to  how  Fifth  avenue  should  be  paved  ? A.  Yes,  sir  ; several  years 
ago  we  did,  but  we  were  told  as  there  was  no  appropriation  to  repave 
Fifth  avenue  it  could  not  be  done.  I was  given  to  understand  then 
that  it  was  a matter  with  which  the  Legislature  had  to  deal  and  not 
the  city  authorities. 

Senator  Fitzgerald  — Then  I suppose  the  Legislature  must  make 
an  appropriation  for  this  work;  as  I understand  it  the  commissioner 
of  public  works  has  an  amount  set  apart  for  repairing  and  he  can’t 
use  any  of  that  appropriation  for  repaving  ? A.  Yes  ; that  is  it, 
I believe. 

Q.  What  have  you  to  say  about  the  present  manner  of  paving  the 
streets  — so  far  as  the  stone  is  concerned  ? A.  Many  of  the  streets 
are  paved  with  a trap  block  that  wears  very  smooth,  and  is  very  slip- 
pery, especially  in  dry  weather.  In  the  month  of  March  it  is  as  smooth 
as  glass.  We  have  never  experienced  any  such  trouble  with  the  cross- 
grained  granite  blocks.  I know  from  experience  that  the  trap  block 
wears  smooth.  We  have  four  hundred  (400)  horses  running  all  the 
time. 

Q.  You  are  one  of  the  firm  of  Eyerson  & Brown,  are  you  not  ? A. 
Yes,  sir. 

The  committee  here  adjourned  sine  die,  Senator  Browning  stating 
that  any  further  information  on  the  subject  could  be  forwarded  to 
him  at  Albany. 

The  above  is  a correct  copy  of  the  proceedings  of  the  above  com- 
mittee, which  met  in  the  City  Hall  at  New  York  city,  Saturday,  March 
31,  1883,  at  1 p.‘  M. 

New  York,  Apr^l  2,^1883. 

TAMES  H.  LYON, 
^i^Stenographer, 


8 


[Senate 


533  Fifth  Ave.,  New  York,  ) 
March  31,  1883.  f 

lion.  Jno.  W.  Browning,  Senate  Chamher,  Albany,  JY.  Y.: 

Dear  Sir — • In  (Icfcrence  to  requests  nuide  to  me  })y  several  of  my 
l)atroiis  — owners  of  Fifth  {ivenue  ])roperty  — it  liad  been  my  intention 
to  go  before  you  and  your  committee  to-day  to  urge  the  necessity  of 
repaving  the  Fifth  avenue,  but  other  important  business  has  pre- 
vented me. 

The  condition  of  this  avenue  — tlie  finest  tlioroughfare  in  the  world 
— is  simjvly  disgraceful.  The  little  worn-out  and  slijipery  trap  block 
stones  were  only  lit  for  light  carriage  driving  — the  heavy  traffic  now 
existing  requires  a large  and  dce|)  but  narrow-edged  paving  stone  set 
upon  a concrete  bed  to  withstand  tlic  travel.  The  condition  of  the 
avenue  to-day  renders  life  and  limb  in  constant  jeopardy,  as  witness 
the  daily  accidents.  I inclose  you  a couple  of  printed  slips. 

Yours  truly, 

ClIAS.  MacKAE. 


A Petition  to  Kepave  Fifth  Avenue.with  Granite  Blocks. 


New  York,  Ajiril  4,  1883. 

Hon.  J.  W.  Browning,  Chairman  : 


We,  the  undersigned  residents  and  tax  payers  of  the  city  of  New 
York,  having  seen  your  invitation  to  those  having  any  thing  to  say 
relative  to  the  repaving  of  Fifth  avenue,  would  respectfully  petition 
your  honorable  committee  to  favorably  consider  the  question  of  taking 
up  the  present  pavement  and  putting  down  granite  blocks  the  same  as 
Broadway.  Every  day  there  is  one  or  more  valuable  horses  fall  and 
permanently  injured. 

We  have  been  as  patient  as  possible  in  hopes  that  some  action  would 
be  taken  whereby  we  would  be  relieved,  but  'up  to  the  present  there  has 
seemed  to  be  no  prospects  of  our  hopes  being  realized. 

Hoping  this,  our  petition,  will  not  be  in  vain,  we  are,  dear  sir,  very 
respectfully.  ' 


Joseph  N.  Naylor, 
Thos.  N.  Cuthbert, 
John  H.  Shaw, 

A.  D.  Williams, 
Edward  Griffin, 
George  W.  Skellen, 
Jas.  llarmel, 

Edw.  P.  Moore, 
John  Martine, 

J.  II.  Horton, 

John  H.  Burk, 

Geo.  H.  Rich, 

E.  P.  Sanderson, 


Geo.  W.  McLean, 
Alex.  Herring, 
Henry  L.  Faris, 
Washington  Hadley, 
Lewis  D.  Bulkley, 
Chas.  G.  Child, 

W.  S.  Fogg, 

J.  E.  Cossart, 

Thos.  C.  de  Luce, 
Chas.  H.  Whitfield, 
Peter  Kenny, 

H.  R.  McMurray, 
Chas.  E.  Bostwich, 


No.  50.] 


9 


Eugene  S.  Bull  in, 
Z.  M.  Quimby, 

F.  R.  Arnold, 

S.  H.  C.  Wade, 
Jno.  N.  Gerard, 
Nicholas  W.  Day, 
A.  M.  Underhill, 

0.  H.  MacLein, 
Oliver  W.  West, 
Edward  L.  Milhau, 
Chas.  Macauley, 

J.  E.  Hamilton, 


Win.  Y.  'bompkins, 
Theo.  N.  Melvinn, 
G.  Arnold, 

F.  C.  You  mans, 

P.  Wm.  Binder, 

J.  L.  Naylor, 

R.  M.  Carrington, 
Thos.  B.  Odell, 

S.  H.  AVhlkins, 
Ralph  Sharrock, 
John  T.  Pryer, 

C.  L.  Frees. 


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STATE  OF  NEW  YORK. 


No.  51. 


IN  SENATE, 

May  3,  1883. 


i 

REPORT 

OF  THE  SPECIAL  COMMITTEE  OF  THE  SENATE,  AP- 

POINTED  TO  INVESTIGATE  THE  AFFAIES  OF  THE 

ALBANY  COUNTY  PENITENTIARY. 

To  the  Senate  of  the  State  of  New  York  : 

The  committee  appointed  by  resolution  of  the  Senate  of  March  2, 
1883,  to  inquire  as  to  the  management  of  the  Albany  County  Peni- 
tentiary respectfully  report : 

That  upon  a hearing  duly  appointed  and  notified  to  the  public,  by 
the  lecal  press  of  the  city  of  Albany,  the  officers  of  the  penitentiary 
and  others  representing  those  by  whom  the  management  of  the  in- 
stitution had  been  called  in  question,  attended  before  your  commit- 
tee. That  on  both  sides  these  parties  were  represented  also  by  law- 
yers of  experience  and  reputation.  That  upon  statements  made  at 
that  hearing  by  the  counsel  representing  those  who  asserted  mis- 
management and  abuse  in  the  affairs  of  the  institution,  allegations 
were  framed  as  a basis  for  the  investigation,  which  covered  the 
grounds  of  cruelty  to  the  prisoners  in  their  treatment  and  discipline  ; 
of  overtaxing  them  by  work  ; of  the  insufficiency  and  bad  quality  of 
the  food  furnished  to  them ; of  cleanliness  in  their  clothing  and  ac- 
commodations ; and  of  the  general  care  and  management  of  the 
prison  and  of  the  prisoners  confined  therein. 

Your  committee  did  not  conceive  that  the  resolution  under  which 
they  acted  directed  or  authorized  an  examination  into  the  manage- 
ment of  the  financial  affairs  of  the  prison,  that  being  in  their  judg- 
ment a question  in  which  the  county  of  Albany  is  especially,  if  not 
exclusively,  interested-  Moreover,  it  was  understood  by  your  com- 
mittee that  an  investigation  in  that  respect  was  progressing  under 
direction  of  a committee  of  the  board  of  supervisors  of  that  county. 
Your  committee  declined  to  enter  upon  that  subject  and  limited 
[Sen.  Doc.  No.  51.]  1 


2 


[Senate 


their  inquiries  to  the  topics  above  mentioned,  tliat  is  to  say  as  to  the 
general  management  and  treatment  and  care  of  the  prisoners  com- 
mitted to  tlie  institution,  for  whom  yoin*  committee  regarded  tlie  in- 
stitution as  re8])onsil)le  to  tlie  State. 

Your  committee  extended  to  both  parties  so  a[)pearing  before 
them  the  fullest  opportunity  to  establish  their  respective  accusations 
and  defenses,  and  issued  subpoenas  to  both  sides  in  such  numbers 
and  as  often  as  requested  by  such  parties  res]>ectively  ; they  also 
adjourned  from  time  to  time,  and  at  each  of  their  several  hearings 
extended  the  right  of  examination  and  cross-examination  to  the 
counsel  representing  either  side. 

Yqur  committee  held  six  different  sessions  at  which  witnesses  to 
the  number  of  twenty  in  the  aggregate  produced  by  those  asserting 
the  mismanagement  of  the  institution  were  examined  and  cross- 
examined,  and  they  also  heard  the  testimony  of  seven  witnesses 
produced  on  behalf  of  the  penitentiary  upon  the  examination  and 
cross-examination  of  the  counsel  for  the  respective  parties. 

Your  committee  are  not  able  to  discover  in  the  testimony  adduced 
any  foundation  for  the  charges  made  under  any  of  the  heads  above 
specified,  nor  are  they  able  to  dispute  the  statements  of  those  appear- 
ing on  behalf  of  the  institution  that  it  is  in  all  respects,  so  far  as  the 
subjects  of  investigation  entered  into  by  your  committee  are  con- 
cerned, well  and  properly  managed. 

Some  testimony  was  given  as  to  the  quality  of  the  food,  the 
cleanliness  of  the  cells,  clothing  and  bedding,  the  care  and  attention 
to  the  sick  in  hospital,  the  overtaxing  of  prisoners  in  feeble  health, 
which  tended  to  show  that  there  had  been  abuse  or  remissness  in 
these  particulars,  but  this  testimony  was  not  of  a character  to  which 
your  committee  felt  justified  in  according  entire  confidence,  and  the 
statements  made  by  different  witnesses  testifying  against  the  institu- 
tion did  not  wholly  corroborate  each  other.  Neither  did  the  testi- 
mony given  on  the  same  subjects  by  officials  of  the  prison,  by  the 
chaplains,  two  in  number,  in  charge,  by  the  physicians  employed 
there  regularly,  or  by  the  surgeon  and  physician  called  in  for  con- 
sultation, all  of  whom  were  examined  as  witnesses,  confirm  or  sup- 
port such  testimony  in  any  particular ; such  testimony  was  on  the 
contrary  in  direct  conflict  with  the  testimony  referred  to. 

Your  committee  also  paid  a visit  to  the  penitentiary  and  made 
personal  examination  of  its  various  departments,  such  as  the  work- 
rooms for  males  and  females,  the  cells,  the  kitchen,  hospital,  bathing- 
rooms,  meat-room,  storehouses,  grounds  and  premises  ; and  they  feel 
authorized  to  report  that  they  found  each  and  all  of  them  in  an  ex- 
cellent and  commendable  condition. 

In  the  cells  of  the  male  departments  the  condition  of  tidiness  in 
the  bedding  seemed  to  vary  with  the  peculiarities  of  the  inmates, 
but  there  was  nothing  ap[)arent  in  any  of  them  which  in  the  judg- 
ment of  your  committee  indicated  neglect,  or  failure  to  provide  suf- 
ficient changes  on  the  part  of  the  prison  officials,  nor  was  any  such 
condition  apparent  to  your  committee,  as  would  not  be  looked  for 


No.  61.] 


3 


in  the  bedding  of  men  engaged  in  labor  such  as  is  required  of  the 
convicts  in  the  penitentiary.  The  condition  of  the  cells  in  the  female 
department  was  excellent,  and  there  was  a marked  and  most  com- 
mendable neatness  in  the  corridors,  kitchen,  storehouses  and  other 
rooms  and  apartments  of  the  prison. 

Your  committee  inspected  the  bread  and  rations  of  the  prisoners, 
and  are  able  to  find  no  fault  either  with  the  quality  or  quantity 
which  seems  to  be  furnished,  especially  in  view  of  the  provisions  of 
the  statute  which  provide  that  the  food  in  prisons  shall  be  of 
wholesome  but  of  inferior  quality. 

There  is  testimony  before  your  committee  which  shows  that  cor- 
poral punishment  has  been  at  times  inflicted  upon  the  prisoners,  but 
no  evidence  was  furnished  your  committee  to  show  that  any  such 
punishment  has  been  inflicted  since  the  date  of  the  communication 
of  the  Governor  of  the  State  to  the  Superintendent  of  State  Prisons, 
bearing  date  February  2,  1883. 

All  which  is  respectfully  submitted. 

Albany,  May  2,  1883. 

A.  P.  JONES, 

ABPAHAM  LANSING 
- ^ . SUMNER  BALDWIN. 


STATE  OF  NEW  YORK. 


No.  63. 


IN  SENATE. 

May  1,  1883. 


KEPORT 

OF  THE  COMPTROLLER  RELATIVE  TO  ADIRONDACK  RAIL- 
ROAD COMPANY. 

STATE  OF  NEW  YORK  : 

Comptroller’s  Office.  ) 
Albany,  Ajprvl  26,  1883.  f 

To  the  Senate : 

I have  the  honor  to  acknowledge  the  receipt,  on  the  23d  inst.,  of  a 
resolution  adopted  by  the  Senate  on  the  19th  inst.,  of  which  the  fol- 
lowing is  a copy : 

Resolved,  That  the  Comptroller  be  and  is  hereby  requested  to  report 
to  the  Senate  what  lands  are  claimed  by  the  Adirondack  Railroad  Com- 
pany, to  be  held  by  individuals  as  trustees  for  the  benefit  of  said  com- 
pany and  upon  which  said  company  claim  exemption  from  taxation, 
and  also  upon  which  of  such  lands  the  said  company  has  received  ex- 
emption from  taxation. 

By  order, 

JOHN  W.  VROOMAN, 

Clerkr 

In  reply  thereto  I have  the  honor  to  report  as  follows,  viz.: 

First.  That  the  following  described  lands,  claimed  by  said  Adiron- 
dack Company  to  be  held  in  trust  for  it  by  Henry  C.  Crane,  the  former 
treasurer  thereof,  are  the  only  lands  described  by  said  resolution,  of 
which  1 have  information,  viz.: 

HAMILTON  COUNTY. 

Totten  and  Crossfield’s  Purchase. 

Township  Six. 

Lots  4,  5,  6,  10,  11,  12,  16,  17,  18,  24,  27,  29,  30,  31,  33,  37,  38,  44, 
46,  47,  54,  55,  62  and  63. 

[Sen.  Doc.  No.  52.] 


1 


2 


[Senate,  No.  52.  J 


Toionslii'p  22. 

South 

Lots  17,  20,  24,  25,  2G,  27,  28,  29,  32,  30,  40,  45,  46,  47,  48,  49,  50, 
51  and  58. 


SARATOGA  COUNTY. 

Glen  (John)  and  44  Others’  Patent. 

Lot  175,  Sub.  9. 

Kayaderosseras  Patent. 

24^7i  Allotment. 

Great  Lot  9. 

Lots  1 and  2,  sub’s  8 and  9. 

ST.  LAWRENCE  COUNTY. 

Macomb’s  Purchase. 

Great  Tract  2,  Townsliip^^  GransMre.^^ 

South  part,  9.072  acres. 

Second.  That  the  Attorney-General  now  has  under  consideration 
the  question  as  to  whether  or  not  said  lands,  during  any  of  the  years 
they  were  *so  held  in  trust  for  said  company,  were  legally  exempt  from 
taxation. 

Third.  I am  not  aware  that  said  lands  have  ever  been  exempted 
from  taxation  by  reason  of  their  being  thus  held  in  trust  for  or  be- 
longing to  said  company.  - 

Respectfully  submitted, 

IRA  DAVENPORT, 

Comptroller. 


INDEX  TO  SENATE  DOCUMENTS 


^A. 

No 

Albany  County  Penitentiary,  report  of  special  committee  to  in- 
vestigate   51 

Albany.  (See  State  Normal  School.) 

Annual  report  Buffalo  State  Asylum  for  the  Insane 12 

of  Commissioners  of  Emigration 23 

Executive  Committee  of  Prison  Association  of  New  York  . . 46 

Hebrew  Sheltering  Guardian  Society  of  New  York 32 

Managers  Hudson  Kiver  State  Hospital.  10 

Managers  State  Lunatic  Asylum  at  Utica 7 

Managers  of  the  Society  for  the  Reformation  of  Juvenile  De- 
linquents   16 

Board  of  Managers,  Western  House  of  Refuge 17 

New  Capitol  Commissioners ...  13 

of  the  Regents  of  the  University 54 

of  Secretary  of  State  in  relation  to  statistics  of  the  poor. ...  25 

of  State  Assessors 21 

State  Board  of  Charities  14 

State  Engineer  and  Surveyor  on  Canals 9 

on  the  railroads  of  the  State 44 

State  Reformatory  at  Elmira 8 

State  Treasurer 3 

of  the  Thomas  Orphan  Asylum,  Buffalo 24 

Trustees  of  the  Lenox  Library 19 

Trustees  of  the  State  Museum  of  Natural  History 53 

Annual  reports.  (See  Reports.) 

Assessors,  report  of  State 21 

Assembly  and  Senate,  joint  rules 5 

Astor  Library,  report  of . 15 

Attorney-General  and  Comptroller,  report  of,  relative  to  New 
York  Elevated  Railroad 36 

B. 

Black  River  railroad.  (See  Utica  and  Black  River  Railroad.) 

Boarding-house  list 28 

Board  of  managers.  (See  Western  House  of  Refuge.) 

Brooklyn  Jnstitute,  report  of  directors  and  trustees 27 


2 


No. 

Buffalo  State  Asylum  for  the  Insane,  annual  report 12 

Buffalo,  Thomas  Orphan  Asylum,  annual  report 24 

^ C. 

Canal  Appraisers^  report 6 

Canals,  annual  report  of  State  Engineer  and  Surveyor 9 

committee  on,  report  of 48 

Capitol  Commissioners,  report  of,  relative  to  cost  of  New  Capitol.  42 
Capitol.  (See  New  Capitol.) 

Charities,  State  Board  of,  annual  report 14 

Cities.  (See  Committee  on  Cities.) 

Commissioners  of  Emigration,  annual  report  of 23,  31 

(See  Committee  on  Finance.) 

Commissioners  of  New  Capitol,  annual  report 13 

Commissioners.  (See  New  Capitol.) 

Commissioners  of  the  Department  of  Docks  in  reply  to  resolu- 
tion of  the  Senate,  report  of 30 

Commissioners  of  Public  Charities  and  Corrections  in  city  of 

New  York  in  reply  to  resolution  of  the  Senate,  report  of 29 

Commissioners.  (See  Railroad  Commissioners.)  • 

Committee  on  Canals 48 

Committee  on  Cities,  report  of,  relative  to  resolution  of  March  15, 

1882 49 

Committee  on  Corners  and  Futures,  report  of,  relative  to  investi- 
gation of 45 

Committee  of  Finance  on  order  of  the  Senate  to  investigate  af- 
fairs of  Commissioners  of  Emigration,  report  of 31 

Committee  on  Finance,  report  of,  relative  to  State  Normal  School 

building 43 

Committee  on  Insurance.  (See  Insurance  ; Receiverships.) 
Committee  appointed  by  mayor  of  New  York  city  relative  to 

water  supply ...  34 

Committee  relative  to  corporations  in  New  York  city,  report  of . . 50 

Committee  of  Senate,  report  of  special,  relative  to  receivership 

investigation 38 

Committee  of  Senate  to  investigate  the  affairs  of  the  Albany 

County  Penitentiary,  report  of  special 51 

Committee  on  Villages,  report  of,  relative  to  the  town  of  Graves- 
end  39 

Communication  from  trustees  State  Museum  of  Natural  History.  20 
Comptroller  and  Attorney-General,  report  of,  relative  to  New 

York  Elevated  Railroad  Company 36 

Comptroller,  report  of,  relative  to  State  lands 52 

statement  from,  in  response  to  resolution  of  Senate,  relative 

to  amount  expended  upon  New  Capitol 18 

Concurrent  resolutions.  (See  State  Museum  of  Natural  History.) 
Corners  and  Futures,  reports  of  committee  appointed  to  investi- 
gate   45 

Corporations.  (See  New  York  City.) 


a 

t). 

No. 

Directors  and  trustees  of  Brooklyn  Institute,  report  of 27 

Department  of  Docks.  (See  Commissioners.) 

E. 

Executive  committee.  (See  Prison  Association.) 

Elevated  railroad.  (See  New  York  Elevated  Railway  or  Railroad.) 

Elmira,  report  of  State  Reformatory 8 

Emigration.  (See  Commissioners.) 

P. 

Finance.  (See  Committee  on  Finance.) 

Fish  and  Game  Protectors.  (See  Game  and  Fish  Protectors.) 
Franchise,  rights.  (See  New  York  City.) 

Futures.  (See  Corners.) 

G. 

Game  and  Fish  Protectors,  report  of,  in  reply  to  a resolution  of 


the  Senate 22 

General  orders,  list  of 11 

Governor’s  message 2 

Gravesend,  town  of,  report  of  committee  on  villages,  relative  to..  39 

H. 

Harvey,  C.  S.,  memorial  of,  relative  to  rapid  transit  legislation. . . 41 

Hebrew  Sheltering  Guardian  Society,  report  of 32 

Hudson  River  State  Hospital,  annual  report  of  managers 10 


I. 

Indians.  (See  Onondaga  Indians.) 


Insane.  (See  Buffalo  ; Hudson  River  ; Utica.) 

Insurance,  report  of  committee  on  receiverships 38,^  41 

Investigation.  (See  Receivership.) 

J. 

Joint  rules.  Senate  and  Assembly  5 

Juvenile  delinquents.  Society  for  Reformation  of,  annual  report 
of  managers 16 

Ii. 

Lands.  (See  State  Lands.) 

Lenox  Library,  annual  report  of  trustees 19 

Library.  (See  Astor  Library.) 

List  of  General  Orders 11 

of  Senators 1 

of  Senators,  members,  officers  and  reporters  with  boarding- 
houses  28 


' 4 

M. 

iNO, 

Managers  of  Hudson  Kiver  State  Hospital,  annual  report 10 

of  the  Society  for  tlie  Reformation  of  Juvenile  delinquents, 

annual  report 10 

State  Lunatic  Asylum  at  Utica,  annual  report  7 

of  the  Western  House  of  Refuge,  annual  report 17 

Mayor.  (See  New  York  City.) 

Members.  (See  Senators.) 

Memorial,  C.  S.  Harvey,  relatiiig  to  certain  rapid  transit  legisla- 
tion   40 

Message  of  Grovernor 2 

Majority  and  minority  report  of  testimony  taken  by  the  commit- 
tee apnointed  to  investigate  Puts  and  Corners 45 

H. 

New  Capitol,  amount  expended  upon,  statement  of  Comptroller 

relative  to • 18 

report  Capitol  Commissioners  relative  to  cost  of 42 

Commissioners,  annual  report 13 

New  York,  city  of,  report  of  committee  appointed  under  resolu- 
tion of  Senate  by  mayor  of,  relative  to  increased  water  sup- 

ply 34 

city,  report  of  committee  relative  to  corporations  having  fran- 
chise rights  to  use  the  streets  and  avenues 50 

city,  commissioners  of  public  charities  and  corrections  in  re- 
ply to  resolution  of  the  Senate,  report  of 29 

'city.  (See  Commissioners  ; Department  of  Docks;  Hebrew 
Sheltering  Guardian  Society.) 

Elevated  railroad,  report  of  Comptroller  and  Attorney-Gen- 
eral, relative  to 36 

Elevated  railway,  report  of  State  Engineer  and  Surveyor  in  ^ 

reply  to  resolution  of  Senate,  relative  to 37 

Prison  Association,  report  of  executive  committee 46 

^ O. 

Officers.  (See  Senators.) 

Onondaga  Indians,  report  concerning  condition  of 35 

Orders.  (See  General  Orders ; Rules. ) 

P. 

Poor.  (See  Statistics  of  the  Poor.) 

Prison  Association  of  New  York,  annual  report  of  executive  com- 
mittee   46 

Protectors.  (See  Game  and  Fish. ) 

Puts.  (See  Corners  and  Futures.) 

R. 

Railroad  Commissioners,  report  of 47 

j’e))ort  of,  I’clative  to  Utica  and  Black  River  rail- 
road bill 33 

Itailroad.  (See  Utica  and  Jilack  River  Railroad.) 


5 


No. 

Eailroads.  (See  State"Engineer  and  Surveyor.) 

Rapid  transit  legislation,  memorial  of  0.  S.  Harvey 41 

Receivership  investigation,  report  of  special  Senate  committee. . . 38 

Receiverships,  report  of  sub-conmmittee  on  insurance  to  investi- 
gate   41 

Reformation.  (See  Society.) 

Report  of  Astor  Library 15 

of  Buffalo  State  Asylum  for  the  Insane 12 

Canal  Appraisers 6 

of  Capitol  commissioners  of  estimated  cost  of  completion  of 

New  Capitol 42 

concerning  condition  of  Onondaga  Indians 35 

Commissioners  of  the  Department  of  Docks  in  reply  to  reso- 
lution of  the  Senate 30 

of  Comptroller  and  Attorney-General,  relative  to  New  York 

Elevated  Railroad  Company 36 

Comptroller,  in  relation  to  State  lands 52 

of  committee  appointed  under  resolution  of  Senate  by  the 

mayor  of  New  York  city,  relative  to  water  supply 34 

of  committee  on  canals, 48 

of  committee  on  cities,  relative  to  resolution  of  March  15, 

1882 49 

of  committee  relative  to  corporations  in  New  York  city  hav- 
ing franchise  rights  to  use  the  streets  and  avenues 50 

of  Commissioners  of  Emigration 23 

of  committee  on  finance  on  order  of  the  Senate  to  investi- 
gate affairs  of  Commissioners  of  Emigration 31 

of  Commissioners  of  Public  Charities  and  Corrections  in 
city  of  New  York,  in  reply  to  resolution  of  the  Senate  ...  29 

of  directors  and  trustees  Brooklyn  Institute 27 

of  finance  committee,  relative  to  State  Normal  School  at 

Albany 43 

of  Executive  Committee  of  Prison  Association  of  New  York.  46 
of  Game  and  Fish  Protectors  in  reply  to  resolutions  of  Senate  22 
annual,  of  Hebrew  Sheltering  Guardian  Society  of  New 

York 32 

majority  and  minority,  of  committee  appointed  to  investigate 

Puts  and  Corners 45 

of  managers  of  the  Society  for  the  Reformation  of  Juvenile 

Delinquents 16 

of  managers  Hudson  River  State  Hospital 10 

of  managers  State  Lunatic  Asylum  at  IJtica 7 

of  managers  Western  House  of  Refuge 17 

of  New  Capitol  Commissioners 13 

Railroad  Commissioners 47 

of  Railroad  Commissioners  relative  to  Utica  and  Black  River 

railroad  bill 33 

of  the  Regents  of  the  University 54 

special  committee  of  Senate  to  investigate  the  affairs  of  the 

Albany  County  Penitentiary 51 

State  Board  of  Charities . . . . " 14 

State  Engineer  and  Surveyor  on  Canals 9 


e 


No. 

Heport  of  the  State  Engineer  and  Surveyor  on  the  railroads  of 


the  State 44 

in  reply  to  resolution  relative  to  New  York  Elevated 

Eailvvay 37 

of  Secretary  of  State  in  relation  to  statistics  of  the  poor 25 

in  reply  to  resolution  of  Senate 20 

of  special  Senate  committee  relative  to  receivership  investi- 
gation   38 

State  Assessors 21 

of  State  Reformatory  at  Elmira 8 

of  State  Treasurer 3 

of  sub-committee  on  insurance  to  investigate  receiverships..  4l 

trustees  of  Lenox  Library 19 

of  the  trustees  of  the  State  Museum  of  Natural  Ilistory 53 

Thomas  Orphan  Asylum,  Buffalo 24 

of  testimony  of  committee  on  villages  relative  to  the  town  of 
Gravesend 39 


Reporters.  (See  Senators.) 

Resolution.  (See  Concurrent  Resolution.) 

Resolution  of  the  Senate.  (See  Committee  on  Cities  ; Commis- 
sioners of  the  Department  of  Docks ; Commissioners  of 
Public  Charities  and  Corrections  ; Comptroller  ; Game  and 
Fish  Protectors  ; New  York  City  ; New  York  Elevated  Rail- 
ways ; Secretary  of  State.) 


Rules.  (See  Joint  Rules.) 

Rules  and  orders  of  the  Senate 4 

S. 

Secretary  of  State,  report  of,  in  reply  to  resolution  of  Senate 26 

report  relative  to  statistics  of  the  poor 25 

Senate,  resolutions  of.  (See  Comptroller.) 

resolutions  (See  Game  and  Fish  Protectors.) 
resolution.  (See  Secretary  of  State.) 

rules  and  orders 4 

(See  Committee  on  Finance  ; Resolution  of  the  Senate.) 
committee.  (See  Committee.) 

and  Assembly,  joint  rules 5 

Senators,  list  of 1 

members,  officers  and  reporters  with  boarding-houses,  list  of,  28 
Society  for  the  Reformation  of  Juvenile  Delinquents,  annual  re- 
port of  managers 16 

Special  committee.  (See  Committee.) 

Senate  committee.  (See  Committee.) 

Statement  of  Comptroller  relative  to  amount  expended  upon  the 

New  Capitol 18 

State  Assessors,  annual  report 21 

Asylum  for  the  Insane  at  Buffalo,  annual  report 12 

Boai’d  of  Charities,  annual  report 14 

Engineer  and  Siii-veyor  on  Canals,  annual  report ' 9 

Erjgineer  and  Surveyor  on  Railroads,  annual  report  of 44 

Engineei-  and  Surveyor,  report  of,  in  re})ly  to  resolution  rela- 
tive to  New  Yoi’k  Elevated  railway 37 

lands,  report  of  Coin])troller  relative  to 52 


7 


No. 

State  Lunatic  Asylnm  at  Utica,  annual  report  of  managers 7 

Museum  of  Natural  History,  annual  report  of  trustees 53 

Museum  of  Natural  History,  communication  from  trustees  in 

answer  to  Concurrent  resolutions 20 

Normal  School  at  Albany,  report  of  finance  committee  rela- 
tive to 43 

Keformatory  at  Elmira,  annual  report 8 

Treasurer,  annual  report 3 

Statistics  of  the  poor,  report  of  Secretary  of  State  relative  to 25 

Streets  and  avenues.  (See  New  York  City.) 

Sub-committee  on  insurance.  (See  Receiverships.) 

T. 

Thomas  Orphan  Asylum,  Buffalo,  annual  report 24 

Treasurer  of  State,  annual  report 3 

Trustees.  (See  Directors.) 

of  Lenox  Library,  annual  report ....  19 

of  State  Museum  of  Natural  History,  communication  from..  20 
of  State  Museum  of  Natural  History,  report  of 53 

U. 

Utica,  report  of  managers  of  State  Lunatic  Asylum 7 

and  Black  River  railroad,  report  of  railroad  commissioners 
relative  to 33 

V. 

Villages.  (See  Committee  on  Villages.) 

W. 

Water  supply.  (See  New  York  City.) 

Western  House  of  Refuge,  annual  report  of  managers 17 

I 


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